A short piece I wrote for B2B publishers on programmatic in advance of a conference I’m speaking at.
I hate walking away from prospective business, but a recent situation made me realize that sometimes that is the best outcome. A few months ago I received an inquiry from someone purported to be a consultant who was given our name through a mutual business friend. She was looking to bring in a new media agency for a small HBC company. The brief she sent focused on two objectives; reduce the agency fee and improve the media efficiency (she meant to say lower the CPM because media efficiency and media cost are not the same thing).
I scheduled a conference call with her and one of my key people, while on vacation, to discuss the project and see if it made sense for us to participate. We opted to go forward and had an in-person meeting with the consultant the following week. As she briefed us it became clear that she was asking for spec work, a fully fleshed out media plan—read my prior post on this subject here http://wp.me/p2edMw-2s
There is a certain amount of spec work I am willing to do in a new business pitch. Anything more than that I ask to be paid for. In this case I asked for a “go-away” fee on the work if they did not hire us. It’s an interesting approach in that often times the work is good enough that it forces the prospect to hire us or pay two agencies. The problem here is that we wanted a lot more than the prospect was willing to pay. They did not put the same value on our work as we did. Our ask was 10X what they were willing to pay.
We settled on an intermediate number, but I insisted that it be only if the client agreed to our ongoing fee structure. It made no sense for us to continue if the client wasn’t intending on paying us the compensation rates we wanted. The consultant danced around the commitment and kept insisting that we needed to do the spec work and the fees would work out. Red flag number 1.
Red flag number 2: the consultant asked us to break out our fees for planning and buying separately because she wanted to manage some of the buying herself. Apparently she had a relationship in the :10 TV unit space and wanted to be more than the consultant. She was going to push for the agency that allowed her to maintain this position—and likely the one who planned the most :10’s.
It was then that we decided that we did not want to pursue the assignment because there would be a lot of spec work, which even if they did not hire us, would benefit the consultant more than the client or us.
If someone asked you to work for free would you do it? I would not. But many publishers do this all the time. They allow their content to be served to people who use ad-blockers. Most publishers would say that about 20% of traffic comes from devices with ad-blockers. I don’t understand why sites would serve content to people who block ads. It’s like working for free.
Today the Financial Times launched an interesting defense on ad-blockers. Rather than serve up content with no chance of selling the ad impressions the digital newspaper is testing hiding a percentage of the words in its story to point out how advertising revenue funds the content.
The New York Times is being more direct by insisting that people whitelist their site from the ad-blocker to receive content. This is a big step in the right direction for media content providers. Content costs money. Good content costs more than bad content. Advertising is a necessary aspect of most publishers’ sites because very few people will pay for content with cash. Why should a business give its product away just because a device has an ad-blocker on it?
These steps by FT and the NYT reminds people that quality content can only be provided if there is a revenue exchange. Publishers need to stand firm on blocking content to those who do not want to pay for it. Visitors either need to pay cash or pay attention. The ad-blocking phenomenon will only end if content providers don’t enable them. Don’t work for free.
Read more in this article from Ad Age.
No, not the Keystone Pipeline, but the pipeline delivering content into US homes. Yesterday the FCC proposed a framework (whatever that means) for providing innovators, app developers and device manufacturers the information they need to develop new technologies. A link to the FCC’s statement on this is here: http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db0127/DOC-337449A1.pdf
So who is for and who is against?
No surprise, cable companies are against this because it does something they hate most, it creates competition for accessing TV programming. It also removes an important revenue stream—renting boxes to subscribers, generating billions to their coffers.
Basically everyone else in the world supports this. Imagine people having their own boxes (think Roku, AppleTV, Google Fiber) and deciding what programming they want through their cable company and what programming they want direct.
Another benefit for consumers will be the ease to transition from Cable TV to SVOD to YouTube, etc on your TV monitor. My favorite part might be a single remote instead of three. The question that remains is whether this will eventually reduce costs or increase costs. People are willing to pay for multiple services and convenience, so it could go either way.
Video content providers will see a boon and direct access to subscribers without having to be held captive to cable company’s demands and idiosyncrasies. With millions of options for video content people will curate their own personal networks. We will likely see even more short-form content with fewer ads as either pre-roll or in-stream with more real time ad insertion and addressability.
In the words of the French poet Paul Valery, “The future isn’t what it used to be”.
You know I can only be talking about Star Trek, unless you’ve been in a cave for the last fifty years. CBS announced today a new Star Trek TV Series, but with a twist in distribution. The first episode will air on the traditional CBS network, but all subsequent episodes will only be available on CBS’ All Access SVOD service.
SVOD is a growing phenomenon, currently with about half of all homes subscribing to one service or another. The main players are Netflix, Amazon and Hulu. HBO just hit 5% of homes. CBS currently leads the next tier of providers, each with less than 2% of users.
CBS is looking to jumpstart their paid subs with this move, but is one program—albeit a series with a huge cult following—enough? Time will tell.
The more important aspect of what’s going on here is testing the viability of a new distribution system and a new revenue model. Netflix and Amazon have used original series to accelerate their uptake, but it’s more of a value-add for a new subscriber to their tremendous archive of movies and TV shows. HBO, already a paid service is growing—as pointed out above. Younger consumers are cutting cords, not spending their time with the same traditional media their predecessor generations used. The fact of the matter is CBS has to be successful with this move. They have no choice. Today’s announcement should quickly be followed by more of the same. Their future depends on it.
Programmatic digital can be dicey when it comes to getting what you paid for and you should be concerned about fraud, bots, safety, and viewability issues that result in bad outcomes.
A few months ago a prospective client asked me to evaluate a small programmatic buy her agency had executed for her with one DSP. The agency thought the buy was great, given that they drove a CTR of .48%, higher than most campaigns with a CPM of $1.40. On the surface I would agree.
That is, until I looked at the source of clicks report. This was a small enough campaign, just under 10,000 clicks, that a simple scan of the source of the clicks made me question the real value of the campaign. Many of the URL’s were from out of the US (Belgium, Brazil, Malaysia to name a few) but his was supposed to be a US campaign. Many were from sites that I could not load if I tried. Many seemed to be legitimate sites, but the visits were very low quality and very brief. The average session time for clicks from this DSP was 1/3rd to 1/4th the next lowest referrer. Average page views were even lower.
I sent the source of clicks list to a third party fraud and safety expert for their opinion. About 50% of the clicks were “High Risk” for fraud and another 5% were “Suspect”.
So if this is true, the client’s CPC for real clicks just doubled, at a minimum. Since I knew which DSP was used I asked them for their opinion on the third party auditor’s findings. I was shocked at the response from the DSP salesperson; “we take brand safety very seriously and we’re more than happy to deliver on any parameters mandated. Normally, during campaign negotiations we need to know in advance if a campaign is being measured by a third party and we’ll set up with daily reporting so that we can optimize out of those placements, sites, creative, and or content driving fraud.”
Let me translate this for you. He said that if they knew we were going to look at a third party safety audit that they would not have delivered those impressions. Want to know what was worse? The CEO of the DSP echoed the same sentiments when I raised the issue up the line.
Fraud and bot clicks are going to happen. Clients and their partners who focus exclusively on getting the lowest CPM or CPC will find that they are actually paying more than they think for real inventory. Use a third party verification service for your campaigns, even if it is just to keep the people you’re giving money to honest.
For more info go to http://www.ocdmedia.com
Never underestimate the importance of goal setting and strategy in media. While smart media buying will save you money, smart media strategy will make you money. Without a well thought out media plan you are not getting the most from your budget because you have not determined what you should buy and what you should not. While what you buy may be priced well relative to other options, buying the wrong media is wasteful no matter what the price is. And all too often advertisers and their agencies let buying lead the media process or are missing the connection between the plan strategy and the buy.
Would you use an investment strategy of buying only stocks that are less than $10 per share? And would you use the broker who charges the least per transaction because all he has to do is tell you how much of a given stock is available when you are ready to buy? Or does this sound crazy to you? It is crazy. But what’s crazier is that some companies handle their largest investment, advertising media, in this manner.
This approach is designed to limit your costs, but what you may not know is it also limits your return. Successful media buying, much like having success in the stock market, depends on good research and good timing because the basis of both is supply and demand. The biggest difference is that media buying is more negotiable than the stock market, an extra level of complexity that ultimately determines how much you will pay for your ad time/space.
And negotiating is something large media buying agencies on the whole don’t do as well as their smaller sized competitors. “How can this be?” you ask. “My agency buys gazillions of dollars of ad time, they have to get better prices than the agencies who buy less. It’s simple math. You buy more you get a better price.” Remember Lucy and Ethel in the chocolate factory in that classic “I Love Lucy” episode? That is what being a media buyer in a mega-media agency is like. You don’t have time to “wrap” the schedule properly because you have three more buys to get on the air that day.
Negotiating is about give and take, a certain back and forth. If you’re using one of these big guys chances are you’re not getting the best price because the buyer cares more about getting four buys on the air, and less about buying the right inventory. It’s easier for them to only buy the lowest priced stuff because they don’t have to worry about value. But you should because your media buy is your investment in your brand like your stock portfolio is your investment in your retirement, not an expense on your P&L.
Smart media planning let’s you know which media does and does not make sense for your efforts. It helps tell you which media to stay away from. Buying the wrong media because it’s cheap is as wasteful as buying premium priced media that isn’t right for you. Neither one will produce results.
An approach that recognizes the importance of strategy means targeting the right people at the right time, yielding a smarter use of your marketing resources. Make it easier for a buyer to buy effectively because they know the difference between price and value.
The marketing world is being turned upside down. There are as many as 25 major media reviews going on right now, as I wrote about in my last post. There are many theories as to why; Is it the agency kickbacks/rebate issue? Is it about service pricing? Is it about getting better expertise? Any one of these is legitimate enough and I’m sure there is a mix of reasons. For the agencies the impact is tremendous. Whether it’s to retain or acquire the account the resource dedication for a pitch of this magnitude is huge.
I’ve run new business and worked at more than one of the agencies involved in these pitches. Dozens of people, freelancers hired to help, weeks and weeks of late nights and weekends. This isn’t done in someone’s spare time, because they have none. People are working on the pitch throughout the day and into the night.
So what does this mean to existing clients? One unintended consequence of these reviews is the labor shortage it creates on existing clients because all hands are on deck for these pitches. It means someone who is supposed to be working on your business is not. It means the junior people are doing more of the work because the senior people are involved in the pitch. It doesn’t mean total neglect, it means inattentiveness to everyday matters. And that’s when mistakes happen. An assistant sends an incorrect IO to a media company. A cancellation order doesn’t get issued. A decimal place is off on a CPM and a plan is totally miscalculated. These things happen and they usually happen when people are forced to choose where to devote their time.
Also, in every new business pitch these agencies are being asked to show the organization chart if they win. No one shows empty boxes. They are promising your people to the new client. Don’t be surprised to find out your favorite person is being reassigned.
If your account is at one of the agencies involved in these pitches pay close attention to how many mistakes happen during this time. Pay attention to who is/isn’t involved everyday. It will give you an indication of how important a client you are to them.
Sony, VW, P&G, J&J, Bacardi, SC Johnson, Visa, 21st Century Fox, L’Oreal, Coca Cola, BMW, BASF. What do all these companies have in common? They all have placed their media business in review, or recently completed a review. Their incumbent media agencies; the usual suspects—OMD, Zenith, UM, Mediacom, Vizeum, Carat, Starcom/MediaVest. The agencies involved in the review; the usual suspects.
Insanity is doing the same thing over and over again and expecting a different result.
I’ve heard and read that some people believe that industry change (content, integration, analytics) is driving this rash of reviews. If so, why are the same agencies that some clients are dissatisfied with all of a sudden appealing to others? Why would OMD be a good repository for Bacardi, which they recently won, when current clients J&J and Visa have put their accounts in review? Is it because what is shown in new business pitches is not what is used on a daily basis? I witnessed much of this when I was at Initiative, albeit a dozen years ago. The people who work on client business think many of the tools and sexy stuff shown in new business pitches is just that, only shown in new business pitches. It’s not practical for everyday use because the planners have too many boxes of GRP’s to fill in. They do not have the time to solve real business problems.
So what is the value proposition of these mega-media agencies? It certainly isn’t buying leverage because smaller agencies can match the big guys on media pricing—and often beat them. The big guys speak of relationships with the media companies, but the media companies are putting more and more inventory up for sale in the open market, using exchanges to eliminate the human aspect of transactions that is rife with inefficiencies.
Others suggest that the reviews are procurement driven, which explains why only the usual list of invitees are participating. These big agencies hate losing business and they’ll promise everything to win. They have a beast to feed to perpetuate their own myth and they believe their own BS.
You don’t have to. If you want the same-old solutions join in the Mad Hatter’s Tea Party. If you want real change you really have to want to change.
Typical media agencies are ill suited for getting client’s real value from media buys. Media audiences are fragmenting at an increasing rate. There are very few opportunities in mass media to reach large audiences, yet most brands need reach to drive new buyers to their brand. Buyers at large agencies are siloed into “centers of excellence”, meaning some buyers only buy Cable, some only buy Prime, some only buy Syndication, etc. While this might give them some knowledge of a media market there’s an entire ecosystem occurring over their heads and they know nothing of it. It comes from media company consolidation. And only savvy, de-siloed media agencies can capitalize on it.
Disney is a large media company. The image below includes many of their media properties. They operate in Network, cable and local TV, radio, online, print and on-site. They also have partial ownership in Hulu and other properties.
Now think about how companies like CBS own TV, online, radio, outdoor properties. Every major media company owns multiple properties, and I’m not just talking about online extensions. They own different brands in different media.
How are today’s large over-siloed media agencies structured to get clients an advantage? Media buying is set up to favor the sellers in every way these days. How else can you explain audience CPM’s increasing while individual media property audiences are shrinking? One reason is that media agencies don’t negotiate price. They negotiate increases.
There’s a better way. Smaller media agencies are better suited to deal with today’s complex media market. Senior management who establish the strategies stay close to the end product. They identify media companies and deploy programs regardless of which department should get which budget. There are fewer fiefdoms to feed and fewer “centers of power” fighting for survival internally.