Category Archives: marketing efficiency

Private Equity

Over the last few weeks there has been much reported about problems with automated digital buying, whether it’s Facebook’s misreporting of metrics, YouTube ads running within controversial videos or the latest that Header Bidding isn’t fixing brand safety problems. This problem has major implications on the future of the business of digital publishing.

Over the last few years open market real time bidding has taken off, driven primarily by agencies who are looking to arbitrage pricing to improve their overall margins. They create imaginary companies, agency trading desks, which simply sell inventory to themselves to sell to their clients at significantly higher CPMs than they paid. Agencies are looking for low price inventory that provides the highest margin. Clients aren’t looking deeply enough at site lists and sources of clicks to see how much bad traffic and click fraud is occurring. There’s just too much to wade through to find out.

This creates a need for publishers to create more impressions to sell through low quality and low cost content. Publishers created click bait and fraudulent traffic to make up for the “race to the bottom” pricing being offered by buyers. Sites like Buzzfeed, Diply, Answers, and Mashable use social media to generate traffic to content of absolutely no consequence;  “listicles” that require multiple clicks to complete. Each click results in a fresh set of ads being loaded and charged to advertisers. The industry went too far and now it is time to return to more reasonable practices.

As a buyer who embraces programmatic buying of digital advertising for many clients I see the value in using data to better select which ad impressions to bid on based on our clients’ needs. I counsel my clients not to use programmatic just to save money, but to use it to minimize waste that comes from buying “media space” instead of “audiences”.

Header bidding will help in allowing publishers to evaluate all bids simultaneously, thereby selling the impression to the highest bidder but there is little incentive for them to minimize the click bait approach that leads to the wormhole. The best outcome for all parties is for faster adoption of private marketplace (PMP) deals that can be executed programmatically. There is more transactional transparency for all parties. Publishers can better control who advertises on their pages and marketers can have better control of brand safety and content they approve of.

Accept the higher CPM that PMP’s require because you’ll be getting the same results or better on effectiveness. Don’t let low CPMs be the barometer for your digital media buy.

 

The Battle Over The Pipeline

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”.

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The Dark Side of Programmatic Buying

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

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Is Your Marketing An Investment Or A Cost?

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.

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A Matter of Efficiency

If you ask any media planner or buyer what the term efficiency means they will tell you that it is the way to determine relative value of different media and is usually defined as the cost per thousand impressions, CPM, of the media vehicle or buy. This results in their decisions on which media to buy being made strictly on costs.

That definition is dead wrong and leads to overemphasis on a surrogate measurement that may not correlate with sales results. Something is efficient if it is capable of producing the desired results without wasting materials, time, or energy. Can the vehicle deliver sales at a lower cost than other options? There is a cost/benefit perspective inherent in that definition. Nowhere in this description is there any indication that trying to get as many people as possible to see your efforts compared to other choices is the goal.

Making decisions based exclusively on audience cost of a media vehicle can waste tremendous resources. One of the sayings I’m known for is that the cheapest media is the most expensive media you might buy if it does not work.

Today we have so many tools at our disposal to apply metrics other than CPM to define efficiency. We also have ways to insert intermediate steps in the purchase consideration path to measure whether we are on the right track.

Are your media buyers looking at data other than audience delivery to track your progress? Are they looking at your Google Analytics data? Are they making adjustments based on how well their buy is driving traffic? Even if your ultimate goal is sales at retail there are intermediate steps that can be taken to identify what is working and what is not.

The secret is predicting in the planning stage what the potential return on each vehicle will be based on syndicated data, prior transactional data, behavioral modeling, etc. During the execution stage, make sure you align an inbound intermediate mechanism for tracking. You can use unique landing pages or promo codes, statistical modeling on web traffic, coupon downloads, social media actions or good old fashioned phone calls. A holistic look at this activity can prove helpful in making the proper optimizations to your campaign. Now that’s efficiency.

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