Tag Archives: advertising today

A Boon For Hulugans, Streamers and Cord Cutters

Today’s content is written by Alexa Paradis

Hulu has always been a leading force in the streaming age, differentiating itself from Netflix by offering current seasons of network shows in addition to their vast library of shows and movies. This made them the perfect match for cord-cutters who wanted immediate access to new episodes of their favorite shows. On May 3 during their 2017 Upfront, Hulu announced that they were now offering a live TV subscription that includes over 50 channels to start that will grow over the current year. The current channel offerings include all 4 Broadcast networks, all major sports networks, 5 children’s networks along with the Scripps channels just to name a few. This package will not replace their normal streaming subscriptions but instead be an add-on for customers that will cost $40 per month and also come with the ability to stream on multiple screens at once, quite less then the average cable bill. “Hulu can now be a viewer’s primary source of television,” said Hulu CEO Mike Hopkins. “It’s a natural extension of our business, and an exciting new chapter for Hulu.” As a millennial that cut the cord once I moved out of my parents’ house, I would definitely consider adding this onto my normal Hulu subscription especially if it means I can be watching the new episode of Scandal while my boyfriend watches the Yankee game in the other room.

For advertisers this means even more inventory on Hulu, in addition to their 32 million viewers who opt for ad-supported content advertisers now have access to the standard 2 minutes of local breaks per hour on cable networks. Also announced was a new deal with Nielsen, Hulu said advertisers will have access to Nielsen’s Digital Ad Ratings (DAR) across connected-TV devices starting in the fall of 2017, to provide a validated measurement solution across screens. Another amazing new feature for advertisers is the launch of T-commerce interactive ads in partnership with BrightLine that will let subscribers purchase movie tickets through their connected TVs. The on-screen purchasing capabilities will expand to other categories like retail and quick-serve restaurants in 2018.

Aside from the exciting announcement of the live TV subscription Hulu touted their extensive release schedule of original programing for this year with all of their biggest stars stepping on stage to share their excitement. Stars of the instant hit “The Handmaid’s Tail” announced that not only did they have the most streamed series premiere on the platform out of original and acquired series but they have already been green lit for a second season. Other exciting original series announced were Marvels “Runaway Teens”, Mars mission drama “The First” from House of Cards creator Beau Willimon, Seth Rogen’s project “Future Man”, Sarah Silverman’s political comedy series “America, I love You”, “The Looming Tower” which will star Alec Baldwin along with the series finale of “The Mindy Project”.

A powerful moment took place when Mindy Kaling took the stage for her last upfront and thanked Hulu for being a place that all types of women can be showcased and celebrated, which is not something you can find in many types of entertainment today. This certainly sets Hulu apart from their traditional network counterparts as a way to connect with Millennials who place a high value on inclusivity of all types of characters, especially female ones.

This year’s upfront showed that Hulu is remaining vigilant in their quest to be streamers go-to service and advertisers go-to platform to reach a diverse and highly engaged audience. The company shows no signs of slowing down their innovation either.

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When Walking Away Is The Right Decision

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.

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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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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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The Model Isn’t Broken. It’s Fixed.

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.

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Audience Fragmentation and Media Consolidation Are Hurting Most Clients

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.Featured image

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.

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Relics Part 2–BLUR

In a meeting earlier this week a client was discussing what classes of trade they have distribution in and I mentioned that there’s no longer such a thing as a class of trade. For those of you under the age of thirty, product distribution used to be contained to what we called grocery stores, drug stores or mass merchandisers. Today, these types of stores are one and the same. Food products were sold primarily in grocery, health products were sold primarily in drug and household staples, mostly dry goods, were sold in discount stores. Today, Wal-Mart makes up about 40% of all product sales in almost every product category. Drug stores sell milk and grocery stores sell prescription drugs. The concept of selling through a single class of trade no longer exists. Why? Because consumers want convenience. Whether it’s a quick stop into a convenience store for coffee and breakfast while they’re gassing up or to have one destination for their once-a-week major shopping trip (if that even exists anymore). They don’t want to go to a drug store for their prescriptions, a food store for their groceries and a discount store for paper goods.

I call this blur. Blur refers to the blurring of the lines of delineation that historically existed to differentiate different “channels”. Blur is not only a retail channel phenomenon; it is a reality in the marketing world as well. Today, everything is everything. In my Integrated Marketing class I refer to video and audio as communication techniques, I hate to call them TV and radio. Why? Because TV and Radio are terms that reflect an archaic distribution AND consumption system that no longer dominates. Most of the students in my class don’t listen to traditional radio, but they are exposed to a lot of audio content. The same is true in video.

Even within traditional media concepts like dayparts in TV are blurred. Many cable networks air the same programs in daytime that they do in Prime. Many people DVR whatever they want and time-shift the viewing to their convenience, yet we still plan TV based on old reach curves and buy daypart ratings numbers.

Last year I recall speaking with a client who considered Social Media PR and not advertising. We said it’s neither and it’s both. The line between PR and advertising has blurred dramatically. Is Content Marketing advertising or PR? Is Native advertising or PR? The answer lies in redefining what we do not as advertising or PR but as marketing. And if it’s smart to do PR and advertising for your brand it doesn’t really matter if there’s a line. It only matters that it gets done right. But doing it together, in an integrated manner, where paid promotion of Tweets/Posts and DJ endorsements and product integrations and content all magnify the messaging to a brand’s business advantage.

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Buyer’s Remorse

A new CEO comes in, ousts the CMO and VP of Marketing and tells his smaller media agency that he won’t renew their contract because he has a larger media shop he’s worked with and believes their BS about bigger agencies always buying better than small ones.

This happened to us recently. When the CEO’s preferred media agency submitted a ridiculously high compensation proposal suddenly we’re back in the mix. Our fee proposal was very fair. We even offered the client a better deal. We get an opportunity to pitch ourselves to the new CEO who, for the previous two months, wouldn’t even acknowledge our existence.

We have a great meeting. We explain the fallacy in believing that larger agencies “always” get better pricing. We tell him you get best pricing (and overall work) from people who care about their work and have time to do a great job for you. They take the time to negotiate for value and continue to drive down costs if they can rather than stop when they reach the benchmark. Sometimes those people work at bigger agencies, but more often they work at smaller ones. He mutters on his way out “that was a great meeting”.

We have the support of the marketing team, the research team and the field marketing personnel who all lobby for us to be retained. The CEO asks us to submit pricing on a prototypical buy in 50 markets. We bought those markets the prior year so we used our actual achieved costs. The CEO hires his preferred media agency. We’re disappointed, as we should be. We felt we had a chance. We believed we won the CEO over. Then we felt used simply so he could get a better compensation deal from the agency he hired.

A month later one of the marketing managers calls us to ask how we got our media pricing because the new agency can’t meet those costs. Why weren’t they asked to submit pricing on the same prototypical media buy that we were asked to? The CEO could have hired the better agency if he held them to the same standard throughout the process.

We get more calls asking us to meet with the new agency to tell them how we achieved the costs we got. We outright refuse and offer to handle the business instead. “Hire us and you’ll get those costs”.

Now the CEO has a recruiter calling one of our senior people to ask him to interview for the head of media position. Our guy says to the recruiter “If he respected me so much and wanted me working on his business why didn’t he hire my agency?”

He wanted a larger media agency. He got one. Be careful what you ask for. You just might get it.

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BORDER CONTROL

Everything is everything these days. Long gone are the days when clear lines of distinction exist between channels. For example; where is the line between PR and advertising today? Content and advertising?  Is Social best handled by a PR agency or a digital agency? How does a marketer divide responsibilities between their service agencies when there is overlap in capabilities and expertise?

We had a situation recently that could have gotten ugly in which two service partners sharing a mutual client had a different take on who should ‘own’ execution on what was a combined recommendation. Each partner had a unique take on how they would execute it.  Was one right and the other wrong? No, they each approached it from their unique expertise.  Either agency would have executed the program well and the client would have had good results.

So, how did we resolve this?

First and foremost, we did not drag the client into the middle of the discussion because the last thing the agencies needed was to come across as non-collaborative to the client. This was our problem, not theirs.

Two open and honest phone calls between reasonable professionals who never lost sight that the decision should be made based on what was best for the client. Had these conversations become arguments or devolved into financial self-interests we’d still have no resolution. We also never characterized the situation as a fight because that creates conflict, friction and animosity.

Our first inclination was to see if there was an opportunity to collaborate on execution. But due to the unique nature of this specific initiative, we ultimately both agreed that one of the partners needed to own it outright and the other agency gracefully backed away in the spirit of partnership feeling that the client was still in very capable hands respecting the decision and the overall relationship.

The moral of the story?  In absence of having very clear and agreed to lines of distinction cooler heads will prevail. If you find yourself in this predicament be willing to back away if the client is better served by the other partner—or equally served. One bad situation can sour a relationship forever and ultimately you and the client are worse off for it.

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