Social Affinity

Is your media measurement as dated as this 1970s den?

Is your media measurement as dated as this 1970s den?

The New Panel-Based Audience Measurement for Brands

With the prevalence of social data, yesterday’s panel-based measurement for digital campaigns is starting to look like the wood paneling in your grandmother’s den: A bit out of fashion. Marketers have been trained to buy media based on demographics, and it is natural to want your ads to be where you think your customers are. For BMW’s new entry level sedan, that might mean finding the media that males aged 26-34, who are earning 75,000 or more a year, consume. That makes a lot of sense, but it also means that your paid media will always compete alongside ads for your competitors. That is a big win for websites with premium inventory that fits your demographic, because it means scarcity and high prices for marketers.

What if there was another way to measure what audiences are right for brands? And what if that data were based on a panel of a few hundred million people, rather than a few thousand? Well, thanks to Facebook and Twitter, we have just such a web-based panel of consumers, and they are always eager to share their opinions in the forms of “likes,” “follows,” and (more importantly) engagement. Social listening platforms have been able to tell brands what people think about them directionally, and measure how certain marketing efforts move the social needle. Listening is great, but how do you get to hear what to buy?

A company called Colligent has been going beyond listening, by measuring what people actually do on Twitter, Facebook, and other social sites. “Liking” is not enough (when me, my 10-year old daughter, and my mom “like” Lady Gaga, the audience I am a part of gets too broad to target against). What matters is when people express true affinity by sharing videos, tweeting, and commenting. When people who are nuts about a certain celebrity are also nuts about a certain brand—and that relationship over-indexes against normal affinity, you have struck real social gold: Data that can make a difference. Pepsi recently used such data to choose Nicki Minaj as a spokesperson over dozens of other choices.

What about other media? Nielsen defines television, Arbitron measures radio, and MRI defines magazine audiences by demographics. Now, for the first time, marketers can use social data—gathered from panels nearly as large as the buying population—to define audiences by their own brand and category terms. That’s a world in which Pepsi can purchase “Pepsi GRPs” across all media, rather than GRPs in a specific media.

This is the way brands will buy in the future.

[This post originally appeared on 2/21/13 in The CMO Site, a United Business Media publication]

Is Programmatic Premium?

Will "buy it now" buttons control display media?

Will “buy it now” buttons control display media?

As the bloated Display LUMAscape shifts, more and more companies focused on real time bidding are turning their venture-funded ships in the direction of “programmatic premium” and trying to pivot towards an area where nearly 80% of display media budgets are spent. This has been called the “Sutton Pivot,” referring to the notion of robbing banks, because “that’s where the money is.”

The fact that that 80%—over $6 billion—is largely transacted using e-mail, Microsoft Excel, and fax machines is staggering in a world in which Facebook is becoming passé. The larger question is whether or not publishers are going to enable truly premium inventory to be purchased in a way that lessens their control. At a recent industry conference, publishers including Gannett and Turner completely rejected RTB and “programmatic” notions. In a world of ever growing inventory, the premium stuff is ever shrinking as a percentage—and that means scarcity, which is the publisher’s best friend. Selling less of a higher margin product is business 101.

As I wrote recently, at the same conference, Forbes’ Meredith Levien laid out the three principle chunks of inventory a super-premium publisher controls, and I want to examine the programmatic premium notion against each of these:

  • Super Premium: Big publishers love big “tent pole” branding campaigns, and are busy building mini-agencies within their sales groups, which bring together custom sponsorship packages that go beyond IAB standard banners. A big tent pole effort might involve a homepage takeover, custom rich media units, a dedicated video player, and branded social elements within a site. While some of the display elements within such a campaign can be purchased through a buying platform, this type of complex sale will never scale with technology, and is the very antithesis of “programmatic.” For many publishers, this type of sale may comprise up to 50% of their revenue. Today’s existing buying and selling platforms will be hard pressed to bring “programmatic” efficiencies here.
  • Transactional: Many super-premium (and most premium) publishers spend a lot of their time in the RFP mill, churning out 10 proposals and winning 2   or 3 of them. This “transactional RFP” business is begging for reform, and great companies like AdSlot, iSocket, Operative, and ShinyAds are starting to offer ways to make selling premium inventory such as this as programmatic as possible. Companies such as Centro, Facilitate, MediaOcean, and NextMark (disclosure: my company) are starting to offer ways to make discovering and buying premium inventory such as this as programmatic as possible. Much of the RFP process is driven by advertisers looking for information that doesn’t need to be offered by a human being: How much inventory do you have, when do you have it, and how much does it cost? This information is being increasingly found within platforms—which also enable, via tight pub-side ad server integrations, the ability to “buy it now.” 100% of this business will eventually happen programmatically. Whether or not today’s big RTB players can pivot their demand- and supply-side technologies to handle this distinct type of transaction (not very “real time” and not very “bidded”) remains to be seen.
  • Programmatic: There will always be a place for programmatic buying in display—and there has to be, with the sheer amount of inventory available. Let’s face it: the reason the LUMAscape is so crowded is that it takes a LOT of technology to find the “premium” needle in a haystack that consists of over 5 trillion impressions per month. If the super-premium inventory publishers have to sell is spoken for, and the “transactional” premium inventory publishers sell is increasingly going to other (non-RTB) platforms, then it follows that there is very little “premium” inventory available to be bought in the programmatic channel.

The middle layer—deals that are currently being done via the RFP process, is where “programmatic premium” is going to take place. In this type of buy, a demand-side platform will create efficiencies that eliminate the cutting and pasting of Excel and faxing and e-mailing of document-based orders, and a supply-side platform will help publishers expose their premium inventory to buyers with pricing and availability details. That sort of system sounds more like a “systematic guaranteed” platform for premium inventory.

So, is programmatic premium? Not the type of programmatic buying happening today.

[This post originally appeared in ClickZ on 2/18/2013]

When Cost-Plus is a Minus

imagesIs the Hourly Pricing Model Right for Today’s Digital Media Agency?

It’s funny how people deride Microsoft for not being successful in advertising technology when 80% of digital media dollars are transacted using their media planning software. Despite the fact that we live in a world where computers can evaluate hundreds of individual bid requests on a single impression and render an ad serving  decision in under 50 milliseconds, the overwhelming majority of display inventory is bought using e-mail and fax machines. Those media plans are manually created in Excel.

Terence Kawaja of the famous  LUMAscape maps, which depict the 300-plus companies who enable the 20% of display buying that happens programmatically, once said that “inertia is the agency’s best friend” when asked why holding companies were not doing more to bring innovation to advertising. I imagine that part of what he meant was that their common business model (billable hours plus a negotiated margin) does not create an incentive for efficiency. On the contrary, complexity in media planning means more billable hours—as well as a built-in need for agencies’ existence. After all, if media buying were easy, then marketers would do it themselves.

A result of this inertia is the fact that Microsoft’s business products (Outlook, PowerPoint, and Excel) power the majority of digital media buying today. After research is done in platforms like Comscore and Nielsen, media planners output a spreadsheet, create an RFP, and begin the long process of gathering other spreadsheets from publishers. After a few weeks and $40,000 in hours spent cutting and pasting, a media plan is born. This grueling process has the average media planner spending more time on manual, repetitive processes than on strategy and high-value, client-facing activities. You would imagine that agencies would work quickly to adopt technologies that make the transactional nature of media planning more streamlined.

It seems like agencies don’t care, as long as they are getting paid for their work, but there are real problems with the Excel model. Here are a few to consider:

  • Employee Happiness: One of the biggest problems facing agencies is the constant turnover in media planning departments. Agencies hire junior planners directly out of college in many cases, and work them long hours where they perform many of the manual processes that go into digital media plan execution. After a while, they take their training and insights and ascend the ladder into the next position, or take their newfound expertise to the next agency, where they can expect more of the same for a slight raise. Wouldn’t it be better to deploy technology that takes out the grunt work of campaign planning, and enables planners to focus on more high value activities, such as strategy? The costs of employee turnover are high, as are the hidden costs of employee dissatisfaction.
  • More Bandwidth Equals More Clients:  Although agencies get paid for their hours, there is a point at which an agency can only take on so many clients. After all, adding employees (even low cost ones) means adding more desk space, furniture, computers, and financial overhead in general. Eventually, an agency starts to need increases in productivity at the employee level in order to scale, and add more clients (and revenue) without overly expanding its physical footprint. Leveraging technology that streamlines the manual part of media planning means being able to do more planning with less planners, enabling shops to scale their market share without adding as many junior personnel.
  • You Don’t Get Paid for Pitching: Digital media shops don’t always get paid for all of their hours. Pitching new clients means creating sample plans and putting company resources to work on speculative business, which is all the more reason to find efficiencies in media planning technology.
  • Spreadsheets Don’t Learn: One of the biggest problems with digital media planning using manual, spreadsheet-driven processes is that it becomes hard to maintain a centralized knowledge base. Planners leave, plans get stored on disparate hard drives, information on pricing and vendors is fragmented, and it is hard to measure performance over time. Despite the fact that they are getting remunerated for their work, agencies must consider whether the method of using man hours to perform repetitive tasks could be more expensive in the long run. As David Kenny once remarked, “If you are using people to do the work of machines, you are already irrelevant.”

At the macro level, the cost-plus pricing model’s principle disadvantage is that it creates what economists call a perverse incentive or, put more simply, an incentive for inefficiency. When it that cost model is applied to digital media planning—already fraught with inefficiency—you have an environment ripe for disruption. The advent of new, platform-driven media planning and buying technologies is spawning a new era of “systematic guaranteed” buying which promises to streamline and centralize the way banner ads are bought today. Agencies will be able to dedicate more hours to client facing tasks and strategy, and publishers will be able to manage their transactional RFP business more seamlessly, and be able to focus their sales teams on super premium, high CPM sales.

By eliminating much of the human cost of media planning and buying, technology can help add more value to the media itself—the real “plus” that we have been looking for.

[This post originally appeared in ClickZ on 2/7/13]

Programmatic Premium is not about Bidding

bid-nobid-article “A market is never saturated with a good product, but it is quickly saturated with a bad one” – Henry Ford

When it comes to digital publishing sales, it seems like many publishers are questioning whether the product they have—the standard banner ad—is what they should be selling. Last month, I wrote that 2013 would be the year of “premium programmatic,” where LUMA map companies who make their living in real time bidding turn towards the guaranteed space, where 80% of digital marketing dollars are being spent. My recent experience at Digiday Exchange Summit convinced me that this meme continues—with an important distinction: “premium programmatic” is not about bidding on  quality inventory through exchanges. Rather, it is about using technology to enable premium guaranteed buys at scale. Here is what I heard:

The Era of the Transactional RFP is Over

Forbes’ Meredith Levien currently gets 10% of her display revenue from programmatic buying, up from 2% in 2011. The rest of her revenue is comprised of 45% premium programs , and 45% from what she calls the “transactional RFP” business. The latter is the type that comes from continually responding to agency RFPs for standard IAB banner programs, with little customization. Levien questioned whether that type of transactional business was completely on its way to becoming driven exclusively by technology.

Are publishers really going to be able to abandon the  relentless RFP treadmill where countless hours are spent reacting to agency RFPs—many of which are sent to over 100 publishers, despite the fact that an average of 5 find themselves on the campaign? In order for that to happen, Levien said, the very language we are using must change. The language of the transactional RFP (“GRP,” “CPM,” “Impressions”) must change to the language of premium (“Social Shares,” “Influence,” and “Engagement”). Ultimately, Levien sees a world where there are fewer people managing  RFP response and more multi-disciplinary teams that create super premium tentpole programs for large brands. Forbes’ teams feature copywriters, developers, and creatives who don’t talk about the “buy details” of a campaign, but more about the social and cultural implications a great advertising program can create.

To paraphrase Federated’s CEO Deanna Brown, publishers “really have to question whether sending 100 e-mails to win a $50,000 RFP is worth it.”

Create Scarcity

Gannett’s Steve Ahlberg was even more forceful in his rejection of programmatic buying, and the transactional nature of guaranteed buying. After living in a world of their own creation (pages festooned Nascar-like with low-CPM banners) USAToday.com took the draconian move of removing all below-the-fold ads from its site, stripped every network and exchange tag from its pages, and decided to have one large ad placement per page. The experiment—revenue neutral in the 4th quarter of 2012—has thus far proven that publishers can get off “set it and forget it” SSP revenue by creating the type of scarcity that drives up both rates and demand. According to Ahlberg, the publication is talking to quality brand clients that were not on the radar just months before.

Part of the equation is getting away from standardized IAB units and trying to create a “television-like” experience for brand advertisers. Like Forbes, that means getting RFP response teams away from transactional duties, and leveraging cross-disciplinary teams that think like wealth managers, rather than salespeople. Instead of asking about reach and frequency, USAToday.com asks brands what they want to accomplish, and works with them to craft campaigns that work towards a different set of KPIs.

“If the Premium Publishers’ Product is the Banner Ad, then they are in Trouble”

For Walker Jacobs, who oversees Turner’s digital ad sales, the recent leaps and bounds in programmatic technology has done nothing but “accelerate the bifurcation of the ecosystem” which is divided been the good inventory and the bad. Like Gannett, Turner takes a jaundiced view of the programmatic ad economy.  “Our RTB strategy is ‘no’,” as Jacobs concisely put it.

Going further, Jacobs suggested that “there is no such thing as programmatic premium” in a world saturated with banner ad units, many of which go unseen. Standard banners, therefore, are a “flawed currency.”  It is hard to argue with Jacobs in a world that sees 5 trillion impressions every month.

It is clear that, despite the massive strides being made in programmatic buying technology, there is a very large gap between publishers who control super premium inventory, and those that do not. Publishers in the former want to find more streamlined and efficient ways to respond to RFPs, and ultimately turn more of their efforts into selling creative, multi-tiered, tentpole solutions to major brands. It doesn’t sound like many premium publishers are implementing private exchanges either, despite all of the hype in 2012. As Dan Mosher of Brightroll Exchange remarked, a private exchange “is just a blocklist feature of a larger platform.”

In 2013, it seems like premium publishers are not embracing private exchanges, not because of the technology, but rather because they are rejecting the notion of commoditization of their inventory in general.  For most premium publishers, there are the types of sales: Super-premium programs, that will continue to be handled primarily by their direct sales force; “transactional RFP” business for standard IAB display units, which most see being streamlined by “systemic” reserved platform technologies; and programmatic RTB sales of lower class inventory.

So, is 2013 the year of “programmatic premium?” Yes—but only if that means that publishers embrace technologies that help them streamline the way they hand-sell their top-tier inventory.

[This post originally appearded in the EConsultancy blog on 2/5/13]