Big Data · Data Management Platform · Digital Display · DMP · Media Planning · Uncategorized

Signal to Noise

What Data Should Inform Media Investment Decisions?

The other day, I was updating my Spotify app on my Android device. When it finally loaded, I was asked to log in again. I immediately loaded up a new playlist that I had been building—a real deep dive into the 1980s hardcore music I loved back in my early youth. I’m not sure if you are familiar with the type of music that was happening on New York City’s lower east side between 1977 and 1986, but it was some pretty raw stuff…bands like the Beastie Boys (before they went rap), False Prophets, the Dead Boys, Minor Threat, the Bad Brains, etc. They had some very aggressive songs, with the lyrics and titles to match.

Well, I put my headphones in, and started walking from my office on 6th Avenue and 36th street across to Penn Station to catch the 6:30 train home to Long Island…all the while broadcasting every single song I was listening to on Facebook. Among the least offensive tunes that showed up within my Facebook stream was a Dead Kennedys song with the F-word featured prominently in the song title.  A classic, to be sure, but probably not something all of my wife’s friends wanted to know about.

As you can imagine, my wife (online at the time), was frantically e-mailing me, trying to tell me to stop the offensive social media madness that was seemingly putting a lie to my carefully cultivated, clean, preppy, suburban image.

So why, as a digital marketer, would you care about my Spotify Facebook horror story?

Because my listening habits (and everything else you and I do online, for that matter) are considered invaluable social data “signals” that you are mining to discover my demographic profile, buying habits, shoe size, and (ultimately) what banner ad to serve me in real time. The only problem is that, although I love hardcore music, it doesn’t really define who I am, what I buy, or anything else about me. It is just a sliver of time, captured digitally, sitting alongside billions of pieces of atomic level data, captured somewhere in a massive columnar database.

Here are some other examples of data that are commonly available to marketers, and why they may not offer the insights we think they might:

— Zip Code: Generally, zip codes are considered a decent proxy for income, especially in areas like Alpine, New Jersey, which is small and exclusive. But how about Huntington, Long Island, with an average home value of $516,000? That zip code contains the village of Lloyd Harbor (average home value of $1,300,000) and waterside areas in Huntington Bay like Wincoma, where people with lots of disposable income live).

— Income: In the same vein, income is certainly important and there are a variety of reliable sources that can get close to a consumer’s income profile, but isn’t disposable income a better metric? If you earn $250,000 per year, and your expenses are $260,000, then you are not exactly Nordstrom’s choicest customer. In fact, you are what we call “broke.” Maybe that was okay back in the good old days of government-style deficit spending but, these days, luxury marketers need a sharper scalpel to separate the truly wealthy from the paper tigers.

— Self-Declared Data: We all like to put a lot of emphasis on the answers real consumers give us on surveys, but who hasn’t told a little fib from time to time? If I am “considering a new car” is my price range “$19,000 – $25,500” or “35,000 – $50,000?” This type of social desirability bias is so common that reaearchers have sought other ways of inferring income and purchase behavior. When people lie about themselves, to themselves (in private, no less)  you must take a good deal of self-declared data with a hearty grain of salt.

— Automobile Ownership: Want to know how much dough a person has? Don’t bother looking at his home or zip code. Look at his car. A person who has $1,800 a month to burn on a Land Rover is probably the same person liable to blow $120 on mail order steaks, or book that Easter condo at Steamboat. Auto ownership, among other things, is a great proxy for disposable income.

It would be overly didactic to rehearse all of the possible iterations of false data signals that are being used by marketers right now to make real-time bidding decisions in digital media. There are literally thousands—and social “listening” is starting to make traditional segmentation errors look tame. Take a recent Wall Street Journal article that reported that the three most widely socially-touted television shows fared worse than those than shows which received far less social media attention.

Sorry, but maybe that hot social “meme” you are trying to connect with just isn’t that valuable as a “signal.” We all hear the fire truck going by on 7th Avenue. The problem is that the only people who turn to look at it are the tourists. So what is the savvy marketer to do?

Remember that all data signals are just that: Signals. Small pieces of a very complicated data puzzle that you must weave together to create a profile. Unless you are leveraging reliable first-party data, second-party data, and third party data, and stitching that data together, you cannot get a true view of the consumer.

In my next column, we’ll look at how stitching together disparate data sources can reveal new, more reliable, “signals” of consumer interest and intent.

[This article was originally published in ClickZ on 12/2/2011]

Advertising Agencies · AppNexus · Data Management Platform · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · DMP · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

MediaOcean: So wrong, yet so right…

MediaOcean: So Wrong, yet So Right!

A “platform” is a system that can be programmed and therefore customized by outside developers — users — and in that way, adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had time to accommodate.  – Marc Andreessen, 2007

Last week’s news of the merger between DDS and MediaBank was certainly exciting. In digital media management terms, it’s kind of akin to rooting for the Yankees; only their fans want to see them grow more powerful, because it sure ain’t good for baseball. These two behemoths have been fighting over agency budgets for the last four years, and have managed to steal a bit of market share from one another, while advancing the cross-media efficiency agenda slightly. The stated hope for this merger is that the corporate combination will give them enough firepower to finish the golf swing and solve the insanely complicated digital media puzzle, making cross media management possible in a real way.

Is this merger good for the digital media ecosystem? Maybe. Here are the three factors that will determine whether MediaOcean will become the digital media industry’s defacto system:

Standards are good: First off, it helps when everybody is reading from the same sheet of music, and there isn’t an industry that hasn’t benefitted from a common, accepted set of standards. The IAB has done a great job in terms of helping standardize ad sizes and out clauses, and some of the systems and procedures that help oil digital business transactions. An argument could be made that having 80% of agency dollar volume running through the same system brings efficiencies to the entire media buying landscape, but I’m not sure anyone in the industry would say that this was the case when DDS had larger market share.

For digital marketers, a significant hassle has been bill/pay and reconciliation, and that has been an area of focus for DDS and MediaBank across digital and traditional media. There is no doubt they can help standardize the process by which advertisers and publishers reconcile delivery even just by being the largest player – they can bring a de facto standard to bear, but how quickly can they really react to a rapidly evolving space with myriad nuances in ideal workflows for almost every customer? If they can change their DNA, they will be a force to be contended with.

— Platforms are good:  Secondly (and most importantly),  the right approach to solving this problem is an open platform approach. But none of the leaders in this space have shown any predisposition for opening things up.  This is in large part because the technology landscape has evolved so fast that the legacy companies haven’t been able to adapt their systems to keep up.  The market needs an open, extensible platform approach to solve its numerous problems, the question is can any of the existing leaders in the space, including MediaOcean, provide that?

My colleague, Eric Picard, learned about the power of platform effects while working at Microsoft over the last several years. He recently educated me on the varieties of platform approaches that could be taken in our space, and has offered to let me publish that here:

Systems vs. Platforms: The first thing to discuss is that most companies in our space have built systems – not platforms (despite everyone using the word platform for everything.)  A system simply exists on its own, is proprietary and closed – it doesn’t allow third parties to build on top of it.  This describes almost all the offerings in our industry today.

 

Simple Platforms – or Mashups: Most of us have experienced a ‘mashup’ in one shape or another by now. This is where a tool or web site is built that calls to numerous remote services (APIs or Web Services) to build one cohesive interface.   In this case, the platform is really all the multiple different systems used ‘behind the scenes’ to create one simple application that you could use.  Many web sites use this technique, using various content management systems, ad servers, etc… A lot of the SEMs and DSPs use this approach, building their own interface that hits each of the Paid Search providers or Ad Exchanges via API.

 

Consumable Back-End Platforms: Lots of companies now offer API access to their systems.  This kind of ‘back-end’ access is then used by third parties to ‘mash-up’ the functionality with either their own or other third party functionality.  AppNexus, Right Media Exchange, Atlas, DoubleClick, and numerous others provided this kind of back-end access by API.  Some of the more sophisticated providers, like AppNexus and RMX even enable third parties to extend their functionality to some degree – but they don’t make that extension generically consumable.

 

Ecosystem-like Platforms: A great example of this is Salesforce.com – which has built out a platform that really begins to live up to the market opportunity that the industry should be looking for.  Salesforce enables numerous services that can be consumed, like the platforms and mashups we discussed above.  But they also let third party vendors come in and extend the functionality of the core Salesforce platform.  They even provide an App marketplace, similar to iTunes, that allows third party vendors to distribute their applications to existing Salesforce customers.  This is a powerful approach, but requires a whole new set of skills that most companies in the ad technology space are not quite able to pull off.

 

Within this overall context of platforms verses systems, you can see the variety of approaches being taken by the various parties in the ad ecosystem:

Google offers third parties APIs to write against, but keeps the vendors playing in the search ecosystem on their toes by frequently changing the APIs, and it’s fairly clear that their goal is to be both the platform and the applications that run the advertising ecosystem.  They support third parties, but only as it furthers their end-game. 

The ad servers understand that their value is in the engine, much more-so than their workflow.  And they’ve opened up APIs to let other workflows plug in and become mashups that ultimately are powered by the smarts of the ad servers behind the scenes.   

Donovan Data Systems has brought one mashup workflow to market, their iDesk product.  It interfaces with DDS’s other applications fairly well, and can integrate with the dominant ad servers.  MediaBank has done somewhat similar things with their application suites, but has taken a more “Google-like” approach when it comes to their business – investing in their own DSP and automated media buying systems. This investment in products that compete directly with the very vendors that would need to integrate into the combined system causes me to pause a bit.

At the end of the day – it’s hard to understand who might have the right DNA among these constituents to actually roll out the right platform to solve the industry’s needs.

–Creativity is good: Finally, I think a development like this is excellent, if it actually creates an environment that transforms where digital media people spend their time. Right now, digital agencies spend most of their time and effort trying to wrangle an “ecosystem” of nearly 300 technology, data, and media providers. They spend the bulk of their time trying to execute media plans, rather than coming up with creative strategies to engage consumers. The mess of systems, lack of standards, multiple log-ins, and unmanageable hoards of data that each system throws off has created the ultimate irony: digital media is becoming the least creative, least profitable, and least measurable channel for marketers. If the merger brings us one step closer to making the digital execution piece easier, and gets the conversation back to creative, than I think it’s a step in the right direction.

After being out in the field, and talking to over 400 agencies about their digital media needs, I know that a standardized platform is what everybody wants. Whether or not MediaOcean is going to be nimble and creative enough to deliver a system that meets the needs of our growing ecosystem is very much in question. Technology has always thrived on choice, flexibility, and open standards. I believe that the company that can deliver on all three will end up winning.

[This commentary appeared in Adotas on 9/29/11]


Advertising Agencies · Data Management Platform · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · DMP · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · Remnant Monetization · TRAFFIQ · Uncategorized

Epic FAIL

This is why agencies buy direct.

Much has been written about the notorious “logo vomit” map of famed internet banker Terence Kawaja. I reference his handy charts on my blog, and often his “Display LUMAscape” as a reference point for thinking about the digital display business, and what will happen to it. Many have tried to navigate through the various categories and dissect what may be “happening” in the space, which is a favorite pastime of company executives trying to raise money for many of the identified advertising technology outfits referenced within. Nobody ever really tries to explain the whole thing, though. It’s just too complicated, I guess. Allow me to try:

 “A few years ago, people started to figure out that you could use technology to target advertising to people on the Web. Ever since then, 250 companies have placed themselves in the middle of the transaction between the advertiser and the inventory, confusing everyone. Now, most of them are running out of money and will sell cheap, get acquired, or go out of business.”

Perhaps that oversimplifies things slightly, but the reality is that there are many companies in the space that are primed for one of those three scenarios. Unfortunately, most of them will sell for less than their investment, or go out of business. Here are the three big reasons we have gotten here:

It was a Bad Idea

The whole point of most of the companies on the Kawaja map is to help advertisers use data to find exactly the right audience at the right time, serve them the right ad, and maybe find something out about them that helps drive branding or sales. In the past, most advertisers used to do that contextually (putting ads for shoes in Vogue, for example) and it seemed to work pretty well. When that Internet thing came along, publishers could get something nearing their print CPMs for “site sponsorships” and premium banner advertising alongside good content. Sooner or later, however, publishers decided to put banners ads on all of their pages, creating the advertising largest inventory glut known to man. That created a big problem.

All of that banner space needed to be monetized somehow, and publishers were quickly discovering that it was hard to make money on the trillions of monthly advertising impressions they had created. But nobody wanted to buy $10 CPM banner ads on message board pages, and the “contact us” page. So, in order to “solve” this problem, exchanges popped up and allowed publishers to “monetize” this space by having various parties bid on the inventory. Things got even better when data companies came in, and were able to layer some demographic data atop those impressions, making audience buying possible for the first time. The venture money flowed, as smart young technologists created fast-moving software companies to help marketers exploit this trend as they sought a way to help reduce industry average CPMs from $20 to $2.

Mission accomplished! In the last 10 years, average CPMs have been drastically reduced, 100% of a publishers inventory is being “monetized” (often by 10 or more companies), and you can target an ad down to one’s shoe size.  So, what’s the problem? Hasn’t turning advertising from an art into a science worked?

The answer is: Yes, but not for all of the companies on that map. People visit three sites a day, and one of them is Facebook. If you want audience targeting, why not just find exactly what you want from a social network? They are the ones with the real audience data. They are also the ones with the audience scale, having about 5 times as many “profiles” as the next largest data company. The problem with all the companies trying to sell you audience targeting and ad technology is that it only works when you have audience scale (they don’t) and deep audience data (they don’t have that either).

Facebook, Google, and LinkedIn (and the next company that people are willing to share their private information with) are going to win the audience targeting game. When you are talking about audience buying at scale, social media IS digital media.

It’s Still about Art

If you believe that the average web user visits only two sites a day besides Facebook, then you better find them on those sites—and give them a really amazing experience with your banner ad. That thing should play video, games, talk to you, and almost pay you to look at it. Since only three out of every 10,000 people will click on it, you had better make sure the creative really tells a terrific story and gets your brand message across too.

That means standard sized banners that work with exchange-based buying are pretty much irrelevant, since they have a hard time doing any of the above. It also means that context has to accompany placement. It is not enough to reach a “35 year old woman in-market for shoes.” You have to reach her when she is on her favorite fashion site, or otherwise psychologically engaged in shoe consideration. The ad should be in a brand-safe environment that engenders trust—and compliments the creative in question. That sounds suspiciously like premium display advertising…the stuff that was being sold 10 years ago!

In a certain sense, we have almost come back full-circle to guaranteed, premium advertising. And that means an emphasis on the creative itself. If you look at the map, it’s clear that creative isn’t a part of the picture…but it might be the most important thing driving the future of the digital display advertising business.

It’s Confusing

Even if agencies and advertisers wanted to take advantage of a few of the of companies cluttering the “landscape,” they would need to log into and learn multiple systems. As a marketer looking to reach women, am I really going to log into Blue Kai and bid on demographic “stamps” from Nielsen, log into AppNexus and apply those to a real-time exchange buy, constantly log into my DART account to check ad pacing and performance, periodically log into my Aperture account to download audience data, and then log into my Advantage account every month to bill my clients? Maybe—but that’s exactly the reason why digital media agencies are making 3% margins lately. Most of these technologies are really great on their own, but string together too many of them and you start to get lost in the data, and are unable to react to it.

For digital marketing to be effective, a set of standards need to be created that enables systems to work together and share information. Basic B-school dogma teaches you that effectiveness starts to break down when a manager has more than 5 direct reports. If you believe that, then it’s not hard to imagine the effectiveness of a 22-year old media planner managing 5 logins on behalf of his agency.  It’s not just confusing, but impossible.

We have built an industry ripe for aggregation, and the Googles, Adobes, and IBMs of the world will not disappoint us! So, what companies will succeed in this ecosystem?

— Social Scalers: If you agree that all reach advertising targeting audiences will eventually be on social networks, then you should look to work with companies that are making social advertising scale effectively. Doing Facebook advertising is incredibly easy—but doing it right is hard. Doing it properly requires extreme multivariate creative optimization and, more importantly, knowing what to do with the mounds of truly actionable audience data that Facebook and other social networks will hand you. Companies like XA.net that are doing this are EPIC WIN.

 — Creative enablers: Since the conversation is coming back to the creative, how can technology help make great creative even better—and help advertisers understand how that creative is being engaged with?  The click is a dead metric to most seasoned advertisers, who are spending more time with branding measurement tools (Vizu) and creative ad analytics startups (Moat) that are well positioned to “science-ify” the truly important part of advertising: the creative itself. Companies doing that well are also going to be EPIC WIN.

 — Standard Bearers: With all of the logins out there, it is inevitable that one company is going to try and create the technology stack for next generation media buying that puts all the pieces together seamlessly. There are a number of companies trying to do this right now (full disclosure: I work for one of them), and I believe there will be a lot of advertisers and agencies relieved to log into a single platform, and be able to access all of their vendor relationships in one dashboard.  This will take some time, but the companies that enable standardization across technology providers will also WIN big.

[This post originally appeared 7/20/11 on eConsultancy blog]

Advertising Agencies · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

Death of the Digital Media Agency?

Here are the three major trends making media agencies less relevant every day.

On the surface, it would seem that running a modern digital media agency would be fun. Being on the cutting edge of media and technology, being in the “social media conversation,” helping clients understand and deploy groundbreaking new technologies…that is the stuff that has turned scores of English majors into media professionals. Unfortunately, the reality of digital media is somewhat more mundane. At the end of the (long, thankless) day, the digital agency is more valued for reconciling ad serving numbers, collating performance reports, and swapping ad tags than delivering groundbreaking new marketing ideas. The true standalone independent digital agencies (MediaSmith and MediaTwo being great examples) happen to manage both, for most traditional agencies that have added a digital practice struggle to make the technology—and, more importantly, margins—work.

If it wasn’t enough having to make a living on the slim margins digital media offers, the industry’s tendency to constantly and rapidly shift means there are major, fundamental challenges that require the digital operator to adjust their approach to the market. Here are the three latest ones, and how they are impacting digital media shops:

Platform Technology

For digital marketers, it’s all about the tools. Ad campaigns need to be researched, negotiated, served, tracked, analyzed, optimized, billed and reconciled. Just five years ago, each of those tasks would require a separate, and often expensive, software tool. There were relatively few agencies willing to build and maintain the expertise to deliver digital media effectively, and fewer that had the scale to do it at a profit. Companies like Operative were born out of the complicated nature of tools like DFA and Atlas, which were so frustrating to use that agencies were willing to pay others to manage it for them.

The sea change in the industry has been about SaaS model “platform” technology that is giving anyone willing to login the tools to effectively manage many different aspects of digital media, from guaranteed display advertising, to real-time bidded display, to search and even social. This not only levels the playing field for smaller agencies, who now have nearly the same level of access as more deeply pocketed rivals, but once obscure DSP type technology is blowing the lid of the supply side’s hold on inventory, giving the local corner agency the ability to arbitrage media like a pro. Not only that, but many of the platform technologies available are venture funded startups out for any revenue they can get, and more than eager to sacrifice some margin to win sales by offering service behind the product. Most trading desks are pushing the buttons for agencies, and many platform technologies do the same. Ask yourself if your technology partner is looking to help you—or eventually displace you completely.

The challenge for digital media practices these days is not how many digital tools they have access to, but how they are utilizing them to extract the best advertising performance, whether it is for branding or performance or even the nauseatingly titled, “branded response.”   There are only so many tools an agency can realistically use, and fewer that they can use effectively. Getting the mix correct, and choosing your partners wisely is the difference between being a digital media tools provider, and your client’s digital media expert.

Shift back to Premium

Back at the Digital Publishing Summit, I heard Greg Rogers of Pictela say this: “Nielsen says people visit 2.9 sites a day, and one of them is Facebook.” I don’t care how many industry conferences you go to this year; you will not hear anything more significant than that statement. Why does it matter? It matters because everything this industry is trying to do with audience targeting depends entirely on reaching consumers across a wide variety of sites. The Holy Grail of advertising we have been chasing (well, venture capital has been chasing) is based on the notion that you can find me with a targeted ad, wherever I am on the web, and not have to pay some huge publisher gatekeeper a premium to get to me. If those people are all on Facebook, that’s kind of a big problem.

It also means that all of the standardization we have done with ad units and ad operations procedures that have been designed to make deploying 3 ad sizes all over the web was a terrible mistake. If a consumer is visiting 2 sites a day that aren’t Facebook, and nobody is clicking on an ad (well, 0.03% of people are clicking on an ad, but it turns out they have no money anyway), then what? It means that marketers have to engage consumers with ads that do things on the page, such as expand, or play video, or tell a story. The exact types of things you cannot do with a standard 300×250, 728×90, and 160×600 commoditized ad unit.

Sorry, but we made a big mistake. Flooding the web with cheap banner ads doesn’t work for performance (unless the media cost is so low that ROI is almost  guaranteed), and it doesn’t work for branding either, thanks to “banner blindness” and a the general reluctance of consumers to drop everything they are doing online, only to be transported to someone’s really big ad (their website). Coincidentally, nobody really wants to “like” your client’s brand, or be their “friend” either. That’s the modern version of the .03% click rate: the sub segment of consumers that will “like” a washing machine company are the same people that have been punching the monkey for the last ten years.

The future of digital display advertising is about using highly premium ad units to engage consumers on the page, and provide them with a rich branded experience. That is why concepts like Project Devil are coming back to the forefront. Your agency has to be an expert at understanding how to deliver customized ad experiences at scale, but also leverage the existing, commoditized tools for display to achieve reach. That means that creative agencies, who increasingly have access to platform technology advertising tools, can put themselves in the driver’s seat by making  the creative—and deploying it too.

Social Media

Now every Tom, Dick, and Harry has access to platform technology, and creative is once again coming back into the forefront. What’s the next challenge for the digital media agency? The coming threat from social media.  If you thought the increasing dependence on social media for marketers would be a boon to the digital media agency, you may want to think again. Much of the social media focus for big brands is within their PR firms, who are challenged to build and maintain a brand’s “social media presence” on Facebook, Twitter, and LinkedIn. I recently met with a few PR firms who were charged with attracting “friends,” getting tweets, and “likes.”

They are going to do that with media money—and some of them want to keep that money in house, rather than partnering with media agencies to do it for them. A few years ago, this would have been unthinkable, as the cost of hiring a media team would erode much of the margins. Now, with ubiquitous access to platform technology, PR agencies are looking at building small in-house media teams to leverage social budgets, and make deploying social marketing campaigns a core expertise.

The successful digital media agency’s greatest expertise has always been adaptability. The best ones are already building the tools and expertise to help marketers navigate through these times, and partnering with technology companies that can evolve alongside them.

[This post was originally published in eConsultancy on 7/12/11]

AppNexus · Data Management Platform · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · DMP · Real Time Bidding (RTB) · Remnant Monetization · TRAFFIQ · Uncategorized

Fish Don’t Know He’s Wet

If Your Company Depends on RTB, Put Your Helmet On.

The 5 Reasons RTB is less important than you think

All the hype in the display advertising industry has been around real time bidding for the last several years, and rightly so. Finding audiences with precision (cheaply) is marketing nirvana and, with all of the startup companies willing to work their tails off to make their “platforms” work for advertisers, the promise of media, layered with great technology, and tons of free service was hard to resist. Conference after conference, our industry leadership (well, actually I think it’s just the 30-odd people that speak at every conference) prognosticates on the latest data-driven success story, and ponders the meaning of the famed Kawaja logo vomit map, hoping that their flavor of audience technology gets acquired. But, like the old George Clinton lyric goes, the fish don’t know they are wet. After drinking the RTB Kool-Aid for so long, the real time practitioners may not realize that this fundamental driver of the display advertising ecosystem may not be as important as we all think. Here are five reasons to hedge your bets with RTB:

Quality Matters: Sorry, exchanges, but inventory quality still matters—a lot. The notion that you can splash a little bit of data on top of $0.25 CPM banner inventory and turn it into $5.00 gold was never really real in the first place. The great thing about RTB isn’t the enormous amounts of data you can apply to a media buy—it’s the enormous scale and price advantage that exchange buying brings. In a CPA-driven world, the most important metric is the cost of media. Today’s bidders give advertisers the ability to scour 800+ exchange inventory sources and buy cheaply and deeply into remnant inventory like never before. But, when you look at the reporting coming back, the clicks and conversions tend to happen where quality content appears. I’ve seen it time and time again: An RTB advertiser lucks into a bit of Tier I or Tier II inventory and finds performance. Unless publishers start changing their habits and stop putting banner code on every single web page they publish, there will continue to be a dearth of quality placements available in real time, and average real-time CTRs will not eclipse their .03% average.

Cookies Don’t Scale: This is the dirty little secret of the display media industry, and something that Datran’s Aperture team is out actively pushing. Anyone who has used a DSP can tell you that even a little bit of segmentation data applied to a media buy drops impression availability by a large factor. Cookie-based targeting is enormously complicated, and getting all the gears to turn in the same direction is not easy. How many people are in the market for a BMW are there in any given 30 day period, anyway? Well, according to AppNexus, I can find about 81,689 unique users that fit that description, and access up to 1.3M impressions if I win every single bid I place. Let’s go crazy and say that I am prepared to pay $30 CPM for every single one of them (I can probably win them at $8, though). That means, this month there is the potential of $40,000 of inventory to be sold for “BMW intenders.” Add in “Connecticut” and “Men” as additional segments, and you might as well call each potential buyer on the phone, or rent a plane and drop pamphlets on their house. But wait—you could probably mail them something really nice and reach them that way. Now that sounds like a business!

Legislative Tsunami: Many fish don’t understand what “Do Not Track” and other legislation is going to do to real-time bidding. Even if you take the most conservative reckoning, you would have to admit that some sort of consumer protections need to be built into our industry. I can’t tell you how many people are fascinated—and sort of bummed out—when I introduce them to www.bluekai.com/registry Personally, I have no problem being targeted (except for the relentless onslaught of industry-specific ads I seem to be targeted with). No matter how our industry tries to spin it, the fact that I just looked at flights for North Carolina, and am being targeted by travel ads two seconds later as an “in market travel intender” makes almost everyone uncomfortable, and it’s not a winning long term strategy. We need to turn over choice to consumers, rather than convince them that we are “protecting” their data. Watch out for companies that don’t run without the fuel of 3rd party data. Conversely, bet big on companies that collect tons of 1st party (volunteered) data like Facebook…at least until the government has a problem with that too.

Premium on the Rise: Call me a Project Devil fan. With people visiting an average of 3 sites a day (one of them being Facebook), it’s kind of hard to argue with the

It's Time to Break out of Pure RTB Business Models

fact that advertising needs to be engaging on the page. Whether it’s video, over-sized RM banners, in-app ads, or sponsored apps, advertisers are looking to engage users directly, rather than drive them to a site. These opportunities are the opposite of commodity-based exchange buying. You can’t standardize them…and you can’t buy these engaging units cheaply. Advertisers are starting to rebel against the low quality of exchange-based media, and publishers are really starting to rebel against the returns they are seeing on exchanges. They want technology that helps them understand and sell their own audiences, rather than technology that disintermediates them and sells their valuable audiences for them. Maybe we finally jumped the shark with the Admeld acquisition. Wouldn’t it be nice if technology helped advertisers find the right audiences where they wanted to be found, and publishers sell their audiences for more than $0.50? Was there ever an industry that sustained itself by crushing their main suppliers down on price?

Big Guys Have More Data than You: I don’t care how many cookies you have out there on the Web. Is it 150 million? 200 million? It doesn’t really matter. How many Facebook subscribers are there? How many Google Gmail users? We have given the biggest publishers absolutely every single piece of information about ourselves (including, for some Congressmen, too much information), and shared it with our friends, and shared our friends’ data with everyone too. Where cookie-based targeting doesn’t scale, first party data targeting on sites like Facebook scales plenty. You would think the ability to reach users with such specificity would be expensive, but no. Facebook ads are the best deal in town. I have never paid more than $0.50 CPM for my audience, no matter how many “segments” I want to apply. I can’t remember winning many display media bids in for that price. If you consider that Google is just starting to get into display—and Facebook is just starting to look at display, doesn’t that make you want to change your data strategy a little bit? If your business depends on the sheer amount of your data, you may need to get a longer ruler and think about just how much scale you really have.

There are a lot of ad technology fish swimming in the RTB sea right now, and every single one of them is wet. My advice to them is to break the surface of the water for a second, and see what else is around. RTB will be a part of advertising for a long time, but it will not displace premium, guaranteed advertising. It will also look nothing like today’s RTB in a few years. The advent of private marketplaces, higher value audiences exposed in real time environments, and the emergence of smarter branding metrics (via Vizu and others) is going to turn the conversation back to premium quickly. Jump in…the water is going to be fine.

[This post appeared on 6/23/11 in AdMonsters]

Advertising Agencies · AppNexus · Data Management Platform · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · DMP · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

There’s No App for That

Building the Technology Stack for Next Generation Digital Media Buying and Selling

Last week’s IAB Network and Exchanges conference was full of the usual self-congratulatory “use cases” of byzantine, data-based strategies for squeezing conversions from web-based display banners for direct response campaigns—or, alternatively, helping to drive “branded performance,” based on the listener’s preference. I was sitting next to an attorney from a large media company, tasked with making sense of the ad technology business. “I have to be honest,” she said, “I have been looking at this business for 18 months, and I still don’t understand what you people are talking about half the time…and I’m a smart person.”*

Unfortunately, that is the exact sentiment of many media planners, account managers, and marketing managers confronting the vast array of choices in display advertising. Once they figure out the alphabet soup of DSPs, RTB, and (now) DMPs, they start to wonder if they actually want—or need—the technology in question. Agencies are trying to figure out how to be the gatekeepers, and advise their clients on the best technologies and practices to drive branding and performance, but the work required to string together all of the various options makes earning money difficult. Digital media margins are in the toilet right now, and will remain there until agencies can manage all of these disparate systems with efficiency.

In the ad technology business, there’s an “app” for almost any way one wants to find and buy an audience—and many more applications for getting and understanding performance. Unfortunately, there is no operating system that can host all of these and make them work together seamlessly. The ideal scenario would be a world in which marketers could bring the different media applications they want to use into a single, unified system. Call it a “media dashboard” that would enable an agency to create a campaign, plug in their 3rd party research data, ad server of record, segmentation data licenses, audience measurement/verification providers, and billing system and enjoy access and control from a single interface. Down the road, as more mature APIs become available, the OS would enable marketers to “plug in” their mobile ad providers, video DSPs, and bid management tools for search marketing.

Almost everyone agrees that this is the future of the business. A famous media investment banker recently remarked that “there are some very smart companies out there

Are you developing your ad technology for the wrong system?

building a technology stack” to address these very issues, but wondered whether SAP or Oracle will be first to the party. My opinion is that the IBMs and SAPs of the world will let a smaller company fight through the growing pains, and let the preferred standardization technology come to light, before swooping in. The big boys can afford to be patient—and nobody wants to be the guy who backed Betamax. The question now isn’t Betamax or VHS—or even PC vs. Mac. The question is, what will be the operating system of next generation digital media, who will support it, and can an active “ecosystem” be maintained that enables technology companies to develop smart applications for it?

I think the answer is yes—and that the next 12 months will be critical in determining what companies will fit into the increasingly complex landscape and those that fail to meet the task. Not long ago, it was extremely difficult to buy from a variety of networks and exchanges efficiently. In comes AppNexus, and suddenly every Tom, Dick, and Harry has access to over 800 inventory sources, and a great bid management tools to boot. Their OS for real time bidding creates real efficiency for marketers—especially when they go through the pain of integration on your behalf. I know quite a few AppNexus users—but very few who will work with data segments that are not natively available in the platform.  The next great media technologies are going to be built for integration into specific systems, offer APIs that enable “easy” data export and ingestion, and flexible so that others can customize them for specific needs.

Evolution is natural to the technology business. Networks become “platforms”…data providers become “DMPs.” Technology companies will forever try and stick their hand in the middle of the transaction between the demand and the supply side, and shave off a sliver of the pie. But, eventually, evolution becomes “revolution” and the game changes for everyone. We are about to find out who has the capital, talent, and vision to devise the next generation operating system for digital media. That system is going to be the one that every company has to develop an “app” for and support, and that system is going to shape the way digital media is bought and sold for a very long time.

As an ad technology company, it’s time to start figuring out how your technology will fit into the larger puzzle if such an OS becomes standard. Is your technology built for an open system, or does your technology (and, more importantly, business model) only thrive in a closed environment? There are a lot of “platforms” out there, but eventually there will only be one operating system. I think there are a lot of really awesome “apps” out there waiting to be plugged into this new operating system, which would benefit from standardization and an installed base of users.

There’s definitely an “app for that.” We are just waiting for the OS.

*That sentiment was also expressed wonderfully in Doug Weaver’s amazing keynote presentation which he was kind enough to make available this morning on iMedia.

[This post appearred on 5/23/11 in Business Insider]


Advertising Agencies · AppNexus · B2B Media · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Publishing · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

Rise of the Machines

Where do People Fit into a World that Promises Endless Media Automation?

Ever since man tied a rope to an ox, there has been a relentless drive to automate work processes. Like primitive farming, digital media buying is a thankless, low-value task where results (and profits) do not often match the effort involved. Many companies are seeking to alleviate much of the process-heavy, detail-oriented tasks involved in finding, placing, serving, optimizing, tracking, and (most importantly) billing digital media campaigns with various degrees of success.

Let’s take the bleeding edge world of real-time audience buying. Trading desk managers are often working in multiple environments, on multiple screens. On a typical day, he may be logging into his AppNexus account, bidding on AdBrite for inventory, bidding for BlueKai stamps in that UI, looking for segmentation data in AdAdvisor, buying guaranteed audience on Legolas, trafficking ads in Atlas, and probably looking at some deep analytics data as well. If he is smart, he is probably managing that through a master platform, where he can look at performance of guaranteed display and even other media types. How efficient does that sound?

To me, it sounds like six logins too many. Putting aside the obvious fact that an abundance of technology doesn’t lead to efficiency (how’s “multitasking” working out for your 12 year old, by the way?), I wonder we aren’t asking too much of digital as a whole. How many ads have you clicked on lately? If the answer is zero, then you are in a large club. Broken down to its most basic level, we are working in a business that believes a 0.1% “success” rate is reason to celebrate. But the “click is a dead metric” some say. Really? Isn’t the whole point of a banner ad to drive someone to your website? When did that change?

All of this is simply to illustrate the larger point that the display advertising industry, for all of its supposed efficiencies, is really still in its very nascent stages. Navigating the commoditized world of banner advertising is still very much a human task, and the many machines we have created to wrestle the immense Internet into delivering an advertiser the perfect user are still primitive. For a short while longer, digital media is still the game of the agency media buyer…but not for long.

Let’s look at the areas in which smart media people add value to digital campaigns: site discovery, pricing, analytics and optimization, and billing.

Site Discovery

In the past, half the battle was knowing where to go. Which travel sites sold the most airline tickets? Which sites indexed most highly against men of a certain age, looking for their next automobile? What publisher did you call to get to IT professionals who made purchasing decisions on corporate laptops? Agencies had (and still have) plenty of institutional knowledge to help their clients partner with the right media to reach audiences efficiently and—even with the abundance of measurement tools out there—a lot of human guidance was needed. Now, given the ability to purchase that audience exactly using widely available data segments, the trick is simply knowing where to log in. I just found the latter IT professional segment in Bizo in less than 2 minutes. So the question becomes: how are you leveraging data and placement to achieve the desired result, and how efficiently are you doing it?

Pricing

It used to be that the big agencies could gain a huge pricing advantage through buying media in bulk. Holding company shops leveraged their power and muscled down publisher rate card by (sometimes) 80% or more with promised volume commitments, leaving smaller media agencies behind. Then, a funny thing happened: ad exchanges. All of the sudden, nearly all of the inventory in the world was available, and ready to be had in a second-price auction environment. Now, any Tom , Dick, and Harry with a network relationship could access relatively high quality impressions at prices that were guaranteed never to be too high (in a second-price auction, the winning bid is placed at the second highest price, meaning runaway “ceiling” bids are collapsed). Whoops. With their pricing advantage eliminated, large agencies did the next best thing: eliminated the middleman by building their own exchanges, which we have been calling “DSPs.” So, you don’t need human intervention to ensure pricing advantages.

Analytics and Optimization

What about figuring out what all the data means? After all, spreadsheets don’t optimize media campaigns. Don’t you need really smart, analytical media people to draw down click- and view-based data, sift through conversion metrics, and build attribution models? Maybe not. Not only are incredible algorithms taking that data and using machine learning to automatically optimize against clicks or conversions—but programmatic buying is slowly coming to all digital media as well.  In the future, smart technology will enable planners to create dynamic media mixes that span guaranteed and real-time, and apply pricing across multiple methodologies (CPM, CPC, CPA). Much of that work is being done manually right now, but not for long.

Billing

Sadly, much of the digital media business comes down to billing at the end of the day. Media companies struggle tremendously with reconciling numbers across multiple systems, and agency ad servers don’t seem to speak the same language as publisher ones. The bulk of a media company’s time seems to be spend just trying to get paid, and an incredible amount of good salary gets burnt in the details of reconciliation and reporting. This is slowly changing, but the advent of good API development is starting to make the machines talk to each other more clearly. The platforms that can “plug in” ad serving and data APIs most easily have a lot to gain, and the industry as a whole will benefit from interoperability.

So, are people doomed in digital media? Not at all. There are going to be a lot less digital media buyers and planners needed—but what agencies are really going to need are smart media people. Right now, you need 4 people to manage 10 machines. In the near future, you will need 1 smart person to manage 1 platform—and the other three people can focus on something else. Maybe like talking to their clients.

[This article originally appeared in ClickZ on 4/14/11]

Advertising Agencies · Big Media · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · Remnant Monetization · Sales Management · Sales Rants · Sales Tactics · TRAFFIQ · Uncategorized

Notes from DPS 2011

Going Beyond Content and Delivering Value in a Multi-Platform World

Deer Valley, UT – If there is one thing I learned after spending several days at Digital Publishing Summit 2011, is that the people in this industry really love what they do. It’s not easy walking past world class spring skiing in what is arguably the United States’ best ski area, and enter a dim conference room to listen to a speech on “Auto-nomous Data Management,” but every session played to an SRO crowd of media and technology executives. The crowd was a veritable who’s-who of the “Digital Display Advertising Landscape” (LUMA) map, so I suppose you could argue that these guys got where they are today by skipping lots of fun, and building advertising and media technology instead.

Among the highly informative (albeit sometimes sales-y) content at the conference, there were some gems to be had. So, here is DPS 2011, organized by quote:

“Value is shifting from those that produce the content, to those that deliver the experience of consuming it.” – Saul Berman, IBM

Saul Berman’s keynote address touched upon the disruption happening in our space, but even the overhyped keyword “disruption” doesn’t touch upon the true chaos happening as publishers learn how to navigate the through all the new social media, exchange-based sales, and various technology partnering opportunities out there. Do you make Facebook Connect your friend (as Kristine Shine from PopSugar Media does), to drive new unique visits, and build your audience? According to Shine, for her organization, the call was to “go all in” with Facebook. For others, like Todd Sawicki, CRO of Cheezburger, Facebook can kill publications by migrating all of their native traffic (like message board comments) to their environment, without returning the favor.

So, for publishers, the challenge is not just continuing to produce quality content, but to make it for a multi platform world, where consumers are just as likely to value the way they are consuming it. That means having a multi-platform approach—and a multi-revenue approach as well. Why does a full song from iTunes cost $0.99, but a 10-second sliver of that song, sold as a ringtone, cost $3.00? In that case, it is the application of content in a clever way that adds value, a nice use case for anyone monetizing content in an experiential way.

“Media will be sold like pork bellies” – Frank Addante, Rubicon Project

There was quite a bit of discussion around pricing at the conference, and the founder and CEO of the Rubicon Project was not wrong in insisting that, without significant changes, media would indeed be as commoditized as the humble pork belly. Unfortunately, this trend has already happened. Addante was right to highlight the unfortunate fact that the same article in the NY Times commands a $20CPM in print as opposed to $2CPM online. That value gap, Addante argues, can be closed by “realizing the true value of digital experiences.” Rubicon would like to see one big gigantic “open market” that enables the industry to expand the digital advertising pie from $40b to $400b with full participation, but the details were cloudy. If that market concept involves having publishers suddenly not to sell their entire remnant inventory into an exchange, then maybe we can avoid the pork bellies fate.  Addante may be on to something, however. What the industry needs is one trusted third party aggregate high quality inventory, and create value around it, but that battle is in its very nascent stages.

That being said, a good bit of the conversation was around pricing. Both Saul Berman and Tim Cadogan of OpenX deployed the airline pricing scenario, to argue for dynamic pricing models. For Cadogan, three levels of inventory equate to three levels of seating: Exclusive (first class), Premium Guaranteed (business class), and Non-Guaranteed (coach). Just as airlines frequently change the configuration of their seating to account for their routes, seasonality, and passenger mix, so must the industry dynamically price inventory, based on its placement and value. The OpenX Enterprise server hopes to achieve that by putting guaranteed and real time exchange inventory into the same platform, and use smart decisioning  technology to maximize yields. A very smart idea.

For Berman, it was not only about “having 5 different passengers, paying five different prices,” but also about exploring entirely new revenue models, like Apple did in “switching the razor blade model” with the iPhone (expensive “razor,” cheap “blades”). Publishers must go beyond monetizing their content through advertising, and start looking at generating revenue from the larger  “marketing” bucket. Right now, that is called “selling apps.”

“Premium brands need to be associated with premium content” — Eric Klotz, Pubmatic

Truer words have never been spoken. Klotz explored some recent survey data which asked publishers and advertisers how the way they are buying media is shifting. The results were fairly predictable: more and more budget is finding it’s way into real-time bidding environments, as brand and direct marketers seek new ways to target their desired audiences. That’s nothing new. What is changing rapidly, however, is that all marketers are demanding more placement control, increased transparency, and brand safety. Brands want the same direct connections with publishers they have enjoyed with guaranteed buying, with the ease and cost efficiency of exchange-based buying. The takeaway? If you are a publisher, and not looking at building private exchange connections with your demand side partners, you are in trouble.

That sentiment was hinted at in a panel called “Selling in a Cluttered Market.” For Jonas Abney of Hachette Filipacchi, “general content gets beaten by specific content every time.” Marketers are looking for laser-focused, topical content that captures user intent, rather than more generalized content. Moreoever, today’s advertising sale is more educational than ever. For panelists like AdMeld CEO Michael Barrett and PubMatic’s Andrew Rutledge, a sales force cannot simply have media experience–they have to know the ecosystem, and be prepared to add value by educating clients. For Whitepages VP of Sales Craig Paris, it is simple math: Agencies get 100+ unique sales calls a month, from an increasing amount of new technology and media companies. Unless you differentiate yourself, you are not going to win business. “Thirty percent of your day should be spent reading the industry trades so you can have credibility, and provide insights to your customers.”

“Nielsen says people visit 2.9 sites a day, and one of them is Facebook” — Greg Rogers, Pictela

Last minute speaker Greg Rogers of Pictela provided some insights on how premium advertising units (specifically the new IAB 300×1050 “Project Devil” unit from AOL) can drive user engagement. If the above quote is true, it means that brands have to find a way to engage the user more deeply on the the sites they visit every day, and that way is through interactive units. Rogers has data that points to “dramatic” CPM increases from premium RM units, and makes a case for replacing three 300×250 units with the single 300×1050 “devil” slot. Patch and Huffpo have seen great results, and advertisers are getting good engagement, and plenty of reporting. Highly premium, brand-safe, engaging advertising…sounds like something from the past called “premium guaranteed.” I bet PopSugar’s Shine would agree. She has built a virtual in-house agency to build premium campaigns for her customers, and demands “150% control over every ad unit on the page.”

“Cookie Targeting Doesn’t Scale” — Michael Hannon, Aperture

Sort of a dark horse moment for me was Michael Hannon’s first slide, which threw down the gauntlet on cookie targeting. All the energy in the space for the last several years has been about  targeting using 3rd party data . But what if it doesn’t work? This is the 900 lb. elephant in the Ecosystem. Not only have many marketers had difficulties achieving significant scale when overlaying data on top of exchange buys, but the legislative tsunami of “Do Not Track” threatens to reduce that scale even further. Hannon makes an elegant argument for real audience measurement, and doing so in a cookie-less way.

That leads me to a great conversation led by Alan Chapell, a lawyer specializing in just these types of issues. In a room full of ad publishing and ad technology executives that depend on using data to identify target audiences, there was a great deal of confusion regarding how our industry is getting on top of what may be a very severe problem. More direction from the IAB in the form of specific self-regulatory principles and mandates is needed, and needed fast. For Chapell, inaction may cause the “privacy disaster, which enables Google, AT&T, and Facebook to own all the data,”  leaving the rest of the industry on the side.

[This article originally appeared in Adotas on 4/4/11]

Advertising Agencies · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Media Buying · Media Planning · Online Media · Publishing · Real Time Bidding (RTB) · Uncategorized

The Agency of Procrustes

Is Your Media Shop the Right Fit for the Digital Age?

Nassim Taleb’s marvelous book of aphorisms is called The Bed of Procrustes, named after the myth of Procrustes, a cruel owner of a roadside estate between Athens and Eleusis in ancient Greece. According to Taleb,

He abducted travelers, provided them with a generous dinner, then invited them to spend the night in a rather special bed. He wanted the bed to fit the traveler to perfection. Those who were too tall had their legs chopped off with a sharp hatchet; those who were too short were stretched.

Taleb’s point is that we humans tend to “squeeze the world into crisp, commoditized ideas.” In short, we try and fit things we don’t understand into our particular worldview. But, what if the new things don’t fit?

As a digital media agency owner faced with keeping up with the times and (more importantly) earning margins from notoriously labor intensive digital campaigns, it is tempting to fall back on time-worn models. If you think about the tried and true “agency” model, it is exactly what the dictionary says it is: “a consensual fiduciary relationship in which one party acts on behalf of and under the control of another in dealing with third parties.” In other words, the client can do the work himself, but would rather stick to making widgets or selling plane tickets than have 300 different media and technology relationships to contend with.

The problem? That’s not enough anymore. What clients want—and an increasing number of them expect, is a different definition of “agency.” Maybe even a legal understanding of the term: the person or thing through which power is exerted or an end is achieved. Is your digital agency exerting true power on behalf of your clients, or are you just buying media? I believe that, in a world where technology enables most agencies to have ubiquitous access to media and software tools, the modern digital agency needs to go beyond traditional notions of “agency” and provide their clients with unique expertise.

The traditional agency “bed” is still rather misshapen for the world of emerging technology. Most shops still don’t have a cohesive social strategy (beyond Facebook); the technology to properly target audiences through exchanges; or the ability to leverage technology to wring performance from digital creative. Some do, and are leveraging relationships with social technology providers, DSPs, and creative optimization companies. The problem here is that many of those technology providers are going directly to your clients as well.  So, how do you defend against disintermediation and start building proprietary expertise to enable you to win and retain digital business in the future?

  • Data: Create it, analyze it, tie into your clients’ data, and make it actionable. I know an agency in upstate New York that only gets paid every time its client performs an oil change. The agency is tied into their client’s POS system, and gets a true end-to-end view of attribution. They know how they are getting people to the business, when, and how they are getting them to return. I know other agencies that, through tools like Datran’s Aperture, are getting a household-level view of who is converting on their online campaigns, and using online data to go offline to seek new customers and reengage them. If you are not leveraging the data you currently have—and seeking to partner with your client to create or get access to new streams of data, then you are not being an extension of power to your client.
  • Technology: How is your shop leveraging available technology to gain efficiency? Media platforms like Transis, Facilitate, and TRAFFIQ (disclosure: I work for TRAFFIQ) offer agencies the ability to let workflow technology handle the blocking and tackling of digital media (RFPs, AdOps, billing, etc) so agencies can work on things that have value (strategy, creative execution, data analysis).  What about real time bidding technology that uses machine learning to auto-optimize campaigns based on performance data? If you are not leveraging technologies like these, then you are already in danger of becoming extinct.
  • People: If you are in fact going to leverage data and technology to transform your agency business, then you are going to necessarily need different people. In the good old days, you could hire a 22-year old for $25,000 and bill them out at $40,000. Unfortunately, the 22 year old wants $35,000 these days, and by the time you train them to be a “digital media expert,” a larger shop will pay them $50,000 to take advantage of the free training you gave them, and start billing them out at $75,000. Also, that 22 year old media person who used to good at collating spreadsheets and ignoring publisher e-mails is not the person who is going to transform your business. Someone who can dive into data to determine media placements—or someone who is passionate about the social space and understands the new social technology ecosystem are the folks that are going to make a difference (and profit) for your agency now.

In the end, Procrustes faced poetic justice. One of his guests was the mighty Theseus, of Minotaur-slaying fame. Theseus invited Procrustes to lie in his own bed and, seeing it slightly too small for his frame, decapitated him to create the perfect fit. Your agency may not currently be the right fit for clients that need advanced digital agency help. The answer, however, is to make your bed fit your clients better, rather than shrink them down so they fit into your legacy paradigm.

[This article originally appeared in Adotas 3/16/11]

Advertising Agencies · Media Buying · Media Planning · Online Media · TRAFFIQ · Uncategorized

Agencies: Working Hard or Hardly Working?

A recent meeting with a large agency’s digital planning team left me wondering who is doing the real work these days: agencies or ad networks? I was there to talk about our solution for making sense of an increasingly crowded and complicated digital space. Today’s media planners and buyers have to be able to navigate through a 300,000 channel world for their clients — and be able to take advantage of dozens of new creative executions, placements, and targeting capabilities. Their clients trust them to find a receptive audience wherever they are on the web — and deliver enough scale and performance to make it effective and affordable.

One of the planners in the room was responsible for a seven-figure pharmaceutical budget. When I asked him how he was evaluating new traffic sources, he said, “I buy on two networks. They find me headache suffers and my client is satisfied, why would I want to risk it by moving money around?”

“I buy on two networks.” Surely he couldn’t be serious.

After I left the meeting, I continued to be astonished by the reply. Sure, buying on those networks was easy (and probably pretty effective) but what was the agency bringing to the table? Why wouldn’t the client simply place those two network buys themselves, and gain an extra 10% in performance by eliminating the agency’s fee?

Furthermore, what if the client’s CMO asked that planner where his ads were running? He couldn’t tell him with any certitude. It seemed to me like a pretty expensive and risky marketing strategy.

The agency is passing along their job along to a network, who is keeping all the data from the campaign. Even if the company sold a ton of migraine pill prescriptions, they still don’t know how they were successful—and who responded to their ads. Even worse, that network can now go and pitch all of the client’s competitors, who now stand to gain for the investment they made building an audience.

If I were the client, I would be justified in firing this agency.

The successful agency not only continually works to discover new pockets of high-performing traffic for their clients but they actively manage the campaign, and share performance results with them. If I want to reach migraine sufferers, the easiest thing in the world is to call WebMD and sponsor their migraine section; I am guaranteed a contextually-relevant placement in a high quality setting. Easy.

Same thing as buying a car. If I want a really reliable German automobile that seats 5 adults, with leather seats, all-wheel drive, and impeccable handling, I just go the Mercedes dealer and pick up a new S-Class.

The problem starts to arise when I get my monthly bill. Is $1,200 a month too much to pay when I can get to work in the same relative comfort in a $600 a month Audi, or a $350 a month Volkswagen?

Maybe, as a media planner, I can find five health sites that target migraine sufferers and string together the same audience for a lot less money. In addition, maybe there are premium opportunities I can get on smaller, more vertically focused sites that the leading site cannot or will not offer me?

Don’t get me wrong, WebMD is a great place to advertise. But that’s something even my mother knows. Do you really need to pay 15% to an agency for them to recommend that strategy?

So, how hard is your agency working for you, anyway? Every advertiser who uses the services of a media agency for their media planning and buying should ask themselves and their agency this question every single day. If they did, I think they would unfortunately find in many cases, the answer to be: not very hard.

How can an agency then justify the fees that they are collecting? They can do it by continually looking for better performing traffic. The only way to do that is to spread dollars around, find pockets of traffic either through other networks, or direct-to-publisher sites. They can do it by deploying smaller per-publisher budgets, while benefiting from smaller incremental risk.

Sure, it will take more work, but that’s what the client is paying for.

[This originally appeared in Adotas on 3/9/2010]