I was recently at a Digital Marketing Association awards dinner where data legend Charles Stryker was being honored. After accepting his award, he told a famous story about data that every digital marketer should know.
A long time ago, the US Postal Service discovered they were paying a ton of money to deliver mail to deceased people. Charles was hired to help them get a handle on their records and create a sort of “Do Not Mail” list. Part of doing the work involved considerable A/B testing to ensure he was making the correct assumptions about the data. Direct response mailers were being sent to groups of dead people and similar groups of folks who were still alive. Something astonishing happened when the results came in.
The dead people responded at nearly twice the rate of the living.
Of course everyone at the dinner (about a hundred senior direct marketing executives) laughed uproariously. They have seen all kinds of unpredictable results with direct marketing. In today’s digital age, marketing is moving faster than ever. The velocity of data is increasing in orders of magnitude, and attribution is going to get even trickier.
What happened with the “dead” people was pretty interesting. It turns out that the successful mailers went to households where the husband of the family died, and the elderly spouses were taking great care to go through and read the mail of their deceased partners. The wives wanted to make sure there was nothing important in those letters—and probably were connecting with their husbands through that simple, daily task. Those widows made a great mailing list “select” since they actually opened and read the mail!
In today’s digital marketing, where we seem increasingly dependent on algorithms and attribution models for targeting and measurement, I wonder if we are too deep in the weeds. Are we forgetting the real, human element of marketing? Do we really understand how success and failure happen with our campaigns? At a recent iMedia agency conference, a lot of the talk was about trying not to forget that advertising is first and foremost about storytelling. Leading with emotion is so important. The marketer has to make an emotional connection with his audience and get them to care.
That struck me when watching a joint town hall workshop with Google and Kellogg’s about dynamic creative. Yes, changing the background color or “call to action” on a 300×250 ad in real time can bump the lift of a campaign incrementally—but are we tweaking a broken process?
Can we really tell great stories on standardized banner ads?
With the rapid rise of programmatic, a lot of platforms and data companies are fully committed to a standardized industry where scale is king. Display, video, and mobile—biddable and accessible at full scale—is the mandate. Kellogg’s wants inexpensive access to a large electronic palette where Frosted Flakes ads can be constantly tweaked to get optimal performance. Nothing wrong with that. American Express recently announced an “100%“programmatic” initiative for digital marketing. Why not? Both companies spend tons of money on TV, and optimizing the bottom of the funnel makes complete and utter sense.
But that’s all we are talking about: Optimizing the bottom of the funnel with standardized ads. Sorry, but we are not creating new customers with dynamic 300×250 ads that get a .05% click-through rate. If you are in this business, working for a venture backed startup or newly public adtech company whose value proposition is around driving audience targeting at scale, then you are not “creating stories” online.
As an industry, we need to create digital campaigns that get people to “open the mail.” This is incredibly hard to do with standard display banners, today’s woeful “native” executions, and interruptive social ads. Video has promise, but scale still eludes marketers, and low video completion rates erode available reach considerably.
So, how do you leverage programmatic technology to get great creative out at scale? The only real answer is to automate the workflow behind securing premium inventory and custom programs. That’s where the promise of programmatic direct comes in. Marketers want great ideas from publishers, access to the best inventory they have, and non-standardized units. They just don’t want to pay 10% of their media budgets for planners to cut and paste data into spreadsheets.
Innovation in the space is not just limited to programmatic direct companies with API connections into the publisher side (iSocket, ShinyAds, AdSlot) and workflow automation players (Centro, MediaOcean, and Bionic Advertising)—but also includes RTB players like Rubicon and MediaMath who are building new automation capabilities to augment their RTB stacks. In other words, it’s all about automating the deal right now.
Do they want access to evergreen programmatic campaigns that drive their most likely customers through the bottom of the sales funnel? Of course, and that’s a great job for programmatic RTB. But it does not, cannot, and will never replace the kind of media you can secure through a guaranteed transaction. Also, speaking of dead people responding better—that kind of sounds familiar. In programmatic RTB, some of the best click-through rates come from the dead—fake visitors created by robots.
That said, I think more and more digital advertising will go programmatic, and that programmatic RTB will command the lion’s share of performance budgets. But, when it comes to building brands, bringing automation to the process of securing quality inventory will win.
[This post originally appeared in AdExchanger on 5.13.14]
Currently, Donovan Data Systems and MediaBank own the advertising platform space, with more than 80% market share among agencies, which use the platforms extensively for buying offline media, and use their systems to bill digital media campaigns. Neither have a very sophisticated digital offering, which may be why the two companies teamed up to create MediaOcean (a merger currently pending approval from the government). They will have the best shot at aggregating all the workflow for media planning, buying, and billing—across all media types. Ultimately, their ability to succeed will depend upon their willingness to build the type of “ecosystem-like” platform described below—and the appetite of ad agencies to work with one, dominant provider. Many agencies continue to leverage their legacy platform for offline media, and are looking at new solutions for managing digital media.
Quite a few start-ups have arisen to try and answer the digital media gap left by MediaOcean. Advertisers and agencies are currently using a mix of various resources to meet campaign needs. They can be broken down into the following categories:
— Workflow Platforms: Workflow platforms aim to consolidate the process of discovering, buying, serving, and reporting on digital display campaigns in one interface. By leveraging this technology, agencies can eliminate some of the rote planning processes (collating Excel spreadsheets, faxing insertion orders, and compiling ad serving reports) and take action against data they see in the dashboard, enabling faster optimization. Platforms like TRAFFIQ also include robust planning data, appended by third party demographic data from Nielsen, as well as the ability to access audience measurement data (from PulsePoint’s Aperture tool). Centro’s Transis offering is more of a lightweight management tool, while Facilitate Digital provides a big agency approach that marries ad serving with global currency and language support, and sophisticated tools for generating insertion orders and bills. As mentioned previously, MediaOcean will try and build a next generation digital platform that enables all of that functionality—and tie it to their widely adopted offline media management tools. This is really the future of digital media planning. You should be testing multiple workflow platforms and making sure that you are letting systems perform the menial tasks in digital media management, rather than expensive account and media personnel.
— Trading Desks: Large holding companies have all universally created teams that handle real time audience buying. In an effort to distintermediate ad networks, and thus recapture lost media margins, agency “trading desks” have popped up to handle reach and performance campaigns for their clients. Many leverage existing DSP technology, such as Turn or MediaMath (see below), and all of them are focused on leveraging their media buying volume to capture audience data at scale. WPP’s Xaxis, launched in June 2011, is an example of how holding companies are aggregating their technology assets to do this:
In forming Xaxis, WPP brings together a broad portfolio of audience buying capabilities that have been independently developed and optimized in various parts of GroupM and WPP Digital over the past three years in businesses including B3, targ.ad, GoldNetwork, GroupM DSP and the GroupM Marketplace. In 2010 alone, the businesses that have combined to form Xaxis executed approximately 4,000 campaigns for more than 400 GroupM clients. Xaxis will be led by CEO Brian Lesser, who previously served as global general manager of the Media Innovation Group (MIG), WPP’s digital marketing technology company.
Undoubtedly, they will seek to leverage other data insights from Kantar and SEM technologies to deliver performance marketing across multiple digital channels at scale. Other holding company Trading desks include Accuen (Omnicom), VivaKi (Publicis), and Cadreon (IPG). Smaller media groups also have their own desks, including Adnetik (Grupo ISP) and Varick Media Management (MDC Partners).
Obviously, if you are part of an agency holding company with access to the technology tools and services offered by a trading desk, you have the potential to leverage these assets, but must weight them against the (often high) costs. All of the trading desks execute buys on a managed service basis, rather than exposing a user interface, which does not enable individual agency planners/buyers to get real-time buying expertise. Additionally, many of the services the holding company trading desk offers are available directly through DSPs and their managed service teams.
The inherent conflict of interest in agency trading desks must also be taken into account when deciding the best approach to audience buying for your agency. As Mike Shields recently wrote in Digiday in his article entitled, “The Trouble with Trading Desks”:
According to multiple industry sources, some prominent brands are growing increasingly uncomfortable with their digital agencies funneling money to sister company trading desks (the holding company divisions that purchase ad inventory on exchanges). They are asking questions about how these trading desks earn revenue and whether clients are being charged more than once for executing the same media plan. The shift to programmatic audience-based ad buys through exchanges is undeniably an important advance to the online ad model, but agency holding companies have also taken it as an opportunity to update their own outdated business models in ways that are likely to leave some procurement chiefs scratching their heads.
The questions are murkier when it comes to the issue of “mandates.” There has long been talk that orders have come from the highest levels of agency holding companies for its agencies to redirect spot ad buys through the in-house trading desk rather than ad networks. Holding company and agency reps rebuff questions on this, but their words don’t always match up with reality. In some cases, holding companies are incentivizing their individual agencies’ media planning teams through revenue goals and even bonuses, according to several sources.
For example, Digiday was shown an email from a planner at a top Publicis agency stating that her team was not allowed to work with any networks and exchanges. “We are not authorized to buy networks and exchanges,” read the email from a buyer at a major media agency. “We are required to use [Publicis trading desk] Audience on Demand.” One prominent agency executive explained that over the past year her planning team was given quarterly goals to allocate more client budgets to exchanges, which she ignored. Other agencies compensate their teams for shifting more spending to trading desks; it’s actually in some planners’ contacts, she said. This is causing major friction in some cases between planning agencies and their trading desk partners, said a source.
— Demand Side Platforms: An increasingly common part of the modern digital marketer’s toolset is the DSP, or demand side platform. Obviously, if you are working within one of the holding companies, you would be encouraged to deploy your audience-targeted media through the preferred Trading Desk, all of which leverage one or more independent DSPs. The top DSPs in the space at this time are Invite Media (acquired by Google), Turn, MediaMath, DataXu, X+1, and Triggit. Invite recently raised their minimum pricing to reportedly $50,000 per brand, per month, putting their services out of reach for the typical mid-sized agency. Among the rest, MediaMath has a reputation for having the most proprietary trading strategy, and unique optimization algorithms, with Turn not far behind. Most DSPs provide a blended service approach to trading, offering a mix of self-service tools and managed service support. Almost all of them utilize similar algorithms—and all of them have access to a wide variety of data providers for audience targeting. In considering your business’ approach to leveraging currently available DSP technology, the best strategy is to test as many as possible alongside each other. Most offer trial periods with discounted monthly minimums.
Choosing the right DSP partner has a lot to do with the amount of display volume you anticipate running on an annual basis. Larger providers can charge anywhere between $2,500 and $10,000 per month in minimum fees. Triggit and XA.net offer more competitive pricing for small and mid-sized agencies. For those agencies and advertisers that plan on having trading expertise in-house, and just want to leverage DSP technology, AppNexus is a great choice. Appnexus has built a fully-featured self-service platform (called the “AppNexus” Console, formerly called “DisplayWords”) on top of a broad ecosystem of exchange inventory and data, to create a veritable Sam’s Club for real time buyers. With over 800+ inventory sources available (Google, MSN, OpenX, Admeld, PubMatic, Rubicon) and a good amount of embedded data providers (eXelate, TargusInfo, Datonics, Bizo, Proximic, Peer39, etc.), AppNexus aims to be a one-stop shop for demand side customers looking for their own DSP solution. In addition, they make APIs available to prospective partners interested in building their own media UI on top of their bidding and ad serving technologies. AppNexus has great product support, but is designed for the customer that wants to have total control. For those who want AppNexus capabilities with a managed service layer, Accordant Media would be a great place to start.
Many agencies and advertisers are still struggling with whether or not they should deploy DSP technology to drive display media buying—and with their choice of provider. I think that Nat Turner, Invite Media’s CEO probably summed it up best in his 2010 AdExchanger article, which offered a list of key characteristics that define a “true DSP:”
The DSP must provide a fully self-service interface. Clients should be able to have complete control via the interface and build an expertise around its use.
If the DSP provides managed services help to the agency, the DSP should be using the same interface that the agency would be using. The technology should not require any manual work behind the scenes to activate or “set live” a change or a campaign.
The DSP must remain neutral and have zero allegiances to any publishers, exchanges, data providers or other vendors. A true DSP should embody the word “platform” and not just be conduit or pretty interface to a pre-existing business.
The DSP must be fully transparent, starting with pricing and fees. All fees that the DSP earns should be exposed in the interface, and every penny that the DSP makes should be known and visible to the agency.
The DSP should not mark-up media cost without the agency knowing.
The DSP should not mark-up data cost without the agency knowing.
If the DSP works with a publisher directly, it should be in an effort to make that publisher’s inventory “biddable.” The DSP should not earn any additional margin from revenue sharing with the publisher or arbitraging the inventory.
The DSP must allow the agency to use its own exchange seats. This allows the agency to always have visibility into the exact cost of media to ensure the DSP is not taking any additional margin.
Just like media, the DSP must allow the agency to buy or negotiate data cost directly, but flow through a common integration. Data should be treated like media, it’s another part of the “supply side” that is purchased by the agency and thus should be transparent in cost.
The DSP should not, under any circumstances, own or operate an ad network. This is in direct conflict with the neutrality aspect.
The DSP’s goal should be to expose any feature or tool that a supply source provides (either ad exchange or data provider) and not to try and obfuscate/hide or re-brand certain components (ex. “DSP Auto Segment #1”, with no transparency into what that means). If a supply source provides it, the DSP should expose it for the agency self-service and let the agency decide whether to use it or not.
The DSP should not “bulk buy” media in order to re-sell to its clients. This could either be a function of another way to make margin, a lacking of technology, or a combination of the two.
Related to the above, the DSP should not take on media risk. Every impression should be purchased on behalf of a platform user at that time based on an active campaign that that platform user has created targeting that impression.
These DSP “principles” have not changed since 2010, and continue to be a great set of guidelines for choosing your real-time bidding technology provider. Ultimately, you want to be able to have total control over your bids, insights into the type of traffic available in the platform, and expect complete transparency with regard to your vendor’s pricing model. The right DSP relationship should reduce your dependence upon ad networks, lowering your overall media costs, and increasing campaign performance.
[This is an excerpt from the upcoming “Best Practices in Digital Display” whitepaper, available soon from eConsultancy]