-
Feeds
Feb
13
Ad Sales, Algorithms & Adoption
Filed Under Advertising, Digital Signage, metrics
There was a refreshing couple of posts that I ran into recently that help to paint a picture of the lack of adoption of certain mediums by Brands and agencies and what advertising “actually is” and what it’s for - specifically speaking to online and poking at the idea that advertising shouldn’t solely be a grind down function of the most “clicks” for the cheapest price.
Arora (Chairman of Glam Media) said that “in television, once the three networks were established, the market focused on premium inventory. On the Internet, there is a lack of leverage and reach, and the power of sales forces cannot be used in the way done originally by networks and magazines.” Ninety-five percent of Web display ads, he noted, are sub-prime with costs-per-thousand under $2.
Added to that is a color commentary from a few folks that is worth re-posting, and I have done some of that below.
I’ve written about the use of media and how scientific and hyper-targeted it’s become on the demand side of the business and that I feel folks are leaving money on the table and restricitng themselves and the potential success of their companies and campaigns because of it. See here.
Jack Myers wrote a piece on Mediapost wherein he referenced some comments made by the ex-President of MTV and Wenda Millard (ex-Yahoo and now President of Omnimedia):
Ad sales at Yahoo, Microsoft, Google and AOL are all now headed by executives with primarily search and systems infrastructure experience. At none of these leading operations are there senior executives with extensive experience in traditional brand advertising sales.
Millard pointed out the acquisition of aQuantive by Microsoft and DoubleClick by Google “continues to focus a business that is art and science unduly on science. It is as if the scientific community is taking over advertising, and advertising is not about science. Advertising is not all about algorithms.”
She goes on to continue to challenge the beliefs and directions of her alma matter, and I agree with her heartily:
Advertising, she believes, is about effective brand communications and “while the scale that advertising networks may offer is important for products that are not strong brands, trusted media brands will be stronger online than offline. Consumers need the filters that brands offer,” she argued. “Aggregation of inventory for scale may serve some direct marketers but this should be a piece of the business — not the business.” Millard is concerned that overemphasis on ad sales networks “may be doing damage to the industry before [advertising] value is set.” Trusted brands, she suggested, will be very powerful and valuable and should not be subjected to marketplace metrics and pricing dynamics defined in a “scientific commodity environment.”
FYI, Millard left Yahoo to move to a “traditional” media company and, based on the comments above, you can bet at least a part of the reason she left was because she felt advertising isn’t only about the % and she had more to offer.
Scale or aggregation is definitely important and can assist in dramatic targeting of messaging but if we (as Brands and Advertisers) are demanding aggregation purely on the assumption that it will ultimately lead to tactical success (e.g. 1 ad = 1 sale) then we are doomed to commoditize the advertising business because we’re leaving enormous influence dollars on the table and not really understanding why we’re advertising in the first place. Advertising (or the intent behind it) isn’t a 1 = 1 “science” and approaches and learnings in brand based messaging, promotions, events, word of mouth and other key areas of influence based messaging are hugely important. As “ethereal” as many people view the ad business when they’re not IN the ad business, the entire industry works and exists for much more than the immediate conversion of an audience member into a paid customer on the spot. We in Digital OOH advertising should pay close attention to this as we tend to fall back on (or get pushed back onto) this as a defining metric and point to it as the primary (and in some cases, the only) reason our advertising customers should partake in our medium. It goes far, far beyond that single success metric. We, as an industry, are both above the line AND below the line advertising (messaging and sales influence) and we need to articulate what that means to our customers. In doing so, we will enhance the perception and VALUE of the ad space we sell.
Advertising in the Digital OOH space is just as impacted by this trend and, beyond the constant “measurement” arguments we must answer, suffers investment problems (Brands/Agencies buying the medium) because marketers are trying to understand the industry using some of the same theories and understandings they have of the web (the other “Digital Advertising medium) and trying to be as “scientific” about the process as possible. In all fairness, this is a function of the CFO’s influence on the ad spends and minute dissection of advertising spend and accountability gone too far. It does help to hamper spending in new potentiall areas, however.
Another article pointed out that even Internet is having adoption problems as a % of mind share and budgets.
If consumers spend 30% of their media time online, why has allocation of media budget not caught up? (Only 7.5% of marketing budgets are assigned to Internet Marketing)
Credit Suisse reported that only TV accounted for a higher share of daily media consumption (measured by time) than the Web. I would argue this one, given a recent report that came out (Dave Haynes commented on it here) that said:
Urbanites, says the Out-of-Home Marketing Association of Canada, spend an average 9.3 hours outside the home on a weekday and 6.2 hours on a weekend day. During that time, they are exposed to 3.8 hours of advertising on a weekday and 4.7 hours on Saturday or Sunday. That’s more exposure in a week to OOH than to ads delivered by TV, Internet, radio, newspapers and magazines.
In the article was an interesting commentary (from a McKinsey report) as to why folks weren’t investing online. I think we could take this and apply it quite well to the Digital OOH sector as well. The barriers:
-
- 52% insufficient metrics to measure impact,
- 41% Insufficient in-house capabilities,
- 33% Difficulty of convincing upper management,
- 24% Limited reach of digital tools, and
- 18% insufficient capabilities at agency.
As Steve Latham, the author of the post and CEO of Spur Digital commented:
Combined, insufficient capabilities (in-house and agency) is the leading (59%) deterrent to investing online. This is not a surprise as online marketing is still relatively new, somewhat complex, and changing rapidly. Most companies are still trying to make sense of new media and develop strategies to utilize it.
59% of people simply don’t have the knowledge or capabilities - and that’s in a medium that’s been really running for 10 years. According to the article, 70% of all searchers make offline purchases. Coming from the retail world, in the shopping/Digital OOH sector, 70%+ of all buying decisions are made in-store. We’ve got similar problems to deal with.
Steve also outlined some other factors which weren’t in the study from his own experience:
- Misperception that online marketing is only needed if you have e-commerce.
I could relate this to our business by saying that there is a misconception that Digital OOH marketing is only needed to support in-store sales - Status quo mentality
This is an easy one and I’ve written about it before. It’s much easier not to change and people in the media business get fired for making media purchase decisions that are risky - Accountability
Some marketers have had the luxury of not being accountable for results. As the article intones, this will change over the next few years as lazy media folks are being held to task like at no other times to making their marketing dollars have impact. This is also why we in Digital OOH are asked to provide much more mature measurement and audience data (and qualifiable data as well) than traditional media
Ultimately, ad sales will keep growing into newer channels and so adoption will happen but evaluation of the medium should be only based on 50% science…not 90%. Let’s keep the art in our art form 
Comments
Leave a Reply
