Dec
10
Great article and reference to Digital OOH advertising experimentation and growth.
Steve Lanzano, the COO of MPG’s US Operations, recently had an interview with TVNewsDay where he mentioned he is most excited about addressable advertising (localized TV) via projects like Canoe and the growth of Digital OOH.
I’ve re-printed the article here with links to the original at the bottom:
There may come a day when it’s commonplace for people in subway stations and on elevators to watch video screens providing up-to-the-minute weather forecasts courtesy of their local TV stations.
Story continues after the ad
It may be that broadcasters’ cost-per-point rates increase, even though their ratings decline and that stations can become even more attractive to advertisers with locally branded entertainment opportunities. It also may be that TV really isn’t a mass medium anymore.
Those ideas come from a top gun at one of America’s most powerful media buying agencies: Steve Lanzano, COO of MPG’s U.S. operations.
Lanzano’s perspective has been shaped by his 27-year run in the ad industry. He’s spent the last five years at MPG, a unit of Havas, and is responsible for the strategic and operational leadership of the North American unit, maintaining close relationships with the company’s advertiser clients, which range from Volvo to Fidelity Investments to McDonalds.
He is about to report to a brand new CEO, Shaun Holliday, who joins the company Jan. 1 and whose experience has been outside the agency world, working with consumer-focused marketing companies. He replaces Charlie Rutman, who will maintain a senior adviser role with the agency.
Before joining MPG, Lanzano was CEO of another media planning agency, Mediaedge:cia, and was responsible for overseeing its U.S. and Canadian offices. Prior to that, he was global media director at the media agency Mindshare, and was focused on the American Express account.
He recently shared his perspective in an interview with TVNewsday Contributing Editor Janet Stilson.
An edited transcript:
Given the shaky economy and the multitude of media options available to consumers these days, is the value of broadcast network and spot advertising changing in the minds of MPG executives and your clients?
It varies. Clearly there continues to be ratings declines, especially on the national TV network level. There is less inventory in the marketplace [because ratings are lower]. The ratings are getting to the point where you have to ask: Is it a mass medium anymore? That’s disconcerting.
TV, in many cases, still shows a very positive return on investment. There’s an immediacy to it. You still reach a lot of eyeballs, but not to the extent that you did before. The concern on the advertisers’ side is really dwindling ratings and people now looking at content in very different ways.
As DVR penetration becomes greater and greater, it’s going to be more and more of a concern. The real question for advertisers and the real concern is the fractionalization of that rating point. How do we create scale and mass, especially with packaged-goods clients, movie studios and retailers with short-term promotions? They have to make an impact and, in a lot of cases, on a very quick basis. How do you deliver that mass audience? It’s getting more and more difficult just doing it with traditional television distribution.
Are there things that TV stations can do on the local front that will make them more valuable?
The advantage of local is just that — it’s local and it provides local content that you can’t get anywhere else. If local stations were able to do more experimential-type things — branded local programming — I think all that adds up. That makes local a very attractive alternative.
A lot of stations are providing more and more local content to Web sites. They have local Web sites for their stations. And they sell that together with their television avails. That provides a nice complement. Newspapers have had a really tough time, but the one thing newspapers have is that they’re local. You need to push the advantage of local news content or local entertainment content.
Is local advertising more important to advertisers today than it was before?
I don’t know if it’s more important or less important. It varies. It depends upon what your distribution is. It depends upon where your sales strengths are, or where your sales weaknesses might be. Local is a strategy, and local television is a way of reaching people in a specific area where you’re either going to want a gross share, protect your business or increase penetration.
As your clients are planning their 2009 budgets, are you seeing any general shifts in terms of the proportions of the budgets that are allocated to specific media?
With the ability to advertise on online video, we’re still seeing more and more shifts to digital. Search is still strong, while display might be flattening out. What’s taking the brunt of the hit, to some degree, is TV, but also certainly radio and magazines.
Can you be a little bit more specific about the TV portion, both spot and network? Are you seeing a decline that’s single-digit, double-digit?
Probably more in the high single digits for spot and the low single digits for network.
When you look at the 2009 forecasts from analysts and other industry groups, what is your gut telling you? Do you feel less optimistic than most of the prognosticators or more optimistic?
It’s almost frightening. There have been forecasts of plus or minus 1 percent, but I’ve also seen minus 10 to 15 percent. It’s so hard. You know, I wish we all had the proverbial crystal ball. I would have done a lot better in my 401(k) if I knew what was going to go on.
No. 1, we’ve got to see how retail and the holiday season plays out. And clearly there are a lot of pessimistic points of view on that. The first quarter will be down somewhat. I think the real question is going to be second or third quarter, and that could take a real hit if the holiday sales are what they predict them to be, which is not good.
You could see a collapse in the marketplace. Look at what’s going on with reduced DTC [direct-to-consumer pharmaceutical] advertising, with the automotives industry and financial institutions. There’s been a little bit of an increase in terms of packaged goods advertising. Some of the fast-food companies that are still doing well seem to still be advertising and maybe picking up a notch here and there. But you really don’t see that new category that’s going to make up the spending losses in the other categories.
As you say, nobody’s got a crystal ball, but when do you think we’re really going to start to see a more positive advertising environment? Do we have to wait all the way to 2010?
Normally, we see a pick-up, especially in the broadcast area, when you see some positive uptick in GDP growth. There’s been some talk of a bit of GDP growth in third or fourth quarter of next year, and with Winter Olympic advertising in the first quarter of 2010, that might be the beginning of it. But that’s probably one of the more optimistic prognostications. I think it will probably be later in 2010 that you start seeing a little bit of a turn around. But it’s hard to say.
I’m going to ask you a positive question now. I think we both need it. Tell me what excites you most when you look at all the new media opportunities.
A lot of it’s still in the test phase, and I think scale is an issue with many of them. But clearly all the addressable advertising opportunities, what Invidi’s doing with Dish Network and Project Canoe. It’s almost behavioral targeting for television, where you can really look at what an individual household’s habits are and give them more relevant advertising. [Editor's note: Dish announced last month that it is using Invidi Technologies' Advatar service to deliver targeted national and local TV ads based on such metrics as demographics and geographic locations. And Canoe is the advanced advertising venture launched by a consortium of cable operators.]
What we’ve learned about digital is that, in most cases, behavioral targeting actually gives you a much greater return [than conventional advertising]. We could start making television much more relevant, especially to the viewer, if they see a commercial spot that they’re [personally] interested in. I think that’s very exciting.
Some of the stuff also going on with digital out-of-home could be very exciting too, such as changing a message on a 24-hour basis. Many times you have a captive audience. Whoever can figure out the ad serving for digital out-of-home is going to make a fortune on it one of these days. Or if they put together consortiums of all of these individual companies so you can create some sort of national network. That would be huge. Those are really the two things that most excite me: the addressable advertising opportunities and then the growth of the digital out-of-home.
I know MPG has just started a unit called Chrysalis, which I understand is involved with out-of-home and location-based media channels, among other things.
That’s correct. The expectation is even through a recessionary economy that out-of-home is going to grow anywhere between 13 and 16 percent. And it was an area that we had to get into — in terms of being able to provide that capability for our clients, but also the ability to find our consumers wherever they might be. So we’re very excited about it.
Do you see ways for broadcasters to pick up some revenue on that front, given all the video content they create?
I haven’t thought this all the way through yet, but it could be a big opportunity for TV stations, where you could have local content — local news content — on the elevator or on the video screens that you see in some subway and train stations. Again, it’s local, relevant content that people are going to want to watch. I haven’t thought it through in terms of monetization and how that might work, but clearly I think there’s an opportunity there.
Is the challenged economic climate putting a crimp in your clients’ ability to test emerging ad opportunities?
The one fear all of us on the advertising side have is that when we go through a situation like this, testing money seems to dry up. But it’s important that you keep testing and seeing what’s out there. Because when things start to turn around, a lot of these new opportunities are going to be very, very big.
Can you give me an example of a test that’s being done now by your clients?
I can. I can’t tell you the client though. We’ve done some addressable advertising tests with a couple of the cable operators [where we targeted] a specific audience that’s shown an interest in a product or service to see whether there was a much greater response versus just running an ad across-the-board.
It gives us the opportunity to run different commercials at different times of the day to see if you change the copy or sequence the copy for an advertiser, to see if there was any greater response to it or if the advertiser saw any greater traffic trends.
Are they being done on cable networks as well as broadcast stations?
Yes, that’s correct.
So what other tests and research is high on your priority list?
Most people’s eyes are on the addressable marketplace and the ability to use set-top research. I know there’s always privacy issues and the need for anonymity. But if we could start doing that, it would even benefit the viewer because you really would be delivering [messages] to them based upon their usage habits and any other information you’re able to collect on an anonymous basis, providing them with advertising or content that’s most relevant to them.
I’m 100 percent for privacy, but if there’s a way that we can really tap into that set-top data on a much larger level, I think there would be a lot of insights and golden nuggets that we haven’t been able to turn up yet.
Are there any new businesses like Chrysalis that you plan to launch in the next year?
There are a couple of areas we think are going to be important. We think that the barter area’s going to be very big. We’ve also got a new company called Mobext, which does mobile advertising, and we’re putting more and more investment there.
Tell me a little more about the barter business.
Say a client has a ton of nonperforming assets. Say it’s apparel inventory that they can’t get rid of. So instead of having to write that off the books at a much lower value, they go to a barter house, and the barter house liquidates it for them. And they give them media credits for the retail value of the assets.
So how does MPG fit into that, and how will your business expand?
We kind of play the intermediary. We have partnerships with barter companies. We manage the process. We think barter’s going to become bigger and bigger. We’ll see how it grows and make decisions from there.
Given how strange the last half-year has been, do you expect the upfront is going to be different in 2009 than it has been in the past?
There will really be telltale signs in the next two or three months, in terms of what’s going to happen in the upfront and in 2009 and 2010. A lot of advertisers are going to be looking at the opportunities, in terms of addressable advertising as well as online video and incorporating that more and more into any type of upfront [commitment].
Are you expecting that CPM rates and cost-per-point rates are going to decline in the next few months?
It’s hard to say. I mean it’s really kind of counter-intuitive in terms of what happens. Say you have a [medium] where you have less and less inventory, and you have rating points going down, but you have demand that has stayed basically flat. What’s happens is your CPMs continue to go up. It’s a Catch 22
I’ll give you another example. Say ratings went down 10 percent. If demand only goes down 5 or 7 percent, you have an inflationary marketplace. So it’s really very kind of counterintuitive. It’s just supply and demand. I mean it’s really that simple. It’s like marketing 101. So it depends upon what’s going to happen with demand.
And as I said, if the marketplace falls apart, then we might see a situation where, even as rating points diminish in the marketplace, the decreased demand will outstrip the decrease in inventory, and then you’ll start to see a deflationary marketplace.
You’re about to report to a brand new CEO. Do you expect that Shaun Holliday will have much of an impact on what you do?
I don’t think it will have much of an impact. Shaun has a very varied and impressive background. He’s worked at very big companies on the consumer insight side. We’re looking forward to Shaun bringing a different look at our business. I don’t think it’s going to change anything very dramatically, but we’ll see.
Copyright 2008 TV Newsday, Inc. All rights reserved.
This article can be found online at: http://www.tvnewsday.comhttp://www.tvnewsday.com/articles/2008/12/09/daily.4/ <http://www.tvnewsday.com/articles/2008/12/09/daily.4/> .
Please visit http://www.tvnewsday.com/ for more on this and other breaking news concerning the TV broadcasting industry.
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He is the MAN! Always posting the most interesting articles. Thanks for sharing this one Gorrie!