Just a quick note to point out a nice article on Brand.net in MIT’s Technology Review magazine.
As an MIT grad with many fond memories, it was especially fun to see this one make the front page!
Category: Industry News
The Internet is not Magic
Regular readers may remember my post a few months back commenting on an interesting DataXu article about high price volatility in the RTB-driven spot market for online advertising. They put up another really interesting article Monday.
It seems their research has shown that (what I will call) “overtargeting” is bad for performance.
Regular readers will certainly remember my frequent commentary on this issue in the context of driving offline sales. Many targeting techniques sound hyper-precise (great!), but don’t deliver the goods when impact on key attitudinal indicators like purchase intent, or more importantly impact on offline sales, is measured. Better sales tools than success tools indeed.
Imagine my interest as I read this new research showing excessive targeting doesn’t even work for the DR metrics they studied. If this stuff doesn’t work for branding or DR, what does it work for? Does it serve any other purpose than as the shiny object that helps burgeoning hordes of venture-funded media sales people to convince increasingly overwhelmed media buyers to further fragment their media budgets?
Clients: Don’t take privacy risks or pay premiums for targeting that doesn’t deliver results. Listen with a skeptical ear. If a targeting tactic sounds too good to be true it almost certainly is. The internet is a fantastic marketing channel, but it’s not magic. Anyone that suggests otherwise is either a fool or takes you for one.
Creativity *and* scale is the objective
The discussion during my IAB MIXX panel last week reminded me of a recent article by Tod Sacerdoti of Brightroll. Tod’s high-level point was that there is too much relative focus in online advertising on the sizzle vs. the steak, which creates a variety of downstream problems.
Tod took some lumps in the comments, but he was and is right on with this piece. There’s way too much time spent today selling shiny objects vs. selling scalable, repeatable results. I have written on this previously in the context of BT, but I see it over and over.
The interesting thing from the panel was that my ostensible adversary in the “debate”, Calle Sjönell from BBH New York, and I actually agreed strenuously on a) the need for and b) the possibility of *both* creativity and scale. Both sizzle and steak.
One specific example Calle gave was Apple’s iAd initiative. iAd offers an extremely compelling creative environment, but one that is highly prescribed. Controls for the ad must be in certain places and do certain things. The ad itself has fixed sizes and specifications. The creativity (to paraphrase) is in using the box provided creatively, not in coming up with a new box every time.
One could argue that iAd itself is a shiny object at this point, but Calle’s message was clear. For the truly innovative, the specs of the box don’t matter. It’s what’s in the box that matters. E.g., you don’t need 35 seconds to make a compelling TV spot or as Tod points out, you don’t need Superman flying across your webpage to influence attitudes and/or drive offline sales.
If Calle’s award-winning creative mind can work happily and effectively within a fixed canvass, then I would submit that others should be able to as well, which would have tremendous benefits to the industry at large. Standardized web advertising is now capable of phenomenal scale. Getting better at combining that scale with creativity, rather than arguing for one or the other, should be the priority.
DVRs will cut TV advertising in half over the next 5 years
More evidence of the large and growing holes in the TV advertising dike passed with little fanfare a ways back. I continue to be surprised at the relative lack of coverage (that is, other than mine) of what appears to be a huge story in media: the rapid and inexorable infiltration of the world’s living rooms by DVRs and the implications for TV – today’s workhorse branding medium.
This latest data (not as fresh as I’d like, as I’ve been a little busy) is from a Comcast-sponsored poll, so should potentially be taken with a grain of salt. However, even with salt, it presents a pretty stark picture. Some highlights:
• Time-shifted TV has more than doubled in the past year alone
• >40% of Americans now make plans to record their favorite shows for later viewing
• 74% of viewers have watched prime-time TV using video on demand, DVRs or the Internet
Estimates vary, but some sources report up to 2/3 of viewers skip commercials in recorded programming. Combining that figure with the usage stats above means that more than 20% of TV commercials will be skipped this season. Not only that, but researchers believe that commercial skipping increases as users become more familiar with the technology; that 2/3 will likely increase.
These data have fairly dramatic implications for the mid- to long-term value of the TV ad model.
Perhaps this story hasn’t gotten much attention because the Nielsen “C3 ratings” – launched in 2007 and designed to take into account both time-shifting and commercial skipping – didn’t look much different initially. What seemed a little strange (at least to me) is that they still don’t look much different – most shows actually fare better under C3 than the “live” ratings.
This was counter-intuitive until I actually did the math. Because C3 includes both time-shifting (incremental to live ratings) and skipping (decremental), C3 will always be equal to or greater than live ratings because skipping cannot be greater than time shifting by definition. However, this can (and does) occur even as the size of the audience viewing TV advertising shrinks dramatically.
Consider the (highly simplified1) example below:
In rough terms, a show watched by an audience of 20M people goes from a C3 rating of 6.7 pre-DVR, to a C3 rating of 3.3 in 10 years under perfectly realistic assumptions flowing from DVR penetration projections and usage research cited and linked above. Total viewership of the programming, including time shifting (Live +7), can stay the same or even increase, but ratings for the commercials themselves (C3) plummet under any reasonable scenario.
So DVRs will cut the effective reach of commercial TV advertising in half, absent some dramatic changes in consumer behavior, TV advertising models or DVR devices themselves. This represents nearly $40 billion in advertising spend simply being “skipped”, i.e. wasted, or a doubling of cost per GRP which amounts to the same thing.
That seems like a newsworthy headline. I wonder why I haven’t seen it before today.
Incidentally, that $40B in TV money coming into play makes me especially excited that Brand.net offers the best and most scalable web-wide media forecasting, buying and delivery management platform available today, with cutting-edge tools for agencies to drive measurable, profitable offline sales with online advertising.
1 In the interest of simplicity, this commentary and analysis ignores some edge cases related to different measurement methodologies between live ratings, which measure viewership of content and C3 which measures viewership of commercial pods only. These simplifications do not materially affect the conclusion.
See what all the fuss is about!
Another quick post today to encourage those of you that haven’t read today’s Q&A on AdExchanger to check out the demo for MFP On DemandTM. Also see more coverage of Thursday’s press release on Fast Company.
Announcing MFP On Demand!
We’re very excited today to announce the launch MFP on DemandTM, the demand-side interface to our Media Futures PlatformTM, in partnership with Digitas. Read the coverage in Ad Age here.
Scalable forward buying is a critical gap in the digital media ecosystem and Brand.net has been focused on this huge, unaddressed opportunity since inception. MFP On Demand represents a big step forward towards the long-term goal of a futures market for digital media.
We’re truly thrilled that Digitas shares our vision!
Data property rights moving to front burner?
Another example this past week of the co-equal, but less prominent facet of the privacy issue – data property rights – coming to the fore.
Wired reported that Specific Media was sued in Federal court for violating users’ privacy by a) using flash cookies to reconstruct http cookies that had been deliberately deleted by users and b) having a deliberately misleading privacy policy. If these claims prove to be true, they are a great example of the serious issues the industry faces with privacy.
Particularly interesting, though, was the perspective in a comment on Mediapost’s coverage here from an employee of FAN – Fox Audience Network. The commenter made the point that while this was a privacy issue, it was also a data ownership issue. He went on to state that there is a legitimate reason for a publisher to use flash cookies, (e.g., the Pandora buffering example cited by Wired) and that publishers have legitimate claim to user data as part of the implicit deal struck by users in consuming free content. A network like Specific Media seems to have no such legitimate reason or claim. Flash cookies used by a network are there for one reason only: not as many users know how to delete them.
I recently congratulated Krux digital on their plan to help address the lack of reporting and enforcement capabilities for property rights in data. Based on this announcement last week it looks like Krux already has a new competitor.
I have written before that this second facet of the privacy debate is widely underestimated, but it looks like that’s changing and that’s a great thing for the industry.
Data Ownership is the Krux
Just read Tom Chavez’ AdExchanger post on his new company, Krux Digital.
Tom and I go way back. Tom ran Rapt, an innovative yield management technology company. As part of my role at Yahoo! in early 2003, I helped Rapt make the transition from the computer hardware market to the online display media market. This transition ended well, as Rapt’s market leading online media capabilities resulted in an acquisition by Microsoft 5 years later for a figure rumored to be nearly $200M.
Tom’s a smart guy and seems like he’s onto another smart concept here.
As we have written, there are really two separate and distinct burners under the increasingly bubbly cauldron of online media data issues: privacy and data ownership. Starting on the data ownership side, as it appears Krux is doing, seems like the right answer. Strikes me that it’s tough to have a market driven mechanism for managing privacy without any scalable way of enforcing property rights in the relevant data. Most in the BT industry seem to really want the former, but don’t seem to want to talk about the latter.
Kudos to Tom and Krux for giving publishers the tools to keep the dialog honest. I wish them luck!
Great work from MarketShare Partners
A quick post this AM to point readers to a great piece of work from MarketShare Partners and the IAB that was released last week.
The case studies presented are interesting and present exactly the type of rigorous analysis that should go into optimizing the marketing mix. We in online advertising spend most of our time thinking about the downstream decisions – i.e., how to get more of the budget that’s available to our channel. It’s great to see some smart thinking from a smart company focused on the upstream decisions as well.
Some highlights:
- A relatively small reallocation of media spend can have a significant impact on marketers’ revenue. For example, one media optimization scenario examined in this study demonstrated a 6% increase in revenue—even after a 13% decrease in total marketing spend—when dollars were shifted to interactive.
- In all three of the scenarios presented, huge increases in online display spend were recommended (average of 107%). These recommended increases were due to a combination of relative effectiveness, relative saturation effects and cross-media synergies.
- The average recommended increase in online display spend was nearly twice the average recommended increase in Search spend (61%)
- In 2 of the 3 scenarios presented, MSPs analysis explicitly recommended significant shifts in spend away from bottom of the funnel strategies (promotions/incentives) to upper funnel strategies (media)
I would recommend everyone take a few minutes to read this white paper, and stay on the lookout for more great stuff from MSP.
Weaver chimes in
Just a quick note to direct any reader who hasn’t seen it to a great post by Doug Weaver of Upstream Group. Doug’s a sharp guy with a wealth of experience and consistently insightful commentary on the industry, this post being no exception.
Worth a read.
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