How did they know to search for that brand?

Just a quick post to highlight a recent piece of research by attribution modeling company C3 Metrics (thanks AdExchanger!).

There’s more interesting detail at the link, but the headline is that in 37% of all online transactions analyzed, search on a branded term was the very last action before purchase.

That’s obviously bad news for the (too) commonly used “last click / last view” attribution approach.  As C3 CEO Mark Hughes put it, “If an advertiser is still using last click analytics, they would mistakenly think that brand search was responsible for a third of their results.”

This research underscores the fact that attribution is important, difficult stuff and requires a lot more horsepower than last click / last view.  I think folks like C3 have a great opportunity ahead of them.

C3’s findings echo a great piece of Microsoft research from a couple years back.   As I mentioned in my commentary when the Microsoft research came out, it’s clear that a lot of the money that brand marketers are spending on other media (online and offline) is having an impact – whether or not we can measure it precisely today.

Worth some thought.

Where’s the “LUMA slide” for branding?

Very interesting article today from Brian Morrissey at Digiday, channeling Jeff Levick of AOL.

As Brian put it:

“The truth of the matter is much of the machinery of the programmatic buying landscape, captured in the Luma Partners slide, is dedicated to non-guaranteed inventory used for direct response advertising. Where’s the Luma slide for guaranteed ad space for brands?”

Now, that’s a great question and Jeff has obviously done some great thinking on the matter.

After you give the article a read, check out our results in connecting online ads to offline sales here.

Just because you can, doesn’t mean you should

Today, I wanted to highlight and echo some recent commentary from two very smart online ad veterans, Dave Morgan and Doug Weaver.

Their thesis in a nutshell is that the online advertising ecosystem has pursued an arms race of targeting upon targeting to the point that it has confused brand marketers and backed itself into a DR-only corner.  When it comes to hyper-targeting, as Dave Morgan put it, “Just because you can, doesn’t mean you should.”

I completely agree and would encourage readers to visit the linked articles – there’s a lot more there to think about.

The market’s apparent addiction to overtargeting is especially puzzling given the performance data.  I have obviously written on this topic myself quite extensively over the years and just last week a new piece of research came out of MIT, with yet more evidence for the prosecution.

The MIT study, using data from agency giant Havas, found that highly personalized creative underperformed generic creative except for users who were already well down the funnel.  I understand that creative (this study) is different than media targeting (commentary above), but the two are opposite sides of the same coin and this result is another point on the same line; i.e., overtargeting is just that.

Or, as MIT researcher Catherine Tucker put it, “just because you have the data to personalize, it doesn’t mean you always should”.

A fishing fleet without nets

ComScore released another solid piece of work yesterday.

As readers of this page will remember, comScore has been outspoken on the failings of the ubiquitous click as a metric. Some of that in this report, but much more as well.  From my perspective, the most interesting thread in the report ties together a couple of their numbered points.

First, as comScore correctly points out, cookie-deletion creates real problems for cookie-based targeting and measurement approaches. comScore data shows that 30% of all US internet users delete their cookies monthly or more often. Furthermore, many computers see routine use by multiple users. These factors create “noise” in targeting that often results in much lower true composition against the target than is claimed or described. Consumers’ ever-growing concern about privacy will only make this worse. Probably much worse. More evidence (if any was needed) that measurement of campaign impacts against meaningful metrics is critical – especially when a targeting approach sounds like magic.

Secondly, comScore highlights the tradeoff between targeting and scale. This tradeoff is intuitively obvious, but often overlooked. Equally often, credulous buyers willingly suspend disbelief in favor of a nice-sounding pitch.

Consider the example of one of our clients, with a large online footprint of some 25 million accounts.  Of these 25M, this client has actionable cookies on <5M, with data of varying depths and value (and all of these cookies, of course, are subject to the churn challenge presented above). So this client can (and does) employ the most sophisticated targeting and re-targeting approaches on all of these 5M customers. But what about the other 20M customers they can’t talk to this way?  What about the 100M adults that aren’t customers yet? 30-spots?

For the online advertising to grow to its full potential (and necessary size as “offline” media erodes), we must more fully develop a broader approach to complement our myriad fine targeting approaches.

Sometimes it is best to fish with a hook, other times with a net. As an industry we need a good supply of both.

Look for more on this topic in subsequent posts, but wanted to make sure to call out comScore’s work while it was fresh.  Worth a read.

Yet more on CTR’s failure

Nice piece late last week by MediaMind’s Ariel Geifman.

The article provided a thoughtful, compact summary of a wide variety of different sources and research approaches that all drive to the same conclusion:  CTR is a convenient metric, but an inadequate one at best and most often a misleading one.  Obviously a topic on which we have written on multiple occasions, but I liked Ariel’s treatment and he wove in a few interesting angles I hadn’t seen before.

Worth a read.

Old habits die hard

There was another installment yesterday in the seemingly endless series of articles on the counter-productivity of CTR optimization.  This “billion-dollar mistake” has been covered on this page in depth and repeatedly.  With the ever-growing abundance of research on the topic you’d think that more buyers would stop focusing on CTR “optimization”.

It’s surprising how hard old habits die.

I thought this particular article was worth calling out because it suggests that the ultimate answer to the evil of optimizing for CTR is optimizing for conversions instead.  That’s right of course, if it’s possible (and assuming your attribution models are correct – not a trivial assumption).

But what about the vast majority of valuable commercial activity that can’t be cleanly tracked with a pixel?  Like, for example, the 95% of retail sales that occur offline?  As I discussed in a recent post on the trillion-dollar O2O opportunity, this is a huge gap in the thinking behind and the capabilities of most online advertising solutions today.

Brand.net’s ground-breaking Media Futures Platform was designed specifically to attack this opportunity, driving profitable offline sales measurably and scalably.

These are the results that really click for our customers.

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.

The Trillion-Dollar O2O Opportunity

Some interesting dialog on ad exchanger today about bringing brand dollars online.  Obviously a topic near and dear to our hearts here at Brand.net, even though I think this particular framing of the issue is less and less relevant as the distinction between online and offline blurs.

Zach’s a smart guy and I agree with some of his points.  Manually cobbling together a buy won’t allow the scale advertisers need.  Check.  We as media providers need to enable the creatives to deliver the message in a compelling way.  Check.  Where I lose the thread is his jump to how DSPs, RTB and exchanges magically solve everything for brands.

It is possible to use a DSP (as he describes) to bid only on specific top sites that have offered, transparently for RTB through an exchange, the same inventory their direct sales forces sell.  But there’s simply no scale available that way today.  And unless publishers are prepared to gut out and cannibalize their primary direct sales channel, there won’t be tomorrow either. 

So that’s a big hurdle.  But for the sake of argument, let’s assume that changes.  How much will this premium inventory via RTB cost relative to a direct buy?  Can you plan at scale and count on that cost, or even on basic delivery?  I.e., ultimately, if you use a DSP/exchange in this manner are you really better off?  Or to recognize significant efficiency in terms of cost and effort do you need to buy into the long tail and/or buy blindly by audience or contextual category rather than by site?

Also, the tech world seems to have convinced itself – with a few intelligent exceptions – that large global advertisers would unanimously and emphatically agree that transparency to a media provider’s margin structure is much more important than level of or predictability of costs.  Is a $5 CPM that includes a known margin better than a $3.50 CPM for the same thing that includes an unknown margin?  Is a CPM that could vary between $2 and $4 for delivery that could vary between 20% and 100% of target better than a fixed CPM of $3 on a guaranteed buy?  Large advertisers may well be unanimous on these questions, but not in the direction the tech community majority seems to think. 

Let’s not forget that low cost is not necessarily the same as high-value – there is an “R” in ROI.

Which brings me to my biggest issue with Zach’s post, well articulated by Jeff Rosen in the comments.   Most large brand advertisers – CPG companies are great examples – generate 95% of their sales offline.  For them to spend at scale, they need to know their investments in media are profitably driving incremental offline sales. 

Offline sales impact data comes in with several months lag (at best) and isn’t tied to individual cookies, which are the lingua franca of RTB.  Probably just as well, because when this data does come back it’s not particularly kind to some of the targeting techniques most often used for RTB.  “It doesn’t work that well”  is obviously a big (huge) disconnect, and of course that is before we even get  to the troubling privacy and data ownership issues created by the questionable provenance of much of today’s online targeting data.

Not surprisingly, growing recognition of the importance of this tie between online media and offline activity has spawned a shiny new TLA:  “O2O” (for “Online To Offline”).  O2O is still just a foal of an acronym, but this foal has legs – like the legs on which most people still walk into brick and mortar stores to do 95% of their retail spending. 

O2O is truly a trillion dollar opportunity.

Companies like Groupon have done a great job demonstrating the potential of O2O for promotional spending.  The typical Groupon offer is time-sensitive and designed to drive foot traffic and sales more or less immediately – a savvy twist on the successful online DR advertising model.  Based on the results this model has shown to date, we’re going to see a lot more in the future.

But I also think we need to think more broadly about the potential of O2O than simply the ability to motivate customers at the bottom of the funnel.  Online media is also a powerful, efficient and increasingly proven way to create the awareness, consideration and intent that translate into higher offline sales.  Offline sales increases created in this way have longer cycles than promotional lifts simply because they originate at the top of the funnel, but we, Nielsen, comScore and others prove every day that they are also measurable with accuracy and statistical rigor.

I am always up for a healthy debate, but we’re not going to unlock the huge potential of O2O by debating each other.  We need to spend less time navel gazing and more time with real customers delivering enterprise-class technology that accommodates their business processes and ultimate (not just proximate) marketing objectives.

Stay tuned for more on this shortly.

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.

Simplifying the Narrative

Josh Chasin of comScore can definitely count me among his fans.  He wrote a great article late last year on the limitations of CTR as a metric.  A couple weeks back he wrote another great one that I have been looking for a moment to comment on.  Between the upcoming product launch and the 1 year old I finally found a little time, somewhat belatedly.

As I read it, the main theme of Josh’s most recent article was that as an industry we have inhibited the migration of brand-focused budgets online with complex and conflicting narratives, which cause advertisers essentially to throw up their hands and look for reasons not to spend.  I couldn’t agree more.  In fact, I don’t think Josh would object to framing this as a different angle on the same idea I discussed in a post last year (Josh – feel free to comment if I am taking your name in vain).  Regardless of the angle we each take on the story, we’re clearly in violent agreement that the narrative needs to be simpler.

Josh is also quite correct that the 30-spot is an extremely compelling creative format, next to which a hastily-assembled static banner can look, well, flat.  However, as I have previously noted, within 5 years about 80% of households will have the capability to fast forward through that compelling creative.  Online creative formats get more compelling every year – it’s not hard to imagine a well-made pre-roll, rich media or even animated flash creative execution comparing favorably to a TV ad that is watched at 10X normal speed with no sound.

Even before DVRs reach their inevitable tipping point, the research shows that online advertising drives sales at least as well as TV.

One area where I might diverge with Josh just a bit is on the “scale” element of the narrative.  As he correctly points out, a single highly-rated TV show generates gobs of inventory.  Let’s use his Two and a Half Men example.  The 6 rating means 18M unique viewers, which when multiplied by the 15 spots per episode yields the 270M impressions per episode he mentions.  Breaking that number down in the context of a particular campaign, however, makes it more manageable.  Even if a marketer was comfortable with a frequency of 3 during the half-hour sitcom, that would translate to about 50M impressions.  If it was truly necessary to deliver those impressions in a half-hour period, that’s a pretty big buy for online – possible, but big.  If, however, we allow those impressions to be delivered over a week (i.e. between the beginning of this episode of Two and a Half Men and the beginning of the next one), it starts to look a lot more manageable.  So I would argue that the scale is there, it’s just not as “instantaneous” because web content consumption is less “event-based” that TV consumption.

This all assumes, however, that we’re talking about the type of objective targeting that is possible to do buying a prime-time TV spot – i.e., context, demo, geo.  The myriad other online targeting techniques that continue to proliferate, creating “monstrous” complexity as they do, just can’t deliver anything like that type of scale; we’re not delivering 50M impressions in a week to 18M “competitive peanut butter bakers” any time soon.

For me, it all points back to Josh’s bottom line.  Online has the audience, the content, the creative and yes, the metrics.  A decade of burgeoning complexity has moved lots of DR money online, but brands are still waiting for the simple, efficient, repeatable scale of TV.

If we give them a simpler narrative, reflecting a simpler process, the money will move.

Again, I would suggest our goal needs to be, “Your audience moved. Your marketing needs to follow them. Let us show you how the internet can deliver the same quality, scalability and value as TV.”

What do you think?

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