Archive for the ‘Trends’ Category

As we get close to the end of another year, walk with me into the not-too-distant future for a moment…

It’s taken some time, but mobile barcode scanning and comparison shopping is a common activity among consumers. Barcode scanners are a standard feature of most retail apps, providing access to in depth product information, reviews and immediate feedback from social connections. However, in-aisle comparison shopping  is just the tip of the iceberg.

The Future Isn’t Now, But It’s Soon

If you live in New York, you can now get a taste of the future of mobile payments at any Starbucks via the mobile Starbucks card app. After doing so since launch about a month ago, I put mobile payments in the same bucket as a DVR and RSS reader, you can live without it until you try it. Then life changes forever. Mobile payments are without a doubt a big part of our future. Starbucks will be the proof of concept for others as they roll out mobile payments globally over the next couple of years.

Combine the convenience and personal shopping assistance value of a connected mobile device with the growing self checkout trend at retail, and the future paints its own picture. We’ll see more stand alone apps like Aisle Buyer, and self checkout functionality being added to existing retail apps in the coming year. This should excite you both as both a marketer and as a consumer. Here’s a quick idea of how it works:

There’s Gold in Them Thar Hills

There are a number of companies vying for a piece of the mobile  payments pie ranging from banks to technology companies. Apple and other mobile companies are betting on NFC (Near Field Communication), a contactless data connection between devices within four inches of each other. This technology will be standard in the next round of mobile devices. Payments can either be connected to your mobile account or processed through one of several mobile payment providers. Mobile self checkout via apps could  use this functionality or bypass these mobile payment providers and use the merchant bank of the retailers’ choice, but potentially still make use of NFC for other aspects of the consumer experience. Either way, mobile payments are on the way. Of course,  the pace of  evolution is dependent on further smart phone penetration and a new round of phones (even non smart phones) with built in NFC technology in order for mobile payments to scale.

New Retail Technology Trifecta

Imagine a world where you can walk into a store, self checkout via mobile app, as you approach the store exit you bag your goods, swipe an NFC reader that scans your mobile receipt and works in conjunction with an an RFID reader that scans your bag for the corresponding RFID tags attached to all items or packaging to confirm that what you are walking out of the store with is in fact paid for. This reality is not more than 2 – 3  years away.

 

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Today I’m going to kick off a multi-part series that addresses some of the challenges facing the changing client/agency relationship, along with some solutions that clients and agencies can work together to implement. Let’s just call it – Client/Agency Therapy.

Since this is the introductory Client-Agency Therapy post, i wanted to set the stage with a few principles, disclaimers and caveats.

  1. My goal is to help clients and agencies establish better working relationships, not to bash agencies (or clients). There are plenty of agencies and clients who buck the trends, really have their acts together and should be an inspiration to their peers.
  2. We live in interesting times. We’re working in a difficult and quickly evolving business climate that has been less forgiving than in the past. We are all tasked with doing more with less. We need to cut each other a little slack sometimes and foster positive and motivating relationships that focus on improving the future rather getting hung up on past negativity. That said, due diligence should not be taken lightly, and complacency and inefficiency should not be tolerated.
  3. We must all strive to be the best at what we do and instill this characteristic in those we manage and lead; enter into relationships with the intention of a respectful partnership; and establish accountability and feedback loops that maximize business performance and ensure that expectations are being exceeded.

Here’s just a sample of some of the topics we’ll be exploring together in Client-Agency Therapy:

  • Collaboration
  • Culture alignment and culture clashes
  • Agency organization challenges
  • Client organizational challenges
  • The role of specialists and generalists
  • The vital role of process
  • The implications of efficiency, or lack thereof
  • Importance of the right marketing technologies
  • Accountability
  • How people make all the difference
  • Client expectations
  • Agency proficiency
  • A new era of procurement
  • Agility

I’m excited to address a number of topics that tend to get swept under the carpet or ignored because they are either difficult to deal with, nobody has the time to think about, or sometimes we just don’t know what we don’t know. As a veteran digital agency executive who has led and sold a successful digital agency,  managed the integration into a large agency culture, and moved on to train and consult agencies and clients, including some of the largest media agencies in the world and several leading brands, I have a variety of hands on experience to speak authoritatively on these topics. However, I also have enough humility to reach out to the community and ask you to chime in and augment and debate some of my concepts and statements. In fact, I very much look forward to the intellectual discussion and journey.

I hope that Client/Agency Therapy will also spark conversation within your organizations on how to become better digital marketers and partners.

 

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I posted a short piece on the latest Nielsen product in the Laredo Group newsletter in response to many agencies wondering what Nielsen’s new Campaign Ratings system means for them. here’s the answer…

Mention online GRP’s to a group of marketers or agencies and you’ll get reaction ranging from relief to rage. The notion of using the traditional media metric of GRP (technically TRP) has been the source of much debate, and in the crosshairs of the industry’s leading media measurement companies, Nielsen and Comscore, for years.

Let’s remember that the GRP is used in two facets of advertising:

A)  predicting the outcome of specific levels of media weight during planning; and

B)  confirming ratings after campaigns have run

The launch of Nielsen Campaign Ratings is big news, and the tool focuses on the latter measurement.

Nielsen will be working with large web publishers, including Facebook, who will provide anonymous aggregate reach and frequency data in age and gender buckets, which will be combined with Nielsen data from its TV and online panels, resulting in a single report showing R/F and GRPs for specific campaigns. Quantcast had tried to plant the same stake in the ground, from a solely digital perspective, and with a vastly different methodology. Nielsen takes a giant leap forward by partnering with large publishers, and combining the reports with the industry standard Nielsen TV panel.

What Nielsen created here is most valuable to brand advertisers who are trying to maximize R/F against specific audiences across a media mix. The big caveat is that this only uses broad age and gender buckets (and falls short of all the wonderful psychographic profile data used in other tools like @plan) – but that normalizes against the TV targets of most brand advertisers.

With the difference in media currency between digital and traditional media, and previous attempts at comparing cost per point, we can expect to see online buys showing less GRP coverage than planned. In some instances this will result in an increase in digital budget allocation to close the gap, and in other cases, a decrease in budgets due to inefficiency in reaching certain targets as compared to other media. It is generally accepted that a diverse media mix will maximize the realization of R/F goals, but the ideal mix model is not an easy nut to crack.

Nielsen’s new Campaign Ratings system definitely represents the progression of cross media R/F and GRP measurement, however, in the grand scheme of the GRP conversation, I’d argue that the predictive nature of planning with GRP’s is more important.

Official announcement.

The Privacy Man cometh. Now it’s time to figure out who is going to payeth!

The industry has formally taken a stance to thwart the strong arm of the FTC by enforcing compliance of self regulatory guidelines on data collection and usage.  The Digital Advertising Alliance, which is comprised of the leading advertising trade organizations AAAA, AAF, ANA, DMA, IAB, NAI & the BBB, has selected Better Advertising’s monitoring technology to help enforce compliance. Enforcement is said to begin Jan 1, 2011., and the enforcer will actually be the BBB. I’ll also add that this initiative is in its very nascent stages and surely will continue to be shaped by adoption and the economics of the process. AdSafe Media and TRUSTe have partnered  to become the second provider of compliance enforcement, and will be applying for the same accreditation that Better Advertising received from DAA. You can bet that a handful of others will enter the space as it grows. This is a good thing. We need multiple options for healthy competition, as well as many minds working to keep the FTC from passing ‘baby & the bathwater’ type of regulations for online advertising targeting. However, it is notable that Better Advertising is the only company solely focusing on this.

Compliance is Everyone’s Responsibility, Sort Of

The onus of compliance is going to be more on the publisher/network/DSP side than the advertisers.  When placing buys on networks, exchanges, DSP’s, and even sites directly, when using behavioral targeting, an advertiser can license the icon via the publisher, or choose to use their own, so to speak. The icon overlay can be served via the publisher’s account and over the advertiser’s third party served ad without any technical implementation by the advertiser, or the advertiser can work directly with Better Advertising (and  at some point in the future, a provider of choice). Of course the cost always comes back to the advertiser somehow. But adding more line items of marketing technology fees is not something that advertisers embrace quickly.  So ultimately it is too early to tell whether the standard practice will be the advertiser or publisher being responsible for compliance. However, the big agency holding companies, in addition to the ad networks and publishers, have all bought in and are slowly ramping up delivery of BT ads with the “Advertising Options Icon”, which provides consumers with disclosure regarding data collection and usage, and the ability to opt-out of  specific targeting. Currently when consumers opt-out of targeting they are opting out at a data / targeting provider level, not at an advertiser level.

The Cost of Compliance Enforcement

Publishers & advertisers who are compliant will be able to license the use of the icon for $5,000 per year (if annual BT revenue is less than $2MM this fee is waived). This fee helps fund the DAA and enforcement of compliance. Better Advertising is paid a nominal CPM for the service, which consists of the delivery of a java script overlay of the icon and the functionality of disclosure,  compliance monitoring, and opt-out facilitation. They also offer additional reporting services for additional fees. Essentially the bigger media companies, networks and agencies will be subsidizing the early stages of these initiatives by adopting and paying for the technology so that eventually the costs for everyone can come down with volume.

Challenge: The industry will have to fork out millions of dollars for this.

A new role of planning will include mapping out where compliance is necessary, in which case the icon needs to be visible, and where it is not. Note to agencies – there may be an audit trail requirement here to ensure that you are not paying for enforcement of non BT targeted ads. Nominal CPM or not, it adds up just like ad serving, or ad verification. Ideally it would be nice to have this built into the ad server – but I can say that about so many things! Assume that compliance and the use of the icon will be a part of media terms & conditions in the not too distant future.

One of the elephants in the room is the slightly ambiguous definition of compliance – or more accurately what the compliance is ensuring. The following are the DAA’s Self Regulatory Principles:

The Education Principle calls for organizations to participate in efforts to educate individuals and businesses about online behavioral advertising and the Principles.

The Transparency Principle calls for clearer and easily accessible disclosures to consumers about data collection and use practices associated with online behavioral advertising. It will result in new, enhanced notice on the page where data is collected through links embedded in or around advertisements, or on the Web page itself.

The Consumer Control Principle provides consumers with an expanded ability to choose whether data is collected and used for online behavioral advertising purposes. This choice will be available through a link from the notice provided on the Web page where data is collected.

The Consumer Control Principle requires “service providers”, a term that includes Internet access service providers and providers of desktop applications software such as Web browser “tool bars” to obtain the consent of users before engaging in online behavioral advertising, and take steps to de-identify the data used for such purposes.

The Data Security Principle calls for organizations to provide appropriate security for, and limited retention of data, collected and used for online behavioral advertising purposes.

The Material Changes Principle calls for obtaining consumer consent before a Material Change is made to an entity’s Online Behavioral Advertising data collection and use policies unless that change will result in less collection or use of data.

The Sensitive Data Principle recognizes that data collected from children and used for online behavioral advertising merits heightened protection, and requires parental consent for behavioral advertising to consumers known to be under 13 on child-directed Web sites. This Principle also provides heightened protections to certain health and financial data when attributable to a specific individual.

The Accountability Principle calls for development of programs to further advance these Principles, including programs to monitor and report instances of uncorrected non-compliance with these Principles to appropriate government agencies. The CBBB and DMA have been asked and agreed to work cooperatively to establish accountability mechanisms under the Principles.

It’s a Big Job But Somebody’s Got to Do It

Can an amalgamation of  of a number of industry trade groups that historically have not been involved in technology nor enforcement keep the FTC satisfied? We better hope so.

Personally I feel that a lot of it has to do with the economics behind the process. Can the DAA generate sufficient revenue to properly resource enforcement? Will the industry accept these costs in stride? Do we all understand the alternative?

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There has been a lot of talk over the last couple of years about how the “agency model is broken”. While a sexy headline for marketing trades, and a great scapegoat for clients, I find this phrase a gross misrepresentation of what has been happening in the industry.

Lovers Quarrels

First – there is truth to the client-agency relationship changing – often uncomfortably. Sometimes it is the agency’s fault for over promising, staffing non-strategic thinkers at the helm of account strategy, not fostering proper collaboration, not nurturing a culture of discovery and innovation – and sometimes the client’s fault for having unrealistic expectations, pushing agencies to do too much more with less, and not taking the responsibility to understand their own business better. But truth be told, the client and agency need each other and they both know it. Agencies need to learn how to say “no” and set realistic expectations of the new labor intensity, costs and resources required to accomplish the objectives of a client. This does fly in the face of the “old agency model” of saying “yes” first and figuring out how to execute and manage the work later. The recent resignation of the sizable Home Depot account by MRM is a a prime example of an agency forced to take a stand to ensure a profit from their work. I say kudos! Of course I don’t know if the account was improperly scoped in the first place (a common agency blunder in the over-eagerness to win an account).

MRM New York managing director Corey Mitchell wrote that “for reasons based on a fair exchange of services and a mutual inability to arrive at realistic expectations, we are choosing to walk away from our relationship with The Home Depot completely.”

Embracing Change

Undoubtedly, the only path to success on the client or agency side is to understand the seismic shift in the way we communicate with consumers,  the fragmentation of the distribution channels where we reach them, and the desensitization to marketing in general. Strategy used to be about the creative platform and how to inspire, motivate and tap into consumer passion. While these   creative and messaging objectives remain prerequisite components of an increasingly difficult task of  influencing consumers, the strategic emphasis has actually shifted to understanding how and where to reach consumers and the mechanisms  and marketing attributes that influence them. Agencies have been focusing on reintegrating services and capabilities – to a degree creating jacks of all trades, while they should be focusing on integrating strategic planning, analytics and modeling  while allowing for the growth of specialized units for the disciplines that are increasing in specialization. It’s not a silo’ed approach if the head (strategy & insights) and the tail (analytics and modeling) are driving and fostering collaboration. IPG just announced such a restructuring of their digital agency assets. Of course agency announcements and intentions sometimes vary from actual practice and proficiency.

The Good, The Bad & The Ugly

Since leaving the agency world in 2007, I have been working with Laredo Group, training agencies of all sizes, including some of the largest media shops in the industry. I have seen firsthand the challenges faced and how some agencies overcome these challenges while others struggle. Additionally, I have been consulting clients and agencies, including leading client  agency reviews and selections for clients of various sizes. Big agencies get a bad rap sometimes from pundits. I must say that I have seen some impressive agencies who are embracing  and leading the charge of change, innovation and growth. I have also seen a lot of complacency, mediocrity, arrogance with resistance to change, ignorance with a desire for change, and in a couple of instances, even straight up cluelessness. It’s tough running an agency when margins are being eroded by the complexities of the marketplace and the world is evolving faster than your staff can keep up with. It’s also tough for clients who are looking to lean on their agencies for thought  leadership and executional prowess when you keep hearing how the “agency model is broken” and agencies are the bad guys.

It’s All About The Talent

The Stylistics and Michael Jackson got it right – “People Make The World Go ‘Round”. An agency IS its people. The best agencies have developed a culture that attracts and retains top talent. To a client, agencies are as good as the weakest team members assigned to their account. This is often where the biggest perception of “broken” lies. Clients – be sure to request to meet the actual team assigned to your account before working with an agency. If already engaged with an agency, take the team out to lunch, get to know them better, empower them and make them want to kick ass for you. Often times they are unappreciated and overworked. But keep an eye open for the weaker links – hey, everybody has to learn sometime – just make sure they aren’t on your strategic planning or analytics teams!

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Best Buy TV Ad SpendingToday Ad Age reported that Best Buy is shifting more advertising dollars to TV this holiday season.

The consumer electronics giant wouldn’t give exact figures, but it is increasing its spending by a low double- digit percentage. In 2009, it spent $150 million on TV advertising, according to Kantar; network TV ads accounted for $65 million of that figure. To free up funds for TV, the retailer is pulling money away from inserts and trimming distribution in parts of the country where newspaper readership has suffered.

Quoting a Best Buy exec: “When you have big budgets like we do, a 5% to 10% improvement is a big deal.”

What’s Good For The Goose…

Believe it or not, as a digital strategist, I am actually thrilled to see this move and think it is wholeheartedly the right one – because it is supported by sophisticated media mix models that predict the impact and outcome of the media investments. Make no mistake about it – media mix econometric modeling is neither simple nor absolute, but more companies need to attempt to crack this nut. Unfortunately, today a lot of media investment is based on intuition and debate under the guise of collaborative channel planning, rather than a systematic approach to modeling a mix. And BTW – you don’t need a nine figure budget to take a deeper look at the way your media works together. You may not be able to develop the sophistication level of a comprehensive econometric model, but there are so many different ways to analyze your data. It starts with the desire to do so and a lack of aversion to walk outside of your comfort zone – because trust me, that’s where you’ll be very quickly.

Based on the model’s recommendations, Best Buy has also tweaked its digital spending, putting more money into display advertising. And it’s also considering putting more money into events. Mr. Panayiotou said that the model made other suggestions, which the retailer is still evaluating. His team is looking at everything from events to the loyalty program, digital to online search.

The fact of the matter is that all media spend, whether direct response or branding focused, has the same objective – to influence and sell product to consumers. The primary difference is where in the sales cycle you reach a consumer and how long it takes to influence the sale. This is extremely over simplified, but a fact nonetheless.

Media Investment Predictability

The beauty of the concept of GRP’s is that a historical level of media weight could somewhat reliably predict the business outcome in the market. One of the challenges of digital media for large brand advertisers is that, unlike traditional media, it’s hard to predict the outcome in the market as a result of ad spending. To a degree this is because of the small budget allocations to digital, but is also due to the differences in media currency and the lack of significant corollary research on investment impact. Many brands believe in the power of digital media, but most have yet to quantify the marginal increase to their businesses as media dollars get shifted between traditional and digital media. We can talk ad nauseum about how digital is an essential part of the mix (and it is!) – but as an industry we must do a better job at proving it.

Digital Media is Growing Up

Of course, within the digital ecosystem there is significant evolution all around us. The market is still dominated by direct response marketers – and supports these efforts at scale. Most DR marketers have yet to hit a point of diminishing returns and the market is evolving to push that point even further. Even within this space most agencies and marketers fail to use available tools like attribution reporting to properly model a digital mix and prevent duplicate tracking and over-crediting of activation channels like search and retargeting – a huge issue that plagues every multi-channel digital marketer, particularly retailers, whether they take the time to realize it or not.

As marketers get savvier about the word “accountability” not equating to “direct response”, we will see  more branding dollars shifting to the web. But this won’t happen until every company has a champion to drive modeling that incorporates  and measures digital in a more intelligent fashion than is happening  today, where we use disconnected proxy metrics and great salesmanship to feed into brands’ (and often our own) desire to want to believe in digital. DO believe – digital media IS integral to your or your clients’ businesses. But take a systematic approach to how everything works together, because it’s only becoming more  fragmented and complicated. CMO’s today have a tough job, and they are dropping like flies, with an average tenure being less than 2 years. Maybe  the role of the CMO needs a fundamental shift. Maybe the transformation is underway already. Enter the era of the “Chief Modeling Officer”.

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The increase in buzz and actual growth of the Demand Side Platform (DSP) / Real Time Bidding (RTB) market is not news anymore. The trend of separating audience profiles from media and empowering media buyers  to bid on specific audience profiles across large exchanges of media inventory is a hot topic of conversation, and rightfully so. But of course with any growing trend, it is essential to take the time to identify which players provide true and unique value propositions to the marketplace. Beware of impostors trying to capitalize on the hype rather than helping to perfect the concept of what a DSP facilitates.

In Theory, Practice & Theory are The Same – In Practice They Are Not

In theory, each agency or media buyer needs only one DSP to bid into the entire exchange and second channel media ecosystem, with all the data plugins available at their disposal. The market would have a high degree of bid density (a lot of actual demand side activity) and liquidity (stable supply of replicable “inventory” that establishes and holds its value – which of course is an entire issue in and of itself). Of course, we don’t live in a perfect world, yet. Neither bid density nor an ability to value inventory properly exists in the RTB marketplace.

Give Me a D…

Adding the acronym DSP to your product offering gets more feet in more doors today, and therefore we will see many large networks and new players adding “DSP” to their offerings. However, in concept, many of these new platforms are limited to specific network inventory (albeit large amounts of it), static data profiles or targeting options (albeit fairly sophisticated options), and sometimes lack the total transparency that the more savvy buyers have come to expect from a true DSP (albeit some are willing to work on a CPA basis, so sometimes the buyer doesn’t care). A “true DSP” is one that can bid in real-time into the entire exchange and second channel ecosystem, works with all or at least most of the data providers and maintains total transparency on media and pricing. The holding company-level media agencies have all either developed their own or white labeled AppNexus or other third part technologies. Much like ad servers, as the market evolves, your agency or in-house buyers will only be working with one DSP (or maybe we will start calling them real time bidding engines at some point?) – or at least a primary DSP. Speaking of ad servers – I predict that ultimately Google (DART) and Microsoft (Atlas) will be the two leading DSP’s on the market (although MediaMind will be a third major player, particularly with the impending IPO). This will happen through acquisition, and the first in the category was Invite Media – check one off for Google. Some of the other current acquisition contenders include DataXu, X+1, Media Math, and AppNexus, with new players claiming market entry seemingly monthly. Degree of sophistication of advanced optimization engines should soon become a unique point of differentiation between companies.

Wanted: A Stable Market

Imagine a series of interconnected Venn diagrams, where the overlapping areas represent consumers that satisfy multiple advertisers’ criteria. These criteria are compiled using a combination of data points from several data providers, all integrated into your DSP and available to select from an intuitive  interface. Every single available impression in the exchange is assessed in real-time by every DSP on the market, and multiple bids from the appropriate advertisers within each DSP are all processed in real-time. Those buyers with the highest bids will get the inventory. All of this bidding happens in real-time – billions of times per day. Sound familiar? The bidding part at least? Google built the biggest cash cow in our industry on a similar model – using far less data and sans cross category competition for the same consumer.

Until there is a higher level of bid density and inventory availability, the marketplace will not be ripe for all advertisers and will favor select categories, and not all publishers will provide inventory into the RTB marketplace. It’s the classic chicken and egg problem. Hence some of the non-DSP DSP’s.

The Opposite of DSP

Publishers on the other-hand utilize yield optimizers to interface with the DSP’s to manage inventory, data relationships,  real time bidding and maximize revenue generated. Companies such as Rubicon Project, Ad Meld and PubMatic will soon become necessities for any publisher who wishes to participate in the second channel (inventory not sold at a premium directly by its sales force – which BTW is a lot of inventory!) Even some of these companies are releasing so called Demand Side products. Can they sit in the middle ground of both the supply and demand side worlds? Only time will tell, but my gut says no way. While technology might be able to play both side sof the fence more objectively than people, buyers still want separation from sellers. Of course Doubleclick did it – there’s the whole DFP / DFA thing, but the instances of one company becoming a leader on the buy and sell side of the same technology coin are few and far between.

Anyway, as you can see it’s all really simple …

But in all seriousness, it is as exciting as it is complex. We are participating in the evolution of the digital media world as we know it.

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