Operative Blog

FFL and Digital Media

Anyone know what time of year it is?  That’s right, it’s fantasy football draft season.  If you’ve played before, you know that draft season is the most stressful time of year.  This is when you have to sit down, look at all the players that are available and decide which ones will help you win a fantasy football championship.  There are many strategies that you can deploy, and the most conventional is to draft running backs- fast, furious and early on.  Why?  They are the steady players that give you consistent point production.  But, fantasy football has changed.  Some NFL teams now use multiple running backs (AKA running back by committee).  Other teams have moved away from running the ball all together and have opted for the exciting air attack.  This opened up opportunities for fantasy owners to structure their teams around additional point contributors like a Quarter Back like Drew Brees or a Wide Receiver like Larry Fitzgerald.  Decisions, decisions. 

How does fantasy football relate back to digital media? 

Well, it’s also technology budgeting season.  Today’s publishers and specialty ad networks feel the stress of making technology decisions for 2011.  They have to sit down, review all the projects they are going to push for and make a stake in the ground that “these are the initiatives that will put us in the best position to win”.  

Many of these projects will fall into 2 categories.  The first category is revenue.  Plain and simple, if that project is successful, it will directly help you make money.  There should be no ambiguity.  Some example projects include:

• Developing custom creative programs to help you attract new brands
• Building a mobile, video or  social media ad server that promotes engagement metrics or gives you a competitive advantage in the market place
• Introducing rich media tools

The second category is around helping companies drive efficiency inside and outside their organization.  Below are some examples of efficiency-focused initiatives:

• Syncing your publisher/partner/network management systems
• Evaluating and deploying reconciliation, reporting and billing tools
• Integrating with proposal , IO and media planning applications

In order to be successful in 2011, media companies need to do both.  You MUST do both.  If you don’t innovate, you won’t attract the big ad dollars.  If you only innovate and forget about the back-end efficiency, you’ll lose all the customers you won or have a ceiling on the amount of customers you can take-on due to inefficiency.  Quite the predicament. 

For most media companies, there are the few factors contributing to this problem:

1. You’ve got 1 engineering team and they are drinking through a fire hose.  I don’t care who you are…if you’re a digital media owner in some capacity, your engineering team has too much on their plate and not enough time.  Furthermore, with all the new technology in the market place, it’s just getting worse and worse.
2. Most publishers, even today, still run their business on excel.  There’s not one platform in place that you can use as a springboard for innovation.  Not one place to connect all these new things that you’re buying or creating.  This is also the reason your operations teams are so busy.  They have to log into 10 different systems to get their jobs done. No wonder there is so much demand for projects that create efficiency.
3. A large percentage of the technology and business leadership within media organizations still promotes a “let’s build it all” type of mentality.  For example, the industry hasn’t matured enough where the role of the CIO is relevant – there’s no one to advise the CEO on best practices on how to get information, drive revenue and scale (all at the same time).

If this sounds familiar and your ability to be successful depends on your engineering team executing, consider some of these ideas:

1. Make a list of all the projects you have on your plate for 2011.  From there, put a “$” next to each one that your sure will help you drive revenue next year.  Then, put an “E” next to the ones that will help your bottom line (efficiency gains, speed to market, etc.).  Getting clarity on what these projects actually “mean” for the business is the first step.  
2. From there, make the decision to partner with a company that can offer an enterprise platform to help you run your day to day business and gain those efficiencies (inventory management, proposals, packaging, trafficking, reporting, financial reconciliation, etc.).  Make sure your partner has an API and SDK to help you innovate.  You’ll find there are companies that can not only help you get deal with a lot of your “E”s, but also enable you to innovate the “$”s.
3. It’s important to ensure that the company’s technology culture has a strategic focus on revenue and strategic value creation.  I ran into one publisher recently who calls his engineering team “Team Money”.  That’s because their engineering leadership has a mentality of selecting projects that will help the company drive new revenue by establishing partnerships with companies that help them achieve greater efficiency.   This is a cultural change and isn’t always easy.  Engage your CEO in this concept – make it a big deal towards hitting the 2011 revenue number.

By focusing your engineering teams on things that are exciting (like drafting quarterbacks and wide receivers) and partnering with a company that can help you innovate and scale (your work horse running back), you’ll be in a better position to be successful in 2011…successful in beating your competition, meeting the new demands of brand advertisers, raising employee satisfaction in your engineering department and keeping both the top and bottom line on the up and up.

According to the Bain Study “Building Brands Online”, in the next 3 years, brand marketers will spend close to 40% of their budget on cross-platform campaigns (up from roughly 25%).  That’s about $52,000,000,000 being spent on cross platform campaigns in the near future.  Unless you start making changes in your organization to satisfy this new rise in demand, you won’t get a dime of it.

Let’s explore why.

What do these new demands look like for marketers?                            

A marketer looking for ‘cross-platform’ means they want to use multiple advertising platforms or vehicles to convey an advertising message.  For example, a brand like Nike may want to reach women at home, on the move, during recreation and at work.  To do that, Nike needs a number of options to distribute the advertising message: display media, online video, mobile, social media, TV, outdoor, newspaper and magazines.  And, the list continues to get longer.  For example, in the last 2 months, hundreds of publishers scrambled to build their iPad app, knowing that a decent percent of their audience will flee to the digital magazine version of their product. 

Marketers are starting to require multiple touch points in their campaigns, increasingly digital.  The people who spend the money are aware that digital is an accountable, efficient way to build brand equity and are putting pressure on their marketing departments to become more cross-platform as a result.  They are looking to get a single message to a consumer across different digital and non-digital advertising channels.  In fact, according to the Marketing and Media Ecosystem 2010 Booz & Company analysis, 89% of all marketers are developing ideas that cross media platforms, including digital.        

What can media owners and publishers do to keep up with these demands?

Let’s take a break from the macro-level talk and get into the day to day reality of the situation.  The media buyer that you met at a cocktail party nine months ago calls you up. 

“Hey – long time, how are you?… Great, great…Listen, we are doing this thing for my client and they are trying to reach men between the ages of 18-49 that are interested in buying a car.  And um…they are really trying to do this across multiple outlets…something that covers all the standard online ad units, but something that’s custom too.  So, if you could put together something that’s standard, custom, across video, mobile, online, social, that’s targeted to male car buyers between the age of 18 and 49 that live in the north east, that’d be great.  Oh, wait, I need it by this Friday OK?  Thanks, you’re the best.”

Only 1 type of publisher will get this order- the one who CAN execute.  If you can’t scale, you’ll spend all of your time reacting to these requests and looking for data.  This leaves very little time to sell, brainstorm and get creative. 

Translation – you likely won’t get this deal. 

So, what’s holding publishers back from executing cross-platform campaigns?

1.    Technology and data fragmentation is still a huge problem.  A typical publisher uses 30+ systems to run their business.  The data is fragmented, yet absolutely necessary to access to stay competitive in this new market place.  There’s one ad server for video, one for mobile, and one for display.  If you want to include a TV component or a print component, there’s a whole different set of systems to access to see if the inventory even available, and at what price.  If you plan to offer ad space on an iPad app, well you have that to deal with now too. 

2.    Business resources necessary to complete the RFP or contract oftentimes don’t even sit on the same floor- let alone same office. You may have other sales teams within your company that you may need to consult with to get them on board with your client’s ideas.  They are usually removed from your digital business goals, have not been vested in the process of selling to this client, and have their own agendas in mind. 

3.     Ad operations teams are typecast and segmented by the media they implement.  For many publishers, one team traffics standard and display rich media.  Another team traffics mobile or uses an outsourced mobile ad network.  TV and print production teams don’t even sit in the same office as you.  These are not ideal conditions for selling a cross-platform deal.

What can publishers do about it?

1.    Take a leadership role by getting all of your data in one place for Sales.  Plan for the future.  According to the Ecosystem study mentioned above, 67% of media owners said they need to upgrade their supply chain capabilities in 2010.  Part of this investment translates into having one screen to access your inventory, products and rate cards available for video, mobile, display, social and even TV, radio and newspaper.  This needs to happen, regardless of the number of ad servers or execution systems you may use.  Integrate it all into one central place so at the time of proposal, Sales has all the information they need when they get the call from that media buyer. 

2.    Centralize ad operations teams and production resources.  Fragmented ad operations teams are unable to help sales drive revenue that comes from cross-platform.  While it would be difficult (today) to have the same ad ops team that implements TV also traffic digital, there are steps you can take to move in the right direction.  Get everyone communicating with each other through one platform.  The carrot is integrating their specific ad system into the platform that everyone uses.  This will make them want to be on that platform.  By merging several departments onto one system, new proposals, orders, demands and alerts from a cross-media sales teams would be visible to everyone. 

How do these steps help publishers deliver cross-media campaigns?

By implementing these steps, Sales will be able react quickly to client demands.  They will also have more data to educate buyers and move upstream in the buying process, getting closer to the people holding the budget.  Executives can get a larger share of wallet from existing and new customers.  Ad operations and production resources can become a strategic partner to ad sales teams and help provide a competitive advantage over other publishers competing for the same dollars.

Of course, this is not easily done.  Someone with influence in your company needs to step in and be the VP of Change.  Someone who has power.  Someone that cares about revenue.  That cares about your brand.  Someone that is forward thinking enough to adapt before it’s too late.  If you can get the right people behind you, integration of data becomes easier, centralization of operations starts to fall into place and the company will start to rally towards a common cause- $52,000,000,000.

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Welcome to the IAB Annual Leadership Meeting, “Ecosystem 2.0, Revenue the next wave“.  650 digital media leaders are here in Carlsbad, California- 30% more attendees than last year.  It’s Monday morning, February 22, and one of the resounding messages so far has been the fact that interactive marketing will grow next year.  2010 is about new services, products, and transparency- it is all about growth.  As an update, the Terms and Conditions 3.0 will take effect today and was based upon feedback from over 100 companies.

In one of the opening sessions, Jory Des Jardins from Blogher introduced Frank Cooper  from Pepsi.   Jory praised Pepsi’s innovative approach to interactivity.   She mentioned an example about  a consumer tweeting that they are thirsty, and suddenly a butler appears on the screen to offer a Diet Pepsi.  Companies like Pepsi are taking big risks which means they are taking a leadership position. 

Frank Cooper, Senior Vice President, Chief Consumer Engagement Officer, Pepsi Co Americas Beverages:

“We have a chance to make brands more appropriate to everyone’s lives.”  He believes the marketing that has been built for the last 75 years is now not relevant.  Brands need to add value to our lives.  The truth is that right now we are in the middle of a brand marketing crisis.  Less loyalty, lower prices, dysfunctional messages across the board, these are all problems with marketing today.  The truth is that brand marketing has NOT really changed in quite some time. 

As an industry of digital marketers, we need to rethink, redesign and rebuild brand marketing.  Brands provide consistent value and consistent price.  But identity value has become even more important to consumers.  How can brands bring new value to the audience?

Brand behavior must change from ‘only sponsorships’ to ‘opportunities based on experience’.   We must also build our brands around social networks. The consumer has to be able to sell for us and leverage outlets that are ‘connected’.  The digital space has technology that allows us to relate to consumers in a deeper way.  Social media allows brands to highlight people and elevate their experiences with a brand or product. 

Ultimately, advertising has to add more transactions, better value or higher prices to be successful.

…they could all force publishers to change the way they sell and operate in the near future.

Have you ever had one of those digital media moments where you thought, “cmon, really?!”  Well, on Monday morning I attended Digiday at the W Hotel in NYC and for a moment, thought exactly that… for a minute.  I think it was brought up numerous times that it’s no longer appropriate to call your inventory sold and unsold, but more like ‘reserved and non-reserved’ as Darren Herman put it.  I thought to myself, hmmm, ok, let’s go with that…it sounds better than remnant for sure…but then later that day, it was then proclaimed ‘premium and sub-premium’…I guess because ‘non-premium’ sounds too much like a fake Louis Vuitton handbag sold on 5th Avenue next to the hot dog vendor – you might buy one, but you’ll feel a little icky after.

Believe it or not, all this renaming and debating over what to call unused inventory went on all morning.  All of a sudden, these silly proclamations started to make me think.  If people are spending all this effort debating over what a specific category is called, there must be a disturbance in the force; the growth of this ‘sub-premium’ inventory is growing exponentially.  Jason Kelly from Time, Inc agrees that with “…the growth of  Twitter and other social media, non-premium inventory is growing at a rapid pace, which also means finding premium inventory is getting harder.”  He also added that “non premium display has great opportunity for growth.” 

So as sub-premium inventory grows at such a rapid pace, the dynamic of how advertisers interact with consumers is changes along with it. 

French children are told a story in which they imagine having a pond with water lily leaves floating on the surface.  The lily population doubles in size every day and, if left unchecked, will smother the pond in 30 days, killing all the other living things in the water.  Could the growth of sub-premium inventory threaten publishers ability to compete in the future?  The answer is yes - if you don’t take action.  Here are some thoughts on how agencies are looking to innovate and some action items publishers can take to keep competitive in this newly evolving landscape.

1. Agencies are Buying Audience:  You may say, “duh” to that, but with all the impressions available on the Internet,  coupled with new technologies, there are more and more ways for agencies to buy audiences.  Darren Herman, who runs digital media at the Media Kitchen and is also President of Varick Media Management, talked about their own data initiatives and is working with 27 different data providers to mine data for audience segments. 

2. I also traded some emails with Steve Katelman from OMD and when I asked him what the next big initiatives were for agencies, he said “It’s all about audiences and the evolution of real time bidding.”  These activities signal that agencies are pushing the envelope and taking media buying to the next level since brands are getting smarter about which agencies they work with. 

3. To make things even more interesting, GroupM decided to go against the IAB initiatives for Ts and Cs by claiming ownership of data it collects.  According to GroupM’s COO, John Montgomery, this is a way to “…protect the confidentiality of our clients’ campaign data and information.”  One does wonder if this becomes a trend, how it could create a dynamic  of publishers competing against their own customers OR new price pressures down the road.

So now what?

As a publisher, you need to start to understand your audience.  Quantcast is  great way to take a first step at understanding the segments you can offer – but that won’t be enough.  Taking action on that data and integrating it into your product catalog so it’s easily findable by your ad sales team, will ensure you are ready to sell the way agencies want to buy. Now, that’scompetitive advantage.  This was echoed at Digiday by Janet Balis, President of Digital Media Strategies, who spoke on the importance of, at the very least, keeping an up to date “product catalog and sound inventory management strategy” as the industry looks towards more advanced ways to reach consumers.

Industry vet and pal of mine, Nick Johnson from NBCU mentioned that “mining data and looking for specific audience segments is a big focus for us…we are in the business of unlocking data to create value for our clients and their clients.”  In order to do this, Nick added, “You need to operate more efficiently and look for places in your business that don’t scale and fix them.”  If you want to elevate your game, you need to fix the basic data fragmentation issues in order to solve for the future.

Even if you can get your house in order for this audience revolution, there is still a miss-match in terms of how you set up your resources.  Currently, “50% of ad ops time is focused on 15% of the revenue,” says Josh Wetzelfrom Pubmatic.  Basically, this means that in addition to getting your data in order, you may have to find ways to free up your ad ops resources to stay focused on big ticket integrations and less on the more repeatable, low CPM, ‘sub-premium’ tasks.

I look forward to your comments.

Lorne

So how are the explosion of alternate platforms changing the landscape of digital media and what impact is this having on the underlying data? Is there a sea-change going on that is altering the face of online marketing or are platforms evolving independently of each other? These were some of the questions our panel sought to explore in
Advertising Analytics and Contextual Media: Social Media, Mobile, Search, Video Search and HyperTargeting. Couple of people couldn’t make it – we ended up:

• Michael Boland, senior analyst and program director, The Kelsey Group, Moderator
• Paul Edmondson, CEO, YieldBuild
• Dan Halyburton, President, Radio Time
• Dr. A.K. Pradeep, CEO/Founder, NeuroFocus
• Benjamin Reid, VP, Sales Engineering, Operative

We had a number of interesting perspectives from the high tech (NeuroFocus) to traditional media (RadioTime) to networks (YieldBuild) to process and infrastructure (Operative).

And now for something completely different – no fun following Dr. Pradeep. We were treated to a demonstration of the NeuroFocus technology which measures brainwave activity of a test subject viewing advertising. The test person put on a ski hat with 22 electrodes connected to their brain and watched a Mountain Dew commercial. The audience observed in real-time when the user was highly engaged with the creative and when attention fell off. Unclear how this is used in the digital marketing space but certainly an entertaining demonstration.

A lot of conversation revolved around the relatively recent phenomenon of having more data than we collectively know how to manage. This can range from the buy side having multiple exposure, engagement, performance, brand, interaction, conversion, loyalty metrics all captured in a single campaign, to the sell side managing inventory, sales effectiveness, discount management, sell-through, campaign status, discrepancies, page and slot effectiveness, invoicing etc. How do we make sense of it. We all agreed that building better bridges between buyer and seller are important as well as agreeing on shared success metrics. We focused on different routes though – YieldBuild took a network and efficiency-centric view, while RadioTime focused more on organizing an audience to the marketplace. Operative looks at these challenges through the lens of open platforms that foster collaboration and clearly defined processes. We also spent some time on how the offline and online worlds are converging. There are clearly hurdles to be overcome in the internal structure of many org on both buy and sell side but equally important is the fact that the currency and processes each platform employs are dramatically different. As an industry, we will need to either harmonize the metrics and protocols of media sales or build bridges that will span both worlds to facilitate the process for all parties internal and external.

Another great panel I caught was the Advertising Innovation! Broadband, Mobile, In-Video, In-Game, Social Networks, Blogs and Podcasts http://www.digitalhollywood.com/09DHSpring/DH09Sp-Thurs6.html

• Jon Aizen, founder and COO, Dapper
• Matt Britton, founder and CEO, Mr Youth
• Chris Colinsky, Executive Creative Director, WhittmanHart
• Marissa Gluck, founder, Radar Research, Moderator
• John Montgomery, Executive Creative Director, Threshold Interactive
• Pete Vlastelica, founder and CEO, Yardbarker

This was an agency-heavy panel rounded out with some publisher and network representation. The focus was on where and if advertising works in a social network environment. The first consensus is that it’s not about performance, it’s about interaction. This is kind of a new bucket since we’re not really talking about transacting in volume (people are on SN for the connection and tend to stay with the content) or a large branding opportunity. But there are conversations happening between brands and end users. Couple of great takeaways:

Q: Who controls brands? Consumers? Marketers?

A: John Montgomery – Companies create brands. Consumers help SHAPE brands. The process is usually started with some internal ingenuity. Consumers create trends, not brands.

Q – How can publishers position their audiences differently to be part of the conversation?

A: John Montgomery – The better agencies know what’s coming down the pike the better they can plan against it
Matt Britton – more brands are thinking about becoming publishers. No one knows their audience better than publishers. Work with agencies to understand what makes your audience unique

From where I sit, this is just another reason that Ops should be sitting at the table with Sales/Planning and Product on regular basis, helping shape the innovation that can capture new campaigns in a highly competitive marketplace. Ad networks are definitely a key part of the revenue mix but ensuring that your company is driving new ideas that can be executed against flawlessly can make all the difference at the end of the quarter.