AdExchanger.com: Why will measuring effectiveness as well as understanding how to monetize "earned" or social media be a key for advertising in the future?
BL: Measuring effectiveness of social media is critical, if simply because money flows to the most measurable media. It's why we spend so much money on Nielsen research. Nielsen helps justify the billions of dollars in TV investments. It's also why more money is flowing online during this recession when marketers are being held accountable for every dollar they spend.
One of the reasons TV garners so much money from advertisers, is because it's still the best channel to drive people into the purchase funnel. It's an awareness and familiarity-driving channel. Traditional online and social media tends to engage customers further down the funnel. As we learn more about how sites like Hulu engage consumers I'm curious to see where those dollars are sourced from, that is from which channels along the funnel. I bet they'll come from TV and radio budgets. Proper measurement will be key to support growth of these types of media.
Will agencies need to become, in part, technology companies in order to compete with and differentiate from the standalone technology companies and service providers?
All agencies will have to become data-driven. Unfortunately most agencies have no idea how to mine and manage data nor do they know how to build an infrastructure to easily use data. Today we can precisely target customers using data; we can use data to better understand consumers; we can better optimize our messaging using data. But we can only do these things if we know how to manipulate the data and build communication plans that capture data. And I'm not convinced most agencies do.
We often talk about a time, in the not to distant future, when every creative team will be partnered with a data analyst who can tell them what's immediately working and why. That's a vision and I'm not sure anyone, either on the agency side or the technology side, is there yet.
The big difference between the standalone technology companies and the agencies is that the standalone tech companies really don't understand marketing and the creative professions. They don't understand how to develop communications that inspire customers. But I'm still not sure whether it's easier for technology companies to become creative or creative companies to become technologists.
Are you seeing the much-discussed trend that clients are moving to the digital space versus traditional media due to its accountability or is there still reluctance?
Absolutely. More and more clients are allocating more and more money to digital media. In fact many of our clients, across categories and demos, are allocating as much as 25% of their budgets to online media. That's a big increase.
As online media can deliver customers throughout the purchase funnel, the channel will earn even more budgets.
I'm particularly excited about the growth of online video at the top of the funnel and biddable display via exchanges towards the bottom of the funnel.
Additionally, social media is exploding. I think we're going to look back at the Susan Boyle YouTube video as a watershed moment in the social media space. That fact that her video was watched close to 100MM times in the span of two weeks is extraordinary.
Can exchanges play a part in the transformation of the digital media agency? For example, is the exchange model a key to addressable media?
We think that most standard display will be bought on the exchanges through companies like Varick Media Management. VMM offers marketers extraordinarily precise cookie-level targeting very economically. Since VMM is automated it requires less human resources to execute so the cost of buying display plummets and the benefits soar.
I think most of the people I have buying digital media will morph into producers, very Mark Burnett-esque. They'll be spending their time creating and buying premium and unique site integrations. The same thing will happen on the publisher side. They'll sell most of their display on the exchanges and have their sales teams, which will be fewer and more experienced, focus on the high-CPM large-scale site integrations.
What can agencies do to bring brand dollars online?
I think the question is really what can agencies do to bring awareness-driving dollars online. All budgets are spent supporting the brand.
TV is still the biggest awareness-driving medium. TV reaches the most people at any one time. Online continues to have problems delivering instantaneous awareness. When I reach people online there is still a perception, as a viewer, that I am being reached and no one else is being reached at exactly the same time as I am. In order to drive awareness it's important for the customer to feel like he or she is being educated about the brand at the same time that all of his or her friends are. It's what we call having social currency. TV has always provided brands with social currency. I think the Susan Boyle phenomena changed that.
There was so much chatter online about her that everyone felt they were participating in the discovery at the same time. I think agencies will bring awareness budgets online when there are opportunities to reach lots of people quickly. Social media is the big hope. Social media allows consumers to participate in a conversation while the issue is happening. Until now, we haven't been able to do that online.
With technological insight in advertising, it appears that the audience is more important than the placement. Agree?
Absolutely. I always believed that context was king. I always said that context gives a brand meaning and credibility. When I ran an ad in Vogue my brand had fashion credentials. But now I can deliver a fashion experience to a fashion-involved customer using rich media so the placement itself is less important. My brand has fashion credentials because the person I reached is intimately interested in fashion and, as a brand, I knew that.
Additionally using the exchanges the cost to reach a specific audience that has exhibited purchase intent costs much less than buying direct from the fashion site. When the overall performance of buying audiences on the exchanges is far superior than buying specific placements the value of context becomes less and less.
When the lift from buying audiences is 2X or 3X, I have a hard time justifying buying placements/context when the lift is only X.
As a buyer, what would you like to see more of from web publishers? And, what can agencies do better for publishers?
Web publishers are in a tough spot and will remain so until they figure out the best way to manage their inventory. With that said, The Media Kitchen works with some terrific publishers. The best ones are the ones that take the time to learn our client's business and bring us original ideas.
Looking into your crystal ball, what happens 5 years from now generally speaking? For example, are you concerned with growing monopolies such as Google's current search ownership, or agency disintermediation with the advent of increasingly effective self-service models or fragmentation of media trading experts such as ad networks?
In 5 years the exchange driven businesses that all the agency holding companies are building will be huge. What we're building now is the advertising industry equivalent of the 20th century brokerage house. My clients are coming to me for advice on how to buy (and sell) online media in real time (shortly). I am combining the best creative minds and data intelligence to deliver the best portfolio of results.
When all media is served over the Internet the volume of business that is traded on the exchanges will be enormous. We will no longer be known as media buyers. Instead we will become traders. I think the last time we saw this kind of paradigm shift in the advertising business was when we started putting ads on TV, and I think that shift pales by comparison. What we're seeing now is much much bigger.