My First Media Buy

A little over a week ago, I got to experience what it's like to be a media strategist/planner...for reals. I work closely with our strategists on a daily basis, but never had I been the main point of contact for a media buy. With some help and guidance from an AE, I was able to set-up and implement a CPM deal with a publisher. I even signed the IO, that's insertion order for you youngsters out there. I was told that your first online media buy is the equivalent of having your first child. I don't have children, but it was awesome. Although the campaign didn't produce as anticipated, no computers spontaneously burst into flames on my watch...that's a success in my book.

As I try to articulate this introspection, I realize the importance of that experience. Hold up...I'd like to give a shout-out to college for that last sentence, much love. But, truly, one of the advantages of being part of a small agency is that positions are not one dimensional. The size of Media Two allows for exposure to many different roles and in turn promotes diversity amongst employees. My experience is a case in point. I'm not a strategist by any means (yet), but I feel confident enough to talk to a sales rep without consulting Rosetta Stone. It's hard to imagine that I would have been trusted or even given the opportunity to make such a deal at a larger agency. So thanks Media Two!

Furthermore, such exposure makes me truly appreciate what my colleagues bring to the table. Not only for the development of the company, but for my professional development as well. I am very grateful to be surrounded by such a talented group. I also now understand why Jon and Amy are a few nuts shy of a trail mix (1) Tons of Emails (2) Tons of phone calls following-up on those emails. I kid, I kid, you guys are the coolest. If Amy were here she probably would have karate chopped me by now so I'm going to stop writing and pretend to get a band-aid from HR.

What's The Next Silo?

For the first 8 years of Media Two’s existence, I spent 95% of my time educating clients that interactive was truly a piece of the marketing mix. So as of about 2 years ago, I came to the conclusion that everyone now “got” that – as interactive ad dollars continued to spike while traditional budgets dwindled. The only problem was – apparently we (Media Two and the IAB and the rest of the interactive community) did too good of a job selling interactive’s benefits as everyone started throwing their money into the interactive “silo” and abandoning everything else…

When this happens, it’s great for agencies like ours in the near term, but the long-term prospect for this client is a nightmare… By putting all of your money in one silo, and ignoring the fact that people interact with multiple channels is a death sentence to your marketing mix. I think people just tend to forget that old adage that there’s always going to be a worst performer. If you remove one, the 2nd worst now becomes your worst… So how about not replacing any, but maybe just reducing until you can find the magical combination that they’re all successful? Nah – probably too much work. But seriously, by putting all of your money into one silo now means your best silo is also your worst… So what happens then?

Exactly what we’re seeing… Interactive now gets divided into it’s own silo with Search being labeled the best, and traditional banner ads getting labeled the worst. So the first thing clients start doing is looking to cancel traditional ads and only run search… Now we’re sitting on millions of dollars that have been allocated to interactive, but we can only spend it on search – and best yet, search seems to be “drying” up and we can’t spend millions anymore – we can only spend thousands… Hmm… Should we silo search now and maybe hire an agency that only specializes in 3-word key phrases?

The point is – we’ve silo’d everything, and by doing that we’ve accomplished nothing. Search is driven by other interactive exposure, and interactive exposure can also be driven by offline events such as a newspaper ad, radio spot, tv, etc… Don’t drop your marketing mix – add to it and expand on it – but do it with firms that understand marketing, not just firms that are jumping on the hottest trend and soaking up the most coin.

Ad Networks a Thing of the Past?

Today I read with one part joy and one part sadness the MediaWeek article titled “ESPN Turns Off Ad Nets to Protect Brand, Content”. The joy is very obvious here at Media Two: Stripping the ad networks of some of the larger sites will now “un-muddy” the waters with the placements and only interactive firms with the best capabilities and know-how will now be equipped to handle strategic online media buys (that was a much longer sentence than what I saw in my mind). Some of the advantages that come from bypassing networks include:

• Knowing that your ads aren’t appearing repeatedly on the same site when you buy more than one ad network. The top two networks make up something like 170% market penetration, and yes, we currently buy on both of them – and no, we don’t ALWAYS know if our ads are appearing on the same page at the same time.
• Traditional agencies that are trying to make a splash into interactive will now have to completely jump in instead of just dipping their toes in the water. Part of the problem we have right now is trying to explain interactive to new clients who have had other agencies do a half-ass job with their campaign.
• Optimization can be brought back in house instead of waiting for the networks “super secret optimization tools”.
• Buying direct always gives you better placements and rapport with the publishers themselves, therefore, hopefully allowing for better brand and position control – and always opening the door for more creative placements that can help advance the industry.
• If a network lowers your campaign exposure because a larger opportunity comes along, it doesn’t force you to frantically find replacement buys.

But with the good, comes the bad…

• Large sites like ESPN are probably going to ask for top dollar, when the networks have already proved we shouldn’t pay that much for them on a straight banner placement.
• Your buying clout and testing capabilities pretty much goes out the door. Has anyone else noticed that there’s no such thing as buying clout online anymore? Not to date myself too much, but I remember the days of placing ads in traditional mediums and the sales reps were willing to give me better rates for my Joe Blow client because they knew that we also worked with Gateway, Bose and others… But I digress.
• If we do want to ramp up our buys in categories we’ve found successful, we can no longer do it as quickly as the one call to the networks.
• More paperwork! You now have to contact 500 sites with orders that you could have gotten previously with just one IO.

Trust me, there’s a lot of good and bad to both routes, but I really think that the more the publishers take back control of their “A” Inventory, the more it will help interactive shops such as ourselves differentiate from the newbies in the industry.

'Fitty' cents equals 'Fitty' dollars

We have all taken the call, where an online publisher calls you out of the blue, or worse, calls your client and then they call you, selling their services and the benefits of their site. If they are really good at their job, everything sounds great…quality traffic, attractive demographic profile, targeting capabilities, Web 2.0 functionality…and that it makes “too much sense to ignore”. Then comes the punchline, “depending on the budget levels, I can talk to my manager about discounting our rate card and offer a onetime CPM of $20, but don’t tell anyone else I gave you this rate.” I knew you had heard that before.

Don’t get me wrong, I am not trash-talking publishers...I started my career on the publisher side. A big part of our business, or any business for that matter, is fostering strong working relationships with your vendors. To that point, it is extremely important to test new publishers to see if you may find your next 'Behavioral Targeted Yahoo Mail at a $1 CPM'. That said, do they really think that a CPM at that level is going to work from a direct response standpoint? (Do I even have to say the objective is direct response? The online channel is direct response by nature as results are immediate and measureable)…but I digress. Politely explain to your cold caller that in order to meet your $50 Cost Per Action, you need to be at a $.50 CPM. Maybe your Cost Per Action is higher at $100. Well then at that CPA level, we have to be in the ballpark at that CPM level, right? Ahhh….not even close. The CPM would need to be at $1 to hit a CPA of $100 (just double the $.50 CPM). $150 CPA = $1.50 CPM, $200 CPA = $2 CPM, so on and so forth. You get the idea. At this point, two things will happen. Either, your perfect opportunity will know the jig is up and end the call, or they will get defensive and start spouting @plan composition percentages of their user profile. “70%+ of our audience is 25-54”…oh yeah, so is the general online universe.

I know what you are asking yourself, how do you possibly know what the rate needs to be to reach my client's CPA levels? You have no idea what my business is or what our current metrics are. I don’t need to know. The answers are in these two numbers - .1 and 1. You only need these two numbers to determine what you have to pay for your online inventory to meet a certain CPA level.

• The first number is the click-through rate, the rate at which users responding to your ads after being exposed. A click-through rate of .1% is a good benchmark to shoot for judging creative and using within your projections to forecast performance. What about the use of Rich Media, you say? “We did a campaign in Qwhenever and we saw a 2% CTR, so take that!” (Let’s be clear, flash is not Rich Media. It’s far too common to be considered Rich Media anymore. We are talking about the 3rd party technologies of the world - Pointroll, Eyeblasters, DART Motif). Ok, I’ll bite. How much did your CPM and serving cost go up by running this type of technology? Also, what was the effect on the conversion rate? You have to be careful with Rich Media and focusing too much on increasing front-end response. Majority of the time, your campaign will not achieve a 2% CTR to make up for the added cost associated with the technology, and historically, they have an adverse effect on the conversion rate. In the end, an advertiser pays these additional fees with no return on their investment, and this aesthetically pleasing ad is used only once and forgotten. So, I think it is fair to use the aforementioned .1% in our calculation, don’t you? Sure, sometimes an ad may experience a higher rate, but majority of the time, most flash ads are not cutting through the clutter and not even reaching a .1% CTR.

• The second number is the conversion rate, the rate at which a user clicks on one of your ads and completes the conversion process, whatever that may be. Let me explain why I am using 1%. For far too long lately, I have seen extremely low conversions rates, and it is not just the Health industry. I have seen 1% or less conversion rates for some very well-known clients in the Financial Services and Telco industries as well, meaning this is a trend across the board, not an isolated incidence. I get asked a lot to explain the reasons why users in the online medium are just not converting and dropping off at such an alarming rate. This conversation always leads to “how are you, our interactive agency, going to fix this problem?”. We, as online marketers, can lead them to water, but we can’t make them drink…at least not by ourselves. Both are blog entries for another time, because there isn't a simple answer…again, I digress. The numbers do not lie, and historically, the online click-to-conversion rate is on average around 1%. I stand behind my number. Yes Michael, I feel a case study coming…

As you can see, .1 and 1 are the magic numbers. Obviously, there are more calculations that go into it and you may even have historical data that is different from these. But if you don’t, these two will work for you. Are you coming to the realization that we, at Media Two, have known all along? I know, pretty daunting isn’t it…but if you can’t beat’em, join’em. So, have no fear, there are online marketing tactics and strategies that can make those numbers work for any business to enjoy success in achieving your or your client’s acquisition goals. So next time you receive a call from a prospective online partner, remember this simple calculation, and save yourself the trouble of having to explain to your client why they are in market with a $1,000 CPA. Then, take the conversation to that place where content publishers want to avoid like the plague – PPP (Pay Per Performance). Say that three times fast…

Creative IS Media

Lately I’ve been reading articles about media firms that are starting to break into the creative ranks, but are getting push back from their parent companies or holding companies as they don’t want the media group to compete with their other brand agencies. I “get” that from a holding company strategy. They want to make sure they’re not stepping on each other’s toes, and strategically it opens doors for them if they have a wider array of specialties. However, if I’m the media shops client – I’d be damn sure to push back on them, and here’s why.

For years we have been saying give us more solid clients that understand marketing principles, and we’ll deliver them results – whether it’s brand exposure or ROI – we’re going to produce IF… If the Media Buy is flexible, can be tracked and has good creative execution. Notice I didn’t say “great” creative execution – I only said “good”. If you give us “great” that’s a whole new meaning that we can deliver the world on your doorstep.

To prove our point, we have a client who we had been begging for some brand identity guidelines from. This is not a small client, they just happened to be evolving their brand to keep pace with the fast moving interactive audiences. But when it never came, it was misconstrued by them as saying Media Two didn’t want to create their ads. On the contrary – we were creating very good ads, but our objectives were direct response and that meant there was not a lot of consistency from ad to ad or from site to site. So when the brand guidelines came, they turned the creative chores over to another agency to produce. We immediately saw a negative impact of the new ads and asked for new ones. Three to Four weeks later we had more underperforming ads to the tune of a 150% increase on our CPA. This is not the fault of this new agency, instead it was the result of removing creative from the hands of the media department. With media sitting next to creative on a day-to-day basis and sharing in the experience, you get the benefits of:

• Hearing what new sites are working from media allows design to customize banners (for example – if it’s a sporty site, make an athletic image/message).
• If the media buyer is on the phone and has a value-added opportunity in a new ad size format, the creative group can have that format done in minutes so as to not miss the opportunity.
• If messaging completely bombs – the media buyer will be the first one asking for new ads from creative before the client has even reviewed the end of day numbers.
• Media can keep in check design… By that I mean, every designer wants to create the coolest ads in the world – but when running ads on Yahoo.com or other large sites, you’re limited to 25k file sizes and 15 seconds of animation. If design understands media’s pain – it’s a much happier relationship.

Again – there are a lot of reasons to keep media and design together, and there are a lot of best practices, but I think the biggest reason any of our clients could ever see is that 150% increase on our CPA. As a side note – we have received those creative duties back from the client and are awaiting approval on our first batch of banners under the new brand guidelines. Anyone else smell a case study coming?