The Convoluted Advertising Ecosystem

Yesterday I wrote about the Media/Entertainment world. Today I wish to discuss the world we operate in...Advertising. I am new to Advertising. Only 2 years in and I have an outsiders view. My background in B2B Sales, Business Development to Major Industrial Businesses like Lockheed Martin, Chevron-Texaco, Exxon-Mobile, Raytheon, Ford Motor Company etc really is completely foreign to Advertising to consumers. I have a Finance Degree but my social life is mostly around creative types in music, art, performers etc. Since I have always championed my customer, always sought to add value, and refused to take money just because I could unless I helped my client, I am actually the type of person the staid and entrenched entities in the Advertising-Media World love and loathe. I can help a Brand focus better to maximize their Ad Spending. I can help an Agency prove their worth to Brands to help them increase their value which always seems to be fuzzy.

The biggest issue with marketing is two fold. First is how do you connect marketing with sales. How do you value the different areas to prove you spent the Brands money well. Secondly is how complicated media plans are, especially today and now they are getting even more complex. To top this all off Agency's tend to specialize in certain niches like Mobile, Digital, TV etc, as well as for the actual Media Buying. And when you operate on a national scale combined with the fickle and chaotic decisions people make when they buy, I truly feel this is just as complex a task as when I worked on Missile Defense Programs for the Department of Defense.

Plus there is competing interests all over the place. I might tell Pepsi they can cut their advertising budget by 15% and they won't lose a penny in sales. Pepsi's Agencies will hate me for this reduction in revenue...even if it is true. It is not in an Agency's best short term interest to be honest if it means reduced billings and profits to be honest. But not being honest leaves you open to being exposed and have your business put out for review, which for long term is not in your best interest. This is why the review process sucks and hurts incumbents. Is the reason for the review a problem with creative or a problem with costs in the view of the Brand's CFO. As much as all you Creative types hate us Finance types, we control the purse strings. And while you may feel we aren't willing to spend money to make money, you should go see the expense reports for the sales team. It is the inability to measure the return on investment that creates all this chaos. And Brands and Agencies feel helpless.

Think of a nationwide media blitz for an upcoming Blockbuster Movie. You can spend all you want and force feed the information to the consumers but if the movie sucks it will bomb. How many times do I need to see a trailer? If I see it 25 times isn't 20+ of those times wasted money? And billboards and poster work across the nation? How do I know the placement is good? No one can do that on a massive scale. No one not even a media buyer/planner. They trust the local folks and take their word for it. And what about digital? My trailer had 1 million hits on You Tube. That was free yet I was told 20 million saw the TV trailer but that can't be proven because we are not in people's living room.

So a CFO who see's that his star salesperson spent $25,000 in entertainment expense brought in $30 million in sales. But the Ad Agencies can't truly prove their value which creates friction, distrust, and animosity...even if the Agency is kicking ass on behalf of their client. and sadly a product that sells itself, like an IPod often the Agency takes credit. And when the Agency kicks ass, but the product fails because it sucks, they get blamed.

At least with Missile Defense I can see if the interceptor hit the target, and how often.

The Beauty of the 30 Second Spot

One thing I have beaten to death is measurability and wastage in the Advertising Industry. And I have discussed the issue with Nielsen pumping inflated, deflated, or just plain inaccurate TV/Cable ratings due to a flawed system. And I will admit this is a topic of interest with clients, and I will tell them it is almost impossible to prove someone watched your 30 second commercial. Were they in the room? Were they using a laptop or mobile device curing the commercial? Even polling won't fix things. Yes the subject remembers your commercial. But you bought 6-8 spots during the football game. Did he watch all 6 of exactly the same commercial? So many unanswered questions that not only are almost impossible to solve, but they will remain impossible until people agree to electronic brain impulse monitoring in mass numbers in a way that the monitor can actually confirm you viewed and remembered the advertisement! Good luck!

But figuring out a realistic CPM can be solved relatively easily with an educated guess. And that CPM is higher than the rate published on purchase contracts for the TV/Cable air time. But I am a firm believer that the value of each viewer who truly watches your 30 second spot is probably higher than the realistic estimate. The internet and mobile have presaged the death of the TV Commercial but not medium is as perfect for telling your story, building brand image and personality, exposing consumers to new products, and engaging them for that period of time. Even if I went to a Brand's website I might click on 10 web pages in 30 secs of my choosing (vs choreographed by the Brand), and I might stay 5 seconds of 5 mins. Maybe I will leave the site up in a Browser Tab for 6 hours inflating the Time Spent metric for the website.

But with that 30 second spot you can make people laugh, tell a serious story, pimp your business or product in glowing terms, or major promotional announcements on your terms. And while I will be the first to say that after seeing an Ad once or twice the rest is wasted Ad Dollars spent, there really is not perfect way to fix the shot gun approach of buying slots all over the place to blanket the airwaves in hopes that if you watch TV/Cable at all, you are likely to see an Ad if you fall in the proper age demographic.

Marketers Salivating At Smartphone Potential..but is the Public?

USA Today Article

My views on this have been pretty blunt. People do not want ads pushed to their phone. Obviously AdMob feels you do. But this person said it perfectly in the comments section of the article:

Oversanitized (1 friends, send message) wrote: 54m ago

Sounds like advertisers can now literally be in your pocket wherever you go. Society acts like that's a good thing. I hate pop-ups on my computer, commercials on TV & radio. Why would I want them in the palm of my hand? I take pride in NOT being a commercial zombie.

Not all marketers and brands feel being pushy is a good for business. But for Ad Server Networks it is their lifeblood. And they will do everything they can to convince clients this is a good thing. Opt-In advertising is the way to go. If people have their small phone screens cluttered with served Ads they will leave mobile web.

Google and Twitter the evil side of Mobile Marketing

It is my position that my phone is a sacred place. I will deal with mobile web advertising that is similar to traditional web. Though eventually their will be Ad Blocking technology. Mobile Advertising should be classy and valuable and Opt-In always. But Google via Android and Twitter are developing location based and behavioral targeting ad serving to invade your phone. Eric Schmidt mentioned in a Business Week interview:

What are the biggest challenges the mobile Web presents?
Let's start with the fact that the phones are not fast, the networks are not as capable, the ad formats are not standardized. But on the other hand it's very, very important to solve those problems because a phone is very personal. And so if we know a fair amount about a person, with their permission we can target a useful ad—you know, "It's Eric. You had a hamburger yesterday, do you want pizza today? There's a pizza store on the right." That kind of ad is likely worth a lot of money to an advertiser because it will generate a sale.

In other words, you send a message to the person's cell phone, saying: "Look, we know you had a burger yesterday. If you want pizza today, just go around the block"?
Right. It may sound creepy, but it might also be quite valuable. People could use advice as to what to eat and where the food is—and of course you can turn it off. So the important thing here is advertising that has value to the person is advertising that is a valuable business. That's the business we're in.

The Marketing Sensei wants to know how Google plans this as an Opt-In service vs Push Technology. And how do they know I had a hamburger? BTW this little exchange proves Mr. Schmidt doesn't really know Mobile.

Now Twitter is planning to make public your Tweet location.

From Marketing Vox:

Twitter is preparing to add an additional detail to each and every tweet published by its users: location, according to co-founder Biz Stone on the Twitter Blog.

"A new API will allow developers to add latitude and longitude to any tweet," wrote Stone, adding that with "accurate, tweet-level data" you can immediately toggle to the tweets from users in your neighborhood or city — even if you do not follow them. It would also be of use to Twitterers at events "like a concert or even something more dramatic like an earthquake."

"A small business on Twitter could potentially use the location feature to reach out to local customers, or a Twitter user hungry for pizza could search for nearby pizza joints offering specials," The New York Times speculated.

The question the Marketing Sensei has is if I turn on this feature does that open the flood gates that enables all local businesses to see me and spam me? Do I really want to be located?

Let's break down the last point from the New York Times:

A small business owner will be able to broadcast tweet to all people with this service turned on that are within a certain radius! Basically every store/restaurant can do this flooding your phone!

Now the second part. Why would I use twitter to find Pizza? if I have mobile web I can instantly go to City Search or the Yellow Pages just as easy!

So where is the unique value?

Mobile can bite you in the arse!

As I am pouring through way too many back logged Industry Trade Emails with so many ideas swimming in my head I realized how helpful or damaging the mobile web can be on people's smart phones to their retail business. The technology isn't there yet....but it will be.

Imagine going to Sears and looking for a new Dishwasher. Your budget is $600. Your decide while in the store to do on the spot research comparing 3 brands and 4 models. Specifically to see if Consumer Reports have given a thumbs up as well as any social network recommendations.

You decide that Brand X's Model 1234 is perfect.

Wow....Sears didn't even need sales person to help you with your decision.

Now the three horror film scenarios for retailers.

1] Because your doing research on Dishwashers the behavioral targeting software for the ad server alerts all the stores that use the ad server that your potentially ready to buy. And your phone starts seeing offers from competing retailers.....where you click through to compare prices real time. And you find the same model down the street for $500 and Sears who has you in their store will have to lower their price or lose the sale.

2] You immediately go to Google/Bing and punch in Brand X and the model and a list of all prices come up for this Dishwasher that also includes total price including shipping and you find a retailer out of the area but for the total cost for $550 and you show the salesperson at Sears and demand the lower price.

3] You immediately go to the 'IAuction' I Phone App software. You enter in the brand and model and a real time auction takes place between all the retailers carrying the Dishwasher with the lowest price winning the sale.

Even worse.....Imagine going to Nordstrom's and trying on clothes. And immediately putting out to bid the exact same ones, you place the order with Macy's and say thank you to Nordstrom for letting you try on their clothes, but sorry they lost the bid.

Welcome!

This blog will focus on what is right and what is wrong in advertising and marketing. I will be commenting on developments in the world and the news as it relates to better principles and techniques to reach consumers and businesses. I will also include views on a wide array of products and services in relation to world at large. Stay tuned for more......