Tag Archives: advertising

July 27, 2016 · 9:36 am

Restoring The Balance And Destroying The Blocking

If you are in business and you market that business at all, chances are that you’re using digital media of one form or another to do so. I suspect that much of your budget for that has shifted a bit based on how widespread the ad-blocking phenomenon has become. I’ve written about it a few times and the practice of installing ad blocking software on computers and mobile devices continues to grow.

While several ad agencies and the Internet Advertising Bureau (IAB) continue to denounce the software as violating the value exchange compact (attention to ads in exchange for free content), they’re finally getting around to studying ways to get consumers to turn off the blocking software. Both the IAB and Omnicom published some results of their studies and they’re enlightening.

Advertisements, Salem, Massachusetts

(Photo credit: Wikipedia)

First Omnicom. Their study found that many ad-blocking users don’t dislike all advertising. They hate popups (who doesn’t!). 44% of those polled associate ad blocking mostly with blocking pop-up advertising. Popups are a type of ad that interrupts the content consuming experience, and that’s what’s pissing consumers off. As an aside, TV commercials do the same interrupting – is a remote control an ad blocker? Then there was this, as reported by MediaPost:

If consumers perceive a positive value exchange with websites, most are willing to go back to an ad-centric experience. In fact, consumers can be motivated to not only turn off their ad blockers, but will also disable them. Among those factors that would entice them to disable ad blockers, 28% would do so if the blockers slowed down their browsing speed, 24% if the ad blocker allows advertisements via payment, and 23% if they trusted websites to not serve annoying ads.  Consumers would disable their ad blockers if the website promised non-intrusive ads (35%).

In other words, people get that publishers need to monetize their content and don’t mind ads per se. They do mind being overwhelmed by ads or having to close several popups to get to the content they want. The IAB data echoed this:

A total of 330 people who said they used ad blockers blamed ads for making websites slower, either because the ads were too data-heavy or because there were too many of them…Not surprisingly, animated, moving and autoplay ads irritated consumers who used ad blockers the most, as did ads that covered up content and long video promos.

All of this sounds like common sense to me. Consumers don’t want their content consumption interrupted, delayed, or slowed-down. They don’t want to expend excess data loading ads. They understand the basic economics of the attention/value exchange but feel that publishers have tilted the balance too far in their own direction and are retaliating by blocking the ads that do so. If we’ll restore the balance the chances are good that they’ll go back to looking at the ads. Make sense?

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June 29, 2016 · 11:50 am

Snapping Up Value

The hottest platform in social media these days is Snapchat. I’ve been a user for quite some time and I’m not sure I completely get how to use it yet. I’m amazed by the stories of those who do even if I’m discouraged that they all seem to be under 15.

As with all things eyeball related, advertisers are flocking to Snapchat because FOMO. Snapchat recently surpassed Twitter in terms of average daily users and even Facebook is feeling the heat as evidenced by their development of a Snapchat-like product. When you’re hot, you’re hot! Of course, heat has nothing to do with the success of a business unless it’s translated into revenue and profit, and so the Snapchat folks are actively selling themselves to marketers.  It’s therein where lies today’s business thought.

Advertisers are complaining about both the pricing and investment level needed to gain access to the Snapchat audiences. This from the Digiday folks:

Snapchat started selling ads in late 2014, and early products — one that went to every user and disappeared within 24 hours — cost about $750,000. In 2015, Snapchat brought down the price for video ads to 2 cents a view, or $20 for 1,000 views. This year, prices were back up with premium animated lenses that could cost millions depending on how many an advertiser bought in a given day, and interactive ads, where users can swipe up for more content, cost about $55 for 1,000 views.

I’ll agree that the level of investment required here is steep, even for big brands.  Other than special events, most unit investments in various media don’t require close to a million dollar outlay.  Obviously, and perhaps by design, the pool of advertisers becomes rather limited as well. Providing an API that will let marketers serve ads through third-party technology companies with a smaller outlay makes sense.  But that’s not the business point.

Where I disagree with Snapchat’s thinking is in dropping the CPM. We can’t ever allow price and value to become confused, whether we’re selling media or anything else. This platform has tremendous value – which I measure by both reach and engagement – and to drop pricing is a mistake. It’s the same thinking we faced in my TV days when trying to sell Super Bowl ads. High CPM? You bet. Tremendous cash outlay? Uh-huh. But the value of that exposure is unlike anything else in media, and in the nearly 20 years since I sold my last Super Bowl ad the value has only gotten higher.

The cost/value equation is one everyone in business needs to learn. Have you?

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June 7, 2016 · 12:09 pm

This Is Disturbing

A little over a year or ago, Jon Mandel, who is a widely respected media maven, made a statement in front of an ad convention that kickbacks were rampant in the media and agency businesses. He alleged that agencies were receiving funds back from various media sources and these payments were never reported to the clients. It was such a widespread issue that he left a position as head of one of the biggest ad agencies in the US in part over it.

I worked with Jon in my past life and I’d certainly not cite him as one who is prone to rash groundless statements. Apparently, neither would the Association of National Advertisers (ANA), the trade group that represents marketers. They commissioned a security firm to conduct an investigation of the allegations and the report came out last Friday. It’s not pretty.

You can read the report here but some topline results found non-transparent business practices employed by agencies, some of which may or may not have been contract-compliant, included the following:

  • Cash rebates from media companies were provided to agencies with payments based on the amount spent on media. Advertisers interviewed in the K2 Intelligence study indicated they did not receive rebates or were unaware of any rebates being returned.
  • Rebates in the form of free media inventory credits.
  • Rebates structured as “service agreements” in which media suppliers paid agencies for non-media services such as low-value research or consulting initiatives that were often tied to the volume of agency spend. Sources told K2 Intelligence that these services “were being used to obscure what was essentially a rebate.”
  • Markups on media sold through principal transactions ranged from approximately 30 percent to 90 percent, and media buyers were sometimes pressured or incentivized by their agency holding companies to direct client spend to this media, regardless of whether such purchases were in the clients’ best interests.
  • Dual rate cards in which agencies and holding companies negotiated separate rates with media suppliers when acting as principals and as agents.
  • Non-transparent business practices in the U.S. market resulting from agencies holding equity stakes in media suppliers.

The response by the agency community?  Because the study did not name names, many of the big players seem to be denying there is a problem.  The 4A’s, which is the agency trade group said:

Without an opportunity for agencies to assess and address the veracity of information provided to K2, sweeping allegations will continue to drive attention-grabbing headlines; this does nothing to foster a productive conversation or to move our industry forward and could cause substantial economic damage to all media agencies.

It seems to me that the “productive conversation” needs to have happened quite a while ago.  When some media buying companies realized that they couldn’t make any profit executing buys, rather than have a heart to heart with the people paying their bills they chose, in essence, to cheat. Is it painting with too widespread a brush?  Probably, but one can imagine the lawsuits that would follow the publication of a list of the offenders.

It’s a good lesson for any of us in business.  Just as our clients’ problems become our problems, a healthy business relationship should foster open exchanges of the issues we face as well.  Labelling this problem as “unsubstantiated claims” and denying there is a problem doesn’t solve anything – ask the climate change deniers if ignoring the problem is making it go away. Transparency and good communication are high on any list of best business practices.  Are they on yours?

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