The Danger Of Marketing Isolation

I’m starting this post with my usual standards of responsibly opining on fast-paced marketing events. But I must admit on this one I’m playing a bit of a hunch. It has to do with Extraordinary Measures, the Harrison Ford-led story about a father racing against time to cure a rare disease killing his kids. The film had a great digital campaign, exceeding traffic expectations as it asked viewers to create a “digital quilt” through the film’s website. But all I saw of the movie outside of that was marketing on CBS outlets. That’s a mistake.

Now, it’s a CBS Movie and it will lead a six picture slate from CBS Movies. It bombed at the box office. Was that a failure to drive foot traffic because the movie was limited in marketing scope? I’m going to bet that was a big part of it. CBS has a lot of properties that can effectively carry a marketing program. So does Fox. So does Disney. I have never seen either one of those companies limit a film to internal properties. But to limit the marketing budget for an entertainment property is to limit the overall audience exposure. I don’t see how you can budget for a $50 million box office take, or even a $30 million box office take, if you’re not going to market the picture in a fashion that fits a hit movie.

Integration is key and maximizing exposure to as many different target audiences is important no matter what you’re advertising. It’s an important selling point for the digital marketing industry to understand. Every content property exists because it is attracting a unique audience and serving that audience. Synergy is cool and can be effective. But there’s a big divide between synergy and marketing isolation.

Doing the Math on CPMs

There’s been lots of talk about CPMs lately, some of it well-informed, some of it a bit naïve. Most of this chatter concerns two good research reports, which I’ll comment on here. But first, it’s important to clarify two important things about CPMs that often get lost. First: CPMs are a measure of audience quality. Second, CPMs are a matter of yield management. That said, CPMs are often not easily compared quarter to quarter or even year to year -- so hold off on the pizza party, unless your CPMs are up and you’ve satisfied your goals with regards to both audience and revenue per page.

Let’s take first things first. Last week’s PubMatic survey shows that the average CPM of its non-guaranteed inventory rose 111 percent from Q4 2008 to 2009. Bravo! Even if that CPM had previously fallen to under $1 (which it may well have) anything that shows an increase in the inventory normally accessible to third party networks, or inventory that may have gone unsold by premium vendors is most likely a good thing. But the audience is still key. CPMs generally increase because the value of the advertising is increasing to advertisers. It’s saying that the pages may be fewer, but they’re more valuable because the audience available to read them is worth more. Advertisers pay for the quality of audience. CPMs reflect that quality.

Now let’s talk about yield management. Yield management involves adhering to a strict discipline of serving the advertisement which will increase the network or publisher’s revenue per page and RPM. There are, now, hundreds of companies and scores of technologies that help publishers measure RPMs, in real time, and ad serve the optimal ad each time there is an ad call. Many publishers have, only recently, begun to yield manage their remnant inventory, in a precise manner, through technology. Many publishers have introduced this stepped-up process immediately after their brand deals are served. Most often they are served in priority order tied to CPM value. Many publishers are also using dynamic rate cards on brand deals in order to eek every bit of value out of their ad inventory. CPMs reflect this management.

What encourages me is that everyone today seems to be focused on CPMs. When I see PubMatic’s numbers, and I see the recent JP Morgan numbers that predict a 10 percent CPM increase for display ads this year, I see three things at play. One: there are less remnant pages available. Two: the Internet audience is increasing in value. Three: effective yield management is at work. If your company is tracking well against these three metrics, don’t worry about the CPMs. They will take care of themselves.

On a side note… I’ve heard it said that some premium publishers would like to get away from CPM pricing models and move more toward project-based pricing. That may be more retro than it sounds. When I worked at Yahoo several years ago, we dabbled with this model with home page takeovers and guaranteed-rotation, performance deals. I’m sure you remember the “slotting” fee! Project pricing does have its place in the market and we, at FOX, sometimes use this pricing model in our business on popular, niche sites that advertisers like to road block, like Smartsource.com. Project based pricing and CPMs can’t really live in the same house – unless, of course, you have a team of analysts feeding you real time pricing data.

The New York Times and the Great Subscription Debate

Now that The New York Times has officially put a time and price on its internet access policy, the issue for digital sales and marketing people becomes one of value. In fact, I’ve already had these discussions with our brand and agency partners. On one side of the value debate, paying customers are considered to be more valuable than non-paying customers. So for example, a user who pays a yearly subscription rate for The Times is probably more engaged and therefore more valuable than a user who does not. There’s a strong case for that. A Wall Street Journal subscriber is, after all, part of a valuable audience, and certainly one I would value at a much higher level than a site that aggregates content or a site that does not place a premium on original content.

I wish things were that simple. But they’re not. The Internet has thrived on free content, and while more sites will switch to paid, it doesn’t devalue all free sites. I’m all for paid content as a way for premium websites to generate income, and the Journal is a great example. But engagement is still the most important currency on the Internet. Engagement, which I define as the time spent on a site, the frequency with which a user returns to the website, and the interactions taken consistently via that website, is just as important whether or not a user pays for content.

Here’s what I mean... Taking a look at the FOX universe -- Fox News is free. Now, the audience metrics for Fox Business, which is a subsection of Fox News, are different than those for The Journal, The Finanical Times, The Economist, and what will be the paid content on The Times. Yes, those other sites are attracting subs, and their income levels are high -- but they are, undoubtedly, for Fox Business as well. I would encourage any brand or agency to ask as much about customer engagement as much as I encourage them to ask about subscription-based demographics. It is that audience profile and the engagement of that audience that drives the most value for advertisers. Simply scaling a pay wall does not guarantee engagement, although it is a good indicator.

Don't Discount the Quiet Guy In Leno, OBrien Saga

The news that Jay Leno was returning to late night broke early last Thursday evening. I was surprised that few of the initial news reports reminded folks that a majority stake in NBC/Universal is in the process of being sold by GE to Comcast Corporation. Last Friday's Wall Street Journal covered off on the acquisition a bit. It attributed, to a person with close ties to NBC/Universal, that Comcast isn't involved in any way in the deliberations. "The timing of the (Leno/O'Brien) discussions and Comcast's agreement to buy control of NBC/Universal is a coincidence," it wrote. One piece I read early Sunday, did, in fact, attribute a "no comment" to Comcast COO Steve Burke, when asked about the continuing Leno/Conan O'Brien saga.

While Steve Burke may not have had a comment -- and he couldn't have because the Comcast, GE deal still faces regulatory approval -- he certainly has an opinion. You see, Steve Burke is the son of Dan Burke; part of the legendary, two-man, tag team that founded the ABC-station group, Capital Cities Broadcasting, and later used the affiliate as the vehicle to buy all of the much-larger ABC broadcasting company. I worked for Dan Burke for seven years and Dan is perhaps the biggest champion and most vocal advocate of the "think strategically/act tactically" decision making model. It seems to me, that if the strategy was to keep both Leno and O'Brien in the NBC family then the tactic of committing The Tonight Show to O'Brien five years ago may have made some sense. I believe however, that Dan Burke, and Steve Burke for that matter, would not have bought into that strategy -- and I certainly did not!

As Steve Burke prepares to take control of NBC/Universal, and begin the process of integrating it into Comcast Corporation, he is, undoubtedly, relieved that the Leno Prime Time experiment is coming to an end and the King of Late Night is being returned to his rightful place.... and rest assured, we will, all, be hearing alot from quiet guy, Steve Burke in the not-too-distant, NBC future.

Pepsi Hits "Refresh!"

I could make an argument that Pepsi has been the most important brand for the development of digital sales and marketing. I’d have to put Samsung, Apple and AT&T up there too, but Pepsi has certainly been a bellwether. In the late 90s it planned and executed one of the first and still one of the most effective cross-promotional campaigns in the CPG category with Pepsi Stuff. Now it’s breaking new ground again.

Most of this new ground has been misinterpreted by the business press. Pepsi has not abandoned Super Bowl advertising as many headlines suggest. Anyone who has watched an NFL game over the past two weeks will have a hard time doubting its commitment to TV, and football. But rather than spend money on Super Bowl ads, Pepsi will spend around $20 million to launch the Pepsi Refresh Project on Wednesday. At that time, users can submit their ideas to Pepsi via social media for ways to “refresh” their communities.

I applaud the move and not because it values the Internet over other media. I have never been an internet exclusive advocate. I believe that cross-promotions and a balanced media approach is where brands should be. Taken on balance, the Internet will win out and continue to grow based on its ability to target the right audience and interact with that audience. The online social media component, from my way of seeing it, gets Pepsi closer to the engaged audience it will need to make this campaign work from both a participation and branding perspective. Voting will begin on February 1, 2010, and the projects that get the most votes will be funded by Pepsi. Pepsi expects to spend $20 million to fund thousands of projects.

Pepsi is a competitive brand in a competitive space. One mistake in the Coke v. Pepsi wars is worth millions. So it's worth noting that a bellwether brand is taking another big calculated risk online, more than ten years after its first one blazed a trail for everyone else.

Forget Apple and Google -- Here’s The Right Debate

What a great week for Apple and Google watching. Apple buys Quattro a day before Google introduces its Nexus phone, AT&T decides to sell Droid phones, Google uses the Quattro purchase to justify its AdMob purchase… it’s enough to make a CES attendee salivate with the possibilities of debates about Apple/Google battles around the Hilton lobby bar.

Problem is, these are the wrong debates if your business is digital content and marketing. Although the past week has been filled with fascinating news and rampant speculation about these corporations that the press is so obsessed with, the agenda for digital sales and marketing hasn’t changed. Any sales call that happens next week might begin with some friendly speculation about what Apple will do with a mobile ad network, or what the iSlate might do to iMac pricing, but eventually that meeting will get down to business… and that business will be all about the Internet audience that continues to be the most efficient and targetable audience in the media world.

Mobile advertising, the way I see it, will be based on downloads for at least the remainder of this year. Is that an opportunity for brands? Absolutely. Should a brand develop an iPhone app, and a Droid app, and a Blackberry app? Absolutely. But the biggest and most consistent branding opportunity still lies with the 200 million active Internet users. And although that number may be approaching critical mass, the interactivity of the audience continues to impress. If you don’t believe me check this out: comScore reports that nearly 4 out of 5 Americans visited a retail site during November, which for some verticals represents a 30 percent increase. I think we can make an argument for 80 percent of a retailer’s business.

Whether or not we win that argument, is a better conversation than whether the Nexus is better than the iPhone.

Listening to Hahhhhvahhhd!

Don’t listen to me. Go with the really smart guys. Harvard Business Review started the year out by identifying the twelve management trends of the past decade, and two of them play right into the digital sales and marketing wheelhouse.

Now, this is the past ten years mind you, not the past year. I’ll spare you the natural HBR obsession with IT, shareholder value, and open source technology. But I will focus on Behavioral Economics. “Okay, by now, you're all shouting "that's definitely older than 10 years" and you're right. But talk about a set of ideas whose time has come. In the prior decade, can you remember when someone with Steven Levitt's profile had a breakout bestseller? Or when someone modifying the word economist with "rogue" (or "rock star") could keep a straight face?,” says HBR. I’ll take it a step further. In 2000, could a brand consistently depend on reaching its most valuable customers with a customized marketing message? No. But they can today, and they can everyday through the part of behavioral economics that has become behavioral targeting.

Behavioral targeting has fed a rich set of analytics. There’s a whole science around analytics that can be intimidating without a doubt. But if you do as I do, and simply look at analytics as the numbers that define your client and customer behavior, you can take what you want and leave the rest to the research department. HBR says Competing on Analytics is one of its top management trends. It says: “Decades of investment in systems capturing transactions and feedback finally yielded a toolkit for turning all that data into intelligence. Operations research types, long consigned to engineering realms like manufacturing scheduling, got involved in marketing decisions. Managers started learning from experiments that were worthy of the name.” Digital marketing keeps moving from experiment to strategy to tactics. Good sales teams will push that envelope.