Some new research studies highlighted at MFM’s recent convention provide broadcasters with optimism about advertising’s future on their medium. But to succeed, there has to be a change in tactics to create cross-platform marketing promotions that exploit the strengths of each media platform. In short, they need to move from a “one-to-many” approach to a “one-to-one.”
With some pundits questioning the relevance of broadcast media and advertising in the world of “many-to-many” media platforms, I was heartened by two recent research reports that echoed the optimism about the future of broadcast advertising heard by attendees at our recent MFM annual conference.
One of the studies, The Future of Advertising project was conducted by the Wharton School in cooperation with the Advertising Research Foundation. As Advertising Age reported, this study found no erosion of TV advertising sales impact over the years.
The research project, which analyzed 388 studies, reported a positive ROI for TV, saying it works as well or better than it did in similar tests conducted more than a decade ago. In addition, the study found that threats posed by DVRs and clutter to TV ads are overblown, print and online advertising are effective and word-of-mouth about brands is largely driven by paid ads.
Another study, a survey of top marketers by Forbes.com, underscored that “one-to-many” media such as television are the best vehicles for brand building. According to a report in Adweek, only 31 percent of marketers surveyed by Forbes viewed brand building as one of online media’s top strength and just 14 percent thought it was effective for reach.
However, there was much greater agreement concerning online’s ability to drive direct marketing metrics, with roughly 82 percent of those surveyed identifying conversions as the leading gauge. That’s great news for media companies that are creating cross-platform marketing promotions that exploit the strengths of each media platform.
An MFM/BCCA conference panel on targeted advertising moderated by James Dix, vice president of research at Weedbush Morgan Securities, addressed the challenge traditional media faces in trying to match online’s direct marketing metrics.
David Roegge, director of marketing at Cox Media, described an interactive advertising campaign involving Cox’s San Diego system, in which digital cable customers in neighborhoods typically targeted for direct mail promotions from the Hawaiian tourism board could use their TV remotes to order a travel brochure. By limiting mailing to interested households, the campaign was much more effective than earlier promotions.
Shelly Palmer, host of the daily MediaBytes online show, described the difference between interactive advertising and targeted or addressable, advertising, noting that the term has become a catch-all phrase for several forms of advertising.
“All advertising is targeted at selling something to someone,” he said. “What we’re really talking about are new technologies that allow us to move from one-to-many to one-to-one. This type of targeted advertising requires dynamic ad placement and addressability. When you have both you have efficacy.”
Reinforcing the conclusions from the Wharton and Forbes studies, Palmer also challenged whether this level of targeted advertising was in the best interest of advertisers as well as broadcasters.
“Engagement is not a currency; it’s a concept,” he reminded the audience. “The television model is based upon selling the audience to a show as opposed to selling the show based upon a segment of its audience. It’s a paradigm shift that’s filled with pitfalls.”
Greg Kahn, senior vice president of strategic insights for Optimedia, agreed that the media and advertising industries need to find the right balance. Running dog food commercials only in homes that have dogs risks losing the chance to influence the buying behavior of someone who is about to become a dog owner. Denny’s Super Bowl ad, which drew two million Americans to its free breakfast offer, was a great example of broadcast’s ability to re-awaken a brand, Kahn said.
A conference session focusing on advertising lifecycle management identified the operational challenges that will be created by a shift toward more targeted advertising. As Scot Lippstreau, a partner in Deloitte Consulting’s New York office, observed, advanced advertising could contribute to a falling price for CPMs on non-targeted ads, while targeted ads increase the overall cost of ad inventory management.
To address these shifts, media companies will need to increase sales volume and cut ad management costs. Solutions will include simplifying and automating processes, Lippstreau said.
Self-service models such as Google’s AdSense and companies that are using the shared services to centralize management are examples of cost-cutting trends that are becoming commonplace in the market.
“Media companies are carrying this excess complexity and cost in a difficult economy and while they are undergoing digital change,” added Jillayne DeYoung, industry director at Oracle’s Media and Entertainment IBU. “The market is evolving toward cross-platform, integrated advertising solutions, and no one is satisfied with the silos that exist within their organizations today.”
DeYoung outlined examples of lifecycle management solutions that meet an organization’s need to manage its advertising processes across multiple channels and platforms.
As opposed to selling ad inventory by silos, companies are adopting account-centric selling strategies. This allows them to drive yield management through integration and support data visibility with a common model that meets the company’s — and the advertiser’s or agency’s — need for speed and information.
The end result allows media companies to leverage common business practices across the organization and to deliver superior customer service, DeYoung demonstrated.
Of course, these trends require existing traffic management systems to support much more complex ad campaigns, a challenge already being faced by a number of station groups, TV networks and cable system operators.
With that in mind, Ellen McClain, vice president of finance for Hearst Television and an MFM board member, spearheaded a session addressing the near-term challenge of adapting existing management systems to provide invoices that integrate billing for cross-platform ad campaigns.
Panelist Ryan Walker, manager of industry services at the Interactive Advertising Bureau, provided an overview of “The Interactive Supply Chain,” which identified the role that e-biz solutions can play in facilitating integrated billing and ad tracking/verification.
“Integrated systems are the key,” Walker advised. “If you stick to the process, you won’t compromise the quality of the information you are providing to your advertisers.”
Google’s Jonathan Belach described the benefits of Google’s acquisition of DoubleClick for broadcasters and media companies. Of particular interest to the conference audience was the role that the company’s sales management tool can play in addressing ad discrepancies.
“It takes a village,” Belach said as he described solutions that meet the requirement to verify ad placements that are delivered via multiple servers.
Tom Mannion, senior vice president of sales at Solbright, provided examples of billings systems that manage the ad sales, inventory, traffic and billing functions. “The process is simple; it’s the execution that’s complex.”
By ensuring that billing data such as terms, basis and distributed payments are correctly entered into the system at the beginning of the process, stations can avoid problem that are difficult to fix at the end. Mannion also said that media companies can use a mapping process to combine billing data from online and on-air traffic management systems to create consolidated invoices automatically.
These discussions serve as a reminder of the challenges that we’ll need to address as part of adapting our businesses to remain relevant to our customers and stakeholders.
Addressing these challenges will require investing in the people, technology and the collaborative relationships required to address them. The good news is that we have every reason to believe in the ROI these investments will yield for our companies and our industry in the years ahead.
As Greater Media Chairman and CEO Peter Smyth said, we can’t cost-cut our way into the future.
Mary Collins is the president and CEO of the Media Financial Management Association, a professional society addressing the diverse needs of the industry’s financial and business professionals. Her column appears here every other Friday.