This I believe

So for several months now I have been closely watching the industry, reading articles, PR releases, product releases, financial releases and generally paying attention.  I have been taking bits and pieces of what I care about and have been making comments and providing what I believe has been an insightful perspective on how technology can be better leveraged to improve how we advertise online.


 


I have looked at the ad servers, the networks, the lead generation tools.  I have examined the search engines, the publisher tools and the creative formats and provided you with feedback on what other reliable people have had to say.


 


And I have discussed ad agencies, their workflow, the media buying process and the tools that people use to do their jobs, however inefficiently I may believe that to be.


 


Here is my position.


 


The agencies have engaged the interactive medium completely.  Estimates for 2007 are that between 12 ½ and 20% of advertising budgets will go towards new media.  This is no longer the edgy side-project.  Engagement with technology is here.  But it is about refinement. 


 


Search is essential but everyone is coming to recognize that there is something wrong with the model.  It is extremely time-intensive and expensive to manage.  Furthermore the ROI metrics seem to slip the longer you run campaigns.  As I have said in the past, a tipping point is coming. 


 


Networks have been doing their thing the same way with some minor tweaks for a while now and people are demanding more disclosure.  Tolerance for media showing up on inappropriate sites is very low, accountability is high and additional capabilities like behavioral targeting has become an expectation.


 


That brings me to behavioral targeting – a very common topic on this blog.  I have ripped this topic up and down.  My intent has been to redefine this concept as event-based targeting and to justify that there is little about behaviors actually associated with it at all.  Just because someone took a navigation path, or saw a page means little about their behavior, the predictability of their behavior or their preferences.  All we know is something that happened.  Historical targeting is a better description but I have used event-based targeting over the last couple of months.


 


I have never tried to minimize the value of BT, only put it into it rightful place as a solid prospecting and direct response advertising mechanism.  BT does not represent the best means to capturing known individuals, in fact, it does not have the capacity to associate with knowledge about people at all.  Only with events.  But I believe that BT should be part of a comprehensive campaign.


 


People have approached me both on and off this blog about my position towards BT and some of the networks, but I think its because they have been defensive and protective of their positions as representatives of these companies.  Others have engaged me – usually advertisers, agency representatives or others who see that the evolution of practice is inevitable and being on the adaptive edge of the curve is better than the laggards edge.


 


I have also spent a lot of time plugging a concept called first party ad serving.  Forgive me for the plugs.  Obviously as a member of TruEffect I have a lot of passion for what we do here.  But I also spend a lot of time looking for other technologies that can rival or at least coexist, companion or compliment what we are doing here.


 


The patent-pending DirectServe™ Technology that TruEffect has brought to the market represents the next generation of ad serving.  It leverages the knowledge that an advertiser holds about its customers, registrants or users to re-target through ad campaigns.  This is not a replacement for other technologies out there – I have said that before as well – but a great new way of doing it.  An addition to a comprehensive advertising strategy.


 


First party ad serving is about customer re-targeting.  BT is about event-based targeting, best applied when trying to capture unknown individuals.  One is for bringing in new business; one is about farming and growing existing business.  There is no point is re-prospecting existing customers while advertising online.  DirectServe™ takes care of that.  BT leverages previous events so that you can increase the likelihood of putting the right message in front of the right person at the right time based on historical events.  DirectServe™ puts the right message in front of the right person based on known customer segmentation models, knowledge already held about customers.  This a potential marriage.


 


Now BT is largely touted by networks, so there is a limitation as to how you can use it.  I talk about TACODA a lot – which I think Dave Morgan has not be thrilled about – but its because they have been the leader in the space.  I have also talked about Advertising.com and Blue Streak and Tribal and others as well.  But ad servers offer BT too.  DoubleClick’s Boomerang does it.  TruEffect does it.  And that extends beyond networks.


 


I also talk about integration.  Agencies are not on this trail so much as advertisers.  Well, some agencies are but they are the minority.  I have strong opinions about this because I feel that they pieces of the puzzle are all here now for us to put together a great picture of our online marketing so that we can make better informed decisions about our web site compositions, product placements, online advertising and budget allocations.  But nobody has fully engaged yet.  There are leaders that are putting the pieces together, but I am advocating the full-monty and that is what you read about on this blog.


 


Tying it all together will enable an advertiser to make the best possible decisions regarding allocation of online media spend.  It will promote the best utilization of technology, improve product placement on web sites, increase the value of existing customers, the initial value of new customers and enhance the likelihood of increasing the utilization of interactive media as a channel for marketing.


 


See my ten-step recipe for full-integration of all the technology pieces of an online advertising campaign.


 


First let me redefine that a third party cookie is a vendor’s cookie and a first party cookie is an advertiser’s cookie.  Here is the recipe.

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Ten Step Recipe for a Fully-Integrated Online Marketing Initiative

In my next post, This I believe, I state my position on agencies, networks, ad servers, writers and pretty much all things online advertising related.  In the end I offer up a reciper for putting together all of the technologies into a holistic, comprehensive marketing initiative.  Here it is.

First let me redefine that a third party cookie is a vendor’s cookie and a first party cookie is an advertiser’s cookie.  Here is the recipe:


 


(1)            Starting with the tagging of a web site so that cookies can be set (first party cookies of course) when someone is on the site. 


(2)            Then add in Ad serving – first party ad serving (like the patent-pending DirectServe™) to promote products or services on the web. 


(3)            Mix in the search advertising and be sure to use the ad server’s first party cookie and leverage a redirect so that the search term can be embedded into the cookie so that when the user lands on the advertiser’s web page that search term is associated with that user.


(4)            Deploy customer re-targeting advertising whereby you leverage customer segments from the eCRM database to recognize and distinguish customers through ad campaigns with specific banner advertisements, rich media and video.


(5)            Deploy BT for anyone that visits the web site directly and cookie that user with a first-party cookie so that the re-targeting mechanism can work when they encounter that individual online (on a network or web site).


(6)            Engage with a site-side analytics provider that will use a first party deployment – like WebSideStory – and take full advantage of tracking anonymous user behavior across your web site.  Track all navigation patterns, entrance and exist points, product position preferences, sales cycles, etc.


(7)            Leverage site-side analytics to write the first party cookie and segment the cookie value based on user preferences in association with CRM data.


(8)            Feed the customer preference cookie value to generate the customer segments and associate the customer segments with creative target groups that the ad server will serve in the re-target campaigns (back to #4)


(9)            Have the DirectServe™ write to the cookie during the ad serving process the details of the ad serving history to the cookie so that when a prospect of customer comes to the site, the site-side analytics software can internalize all of the external activity and use it for further analysis on how someone became a customer or how returning customers were reacquired.  First party ad serving will give site-side analytics outside perspective of web marketing.


(10)       Complete the circle by leveraging the holistic view by analyzing the reports on how you acquire customers through BT, Search and Banner advertising, how you re-acquire existing customers through DirectServe™ first party ad serving and how both types interact with your site using site-side analytics.  Determine which messaging strategies, campaign combinations of banners and placements, search engines and terms and which technologies are delivering the greatest source of new customer and returning customer yield and make future media buying decisions based on that analysis.

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Hidden Media Costs Associated with Online Advertising (Ad-tech) – Some Real Good Data

In the Spring of 2006 TruEffect participated in the Ad-tech IMPACT conference TruEffect presented on the Hidden Media Costs Associated with Online Advertising.  These are the costs associated with managing online advertising as an agency or as an advertiser.  This article dives into the costs that are out of control and provides some insight as to what you can do about bringing things under control.

If you can take anything away from this article it is the following:

Measure something when managing online advertising.  Not everything, but something.  Establish a benchmark so that you can recognize where progress is being made.

Educate your client.  If you are an Agency, don’t keep your client in a bubble.  Educate them about your process so that they come to respect the complexity of what you do.  Treat various aspects of your internal business units as a client as well if you are a marketer.  IT needs to understand your business needs to better help you get your needs met.  Educate.

Acquire and retain quality talent.  Sounds simple but its vital.  When you develop expertise, protect it.  If you need expertise acquire it.  I will talk about human capital management a little bit more later.

One of our client’s was quoted during a focus group as saying: “The biggest frustration with online advertising is that it is hard to focus …there are so many choices that it is confusing.”  This is something we can all agree with.  Let’s look at some of the data that we collected during our research:  In comparison to the 1700 TV channels, 1400 newspaper dailies, 13,000 radio stations and 18,000 magazines to choose from when advertising, there are 76 million web sites and 8 billion Google-indexed web pages.  That’s a lot of options when planning for online media.

Meridee Alter, Senior Vice President, Media Director at Rubin Postaer and Associates (RPA) said “…the process of planning, buying and creating for interactive media campaigns has only gotten more difficult as our budgets increase. It still requires more agency resources than any other medium even though spending is still well below that of TV, for example.”  This is a spiraling problem.  When online spend was 1-2% of billings it was one thing, but now it is 5,7 maybe even 10% of the budget and the costs to manage it have grown exponentially.

What are these costs?

There is a failure in the process to make information readily available and repurposable.  Performance reports are static and require constant reformatting.  Historical performance data is ‘locked’ by third party vendors and can only be accessed through their interfaces.  If access to this data is lost, or if reports that have been formatted have been lost there is a breakdown in the decision-making process.  The amount of time spent in developing reports and re-formatting data is HUGE.  I will demonstrate that for you in a minute.

Costs of creative are another area that are out of control.  What do you pay to build an ad banner?  How about a flash component.  Eyeblaster, Pointroll?  Now think about the creative you build and never use?  These are hidden costs.  Or not so hidden.

The most significant source of hidden cost in our industry is WASTED TIME.  IDC conducted a study to quantify costs that are difficult to measure, costs of wasted time by information workers – YOU.  They examined 600 companies and individuals whose average salary was $60,000/yr and a 40 hour work week.  The study found that as much as HALF of your time is wasted!  Look at four out of the six categoried examined:

-  6.2 hours a week is wasted reformatting reports (i.e., data downloaded from an ad server into Excel)
-  3.5 hours a week wasted searching for data or reports that should be readily available to you
-  3.0 hours a week recreating content (i.e., reports) that someone else may already have that 
   you do not know about
-  2.2 hours a week on version control (i.e., figuring out whether or not you have the most accurate information)
-  5.1 hours a week on other

When the dollar values out of the annual salary were overlaid on these figures:

-  $9,302 reformatting reports
-  $5,251 searching for data or reports
-  $4,501 recreating content
-  $3,300 version control
-  $7,646 other

This data shows that only $30,000 of the $60,000 salary or HALF is going towards productive work in the online advertising information worker space.  

So in the beginning I said that you need to measure something.  I did not mean that you need to measure something campaign-wise, I meant measure something operationally.  Obviously campaign measurement is a requirement.  But measure your operation as well.  KPIs for your management practice will help you figure out where your burn is.  How much time people spend in the areas I described above will help you figure out where you can improve.  Are your procedures fragmented or organized?  Does every media planner have their own way of doing things or is it uniformed?  How efficient is the trafficking process and how efficient is reporting?

That brings me to talent.  What is your burn on talent.  Do you hire entry level and have them start as traffickers and reporting people and then promote from within?  Do you bear significant training costs associated with managing multiple ad servers, search engine management tools and analytic platforms?  Can you consolidate platforms and incentivize people to stay in positions longer?  Can you hire people that are already trained on platforms to cut training costs?  Again, measure to figure out where the burn is coming from.

What about the utilization of time?  Do you have a media planner who is paid $60,000 a year – let along a lot more – formatting reports manually?  Do you want to be paying this person $9,000 a year working on spreadsheets or would it be more cost-effective to bring on an intern?  Breakdown how these people allocate their jobs and look at productivity or hours.

Retention of people stems from a combination of aligning job satisfaction with adequate compensation.  If people feel like they are getting compensated for a job that challenges their skill, they will stay longer.  Its common sense.  So spend the time making sure that they are not working on menial tasks.  Spend the time making sure that you are not training people for another job somewhere else.  Spend time making sure that people are excited about a career path in your company.  Develop your talent or acquire talent from someone else.  Let’s face it, in the agency world someone is stealing someone from someone else every day.

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