November 2008 Archives

When the Interactive Advertising Bureau Internet Advertising Revenue Report came in for the second quarter of 2008, I took one quick look at the figures compiled by the PriceWaterhouseCoopers accounting firm and immediately said (first to myself, and then to anyone who cared to listen), "It's a normal recession trend: Above-the-line dollars are moving below-the-line."

I was surprised to discover how few people trained in interactive advertising had any idea what I was talking about.

I will explain, because it's a response to the increasingly prevalent and nonsensical fear that the online display ad market is collapsing. It's not -- in fact, it's growing. But to understand how and where and why, let me provide a short course on marketing practice.

The Purchase Funnel

Marketing needs are typically defined by an image called ""the purchase funnel,"":http://marketing.gfkamerica.com/funnel/funnel.swf a diagram of consumer decision-making identified with the automotive research firm Allison-Fisher International. In this inverted triangle, consumption choices begin with awareness, and gradually narrow to
consumer familiarity, consideration, preference, purchase, and ultimately loyalty.

Different marketing disciplines long have been associated with different levels of this funnel. Awareness is generated by main-media advertising -- typically big blasts on television, billboards, and in magazines. Consideration might have more of a retail angle -- newspaper or radio advertising, say, announcing a product's availability for a limited period at a local store or dealership. Purchase often is motivated by a favorable price -- a consumer promotion featured in a newspaper's free-standing insert or in a direct-mailed catalogue -- or merely the fact that the product shows up, thanks to a trade-promotion deal between a manufacturer and a retailer, on an end-aisle display in a grocery store. Loyalty depends on the user experience, naturally, but consumer-relationship marketing (frequent flier and after-market service programs, for example) can play a significant role.

The upper part of the funnel, the functions associated with measured media advertising aimed at fostering brand or product awareness and consideration, are typically referred to as "above the line," while the tasks that relate more directly to selling are termed "below the line." Wikipedia attributes the terminology to Procter & Gamble's methods for accounting for its marketing expenditures beginning in the 1950s, but the phrasing almost certainly derives from the way business expenses -- notably, deductions from adjusted gross income -- are conventionally dealt with in accounting.

Moving the Metal

It's an axiom of marketing that when the economy gets rough, marketers shift budgets from above the line programs to below the line -- that is, they trade off the longer-term effects of brand-building for the shorter-term need to move products off shelves. While such swapping pains publishers, ad agencies, and marketers' own advertising teams, the economics of a business often demand it.

Consider the U.S. automotive industry, now in as tortured a position as it's ever been. Automakers don't sell cars to consumers: They sell cars to dealers, who in turn sell them to consumers. Dealers, just like consumers, have to finance those purchases; unlike consumers, though, they have to finance them in volume, a system known in the auto business as "floor planning." When consumers stop purchasing cars, dealers can quickly get upside-down on their own loans. They often have little choice but to demand help from Detroit, in the form of incentives and rebates and other "trading money," to move the metal now.

I can't do any better in explaining the dealers' dilemma than the description I offered in my last book, Where the Suckers Moon: The Life and Death of an Advertising Campaign. Here's what auto retailers faced during the recession of 1991:

Under the floor-planning system, every day a car sat at a dealership, it cost them money -- the interest they paid on the loans they took to buy the cars at wholesale. A car with a wholesale cost of $13,000 financed at two points above the late 1991 prime of 6.5 percent cost the dealer $1,105 a year, or slightly more than $3 a day. As a rule of thumb, dealers liked to keep a two months' supply of cars on the lot, and ordered them from the manufacturers accordingly. If a dealership accustomed to selling thirty cars a month saw sales suddenly drop to ten cars a month, its floor planning expenditures could rapidly rise from $180 per day to $300 or more per day. Needless to say, dealers deemed trading money necessary for their survival.

To one degree or another, the challenges faced by automotive dealers during a recession are replicated across the economy. Computers, mobile phones, overnight delivery services, air travel, hotel rooms, alcoholic beverages, even hair care products and salad dressings, become harder to sell -- which means that marketers, under pressure from their distribution chain, feel compelled to try a harder-sell, even at the expense of longer-term brand-building that might otherwise help them maintain pricing at more desirable levels.

So when I saw in October that interactive advertising revenues showed a four-point spike in the second quarter for search (which looks an awful lot like a below-the-line marketing function) and a one-point decline in pure display, I recognized the classic budget shift at work. For those who haven't seen it before, I can offer this admittedly slight comfort: "Welcome to the recession."

Join us on December 8 as the IAB brings together industry leaders to examine the current measurement landscape - from methodology to successful case study - to learn how media companies are finding solutions.  The IAB Audience Measurement Leadership Forum brings together digitally-savvy CMOs, their publisher partners, media researchers and other stakeholders to advance the conversation on accountability in challenging economic times.  Now more than ever it’s important that marketers, agencies and publishers measure their spend in the most accountable way and Audience Measurement will help them do just that.

Here are some highlights:

·         Understand how cross-platform exposure factors into overall campaign metrics

·         Hear leading measurement companies spotlight their progress in digital video and social media

·         Provide feedback on the IAB Audience Measurement Guideline

 

For more details, check out our complete agenda and register today!

5:35pm

 

Growth. It’s usually thought of as a positive thing, but for some agencies it can get in the way of the quality creative manufactured. Taking the emphasis off the work and the environment by focusing on growth can alter the culture of the agency or allow employees to flourish with more opportunities.

 

Marlene Root, Vice President, Director of Quality of Life at Crispin Porter + Bogusky, is focused around the changes the agency has seen over her eight year tenure there. As size increases she’s charged with artificially creating ways to help people understand the culture of the agency and how they do business. It’s not necessarily an organic process as it once was, but an understanding that management must work toward. Growth from within is one way they’ve tried to keep employees focused and included in the successful size change.

 

Michael Ferdman, President and Founder of Firstborn—a 45-person shop—talked about staffing issues openly. He pointed out that when things are good it’s easy to overlook people that might not be doing such a good job or the need to add a new hire to fill a gap. But, when times aren’t good, it’s not so easy to ignore these challenges.  One bad hire is worse than missing out on a good hire because each person is an integral part of any initiative.

 

How do different sized agencies compete in the pitch process? Darren Paul, Managing Partner and Co-Founder, Night Agency, uses his current client base as advocates for new business. Satisfied customers are more than willing to talk first-hand about how the size of Night Agency is beneficial to their relationship. Clients, both large and small, whom they’ve been working with on a consistent basis are happy to share their successes.

 

Panelists included:

 

Freddie Laker, Director, Digital Strategy, Sapient and Founder, Society of Digital
Agencies (SoDA) – moderator
Michael Ferdman, President and Founder, Firstborn
Darren Paul, Managing Partner and Co-Founder, Night Agency
Marlene Root, Vice President, Director of Quality of Life, Crispin Porter + Bogusky

When it comes to talent, this panel feels size is of little impact.

Off for a cocktail and networking...see you on December 8 for the IAB Leadership Forum: Audience Measurement.

4:30pm

We just finished an engaging session on social media and viral marketing.  It featured:

Sarah Hofstetter, VP of Emerging Media & Client Strategy, 360i
Chris Meador, Senior Director of Brand Strategy, NBC News and MSNBC
Bryan Wiener, CEO, 360i

As every marketer knows, there’s no magic formula for viral marketing. It’s an art—the art of engaging your audience and exciting  them enough to pass it along—and it involves luck.  However, this doesn’t mean you can’t “increase your luck” with proper planning to seize a viral opportunity.  Some key lessons taught were:

- Establish metrics in advance and make sure you achieve your objectives.

- The internet is the most untapped focus group out there.  Your audience is telling you what they want.

- Adapt the execution to the platform.

- You can lead the conversation but you can’t control it or else you will fail.

The last point may be the most important one.  Viral marketing is not for the faint of heart and you have to be prepared to take the good with the bad. 

We’ll be back in an hour with notes from the day’s final session.

3:30pm

So, how do these new wizards of digital marketing make it all happen? Lunch and workshops were followed by a session that helped us all understand. The teams responsible for creating two 2008 MIXX Award Gold winning campaigns took the audience through each step of the process.

 

First up was Nissan Rogue Launch presented by Justin Prough, Creative Director, TEQUILA\. The online "marble maze master" was the foundation of the campaign, leading to the related TV spots and the online integration with “Heroes.” Each platform piece revolved around iconic games that encouraged consumer interaction with the brand, or in this case the specific vehicle. The goal was to change consumer perception of what type of person drives a Rogue--not just a soccer mom.

 

Justin was followed by John Travis, Vice President, Brand Marketing, Adobe, and Josh Spanier, Director of Communications Strategy, Goodby, Silverstein & Partners, dissecting the Adobe Layer Tennis campaign.

 

They broke the campaign down with three goals:

1.       Get people excited and aware

2.       Deconstruct what users think they can do with the software

3.       Get them to use it and talk about it

 

The Layer Tennis team spent considerable time learning about and understanding the needs of their target audience. What did the research reveal about the creatives they wanted to engage?  They are passionate. They are only as good as their most recent work. They believe in their skills. They seek inspiration. They are time impoverished. Everything is changing around them. And, they are fiercely competitive. All these ideas factored into the campaign design, giving the audience a platform to showcase their on-the-fly design skills and compete with each other online—while, of course, learning about and using the new Adobe software.

 

The three presenters then discussed their campaigns and brand / agency partnerships on a panel moderated by Journalist Willow Duttge. One point that stood out was to let go of the traditional expectations and try new, creative things –and be prepared for whatever might happen.

The three MIXX award winning campaigns presented by the panel wowed those in attendance.

12:00pm

Next up was Barry Wacksman, EVP, Chief Growth Officer, R/GA. He spoke about what makes up the agency for the digital age.  After giving a brief overview of the classic agency model, he spoke about how technology has lead to the opportunity to build a whole new agency model.

The biggest difference for an agency in the digital age is the inclusion of technology in nearly every aspect.  The analog agency was charged with delivering a message to a passive consumer.  In contrast, the digital age has the opportunity to create an application – something a consumer can use in their everyday lives.

We were then treated to three great examples of this from the Nike+ campaigns as well as the Nokie viNe.  The consumers of these products are active and in control.  This has made them far more evangelical towards the brands.

The bottom line is the digital agency needs to work with their clients to put the power of digital to use.

Now it’s time for some workshops and lunch.  We’ll be back with more when the general session reconvenes this afternoon.

11:15am

Who's Idea is it Anyway?

Mine, Yours, Ours – The title of our last session may sound like a basic lesson in sharing, but in the creative world it’s much more complicated than that. Great ideas, mixed with innovative, collaborative campaigns, built on multiple budgets for multiple partners can lead to complicated “ownership” issues.

 

According to the panel, the idea is only one side of the battle. Execution is just as important because an idea can only be as good as the follow- through. In the case of the Dodge campaign being discussed, it’s all about ultimately driving traffic into the dealership. One idea alone can’t make that happen but by building on that idea and asking partners to add their expertise as the campaign flushes out is what drives the success for the deliverables.

 

Teams that were once competing for the work are now collaborating on specific aspects of it. And, according to Deborah Meyer, CMO of Chrysler, it’s the client’s responsibility to keep every partner aligned with the overall mission.

 

A question from the audience brought the conversation back to the “vendor” vs. “partner” relationship. Some panelists feel strongly that the client leads the way, while others feel like “lead agencies” can still make the strongest end-roads. However, all agree that it depends on the project and the personalities of those involved.

 

Panelists include:

 

John Schneider, MRM Worldwide – moderator

Brian DiLorenzo, EVP, Director Integrated Production, BBDO North America

Deborah Meyer, CMO, Chrysler

Alan Schulman, Chairman, Chief Creative Officer, U.DIG > The Digital Innovations Group

Rick Webb, Co-Founder and Chief Operating Officer, The Barbarian Group

 

Now for a little networking…..

The panel discusses putting egos aside to get work done.

10:30am
IAB CEO Randall Rothenberg set the tone for the day—stating the program is a result of a common request of the IAB, “teach me how, teach me now.” He emphasized that interactive advertising is about the entire ecosystem—marketers, agencies and publishers—working together to drive growth.  This is a conference about ideas in the digital space.  Media is the new creative, but media is not the idea.  Media is only part of the idea.

IAB SVP of Thought Leadership & Marketing David Doty was next onstage to chair today’s event. Prior to introducing the first panel, he placed a bit of a scare into the audience by showing a recent story from Ad Age where major marketers spoke at the ANA Annual Meeting about their lack of need for agencies as they begin to work directly with the media companies.  This further emphasized why we are all here today—to learn how successful agencies are doing it right in the digital world.

Next up was our first panel, Wizards at Work - Powerful Results from Doing It Right: A Case Study in Collaboration. It featured heavyweights  from the brand marketing and agency world –

Deborah Meyer, Vice President and Chief Marketing Officer, Chrysler LLC
Jules Daly, President, RSA
Rick Dennis, Executive Creative Director, BBDO Detroit
Brian DiLorenzo, EVP, Director of Integrated Production, BBDO North America
Joe DiMeglio, Vice President of Engagement Management, Organic
Jason Harris, President, Mekanism

The panel took us through the genesis of the Dodge Ram Challenge campaign, largely regarded as one of the most successful collaborations given its tremendous metrics in a time when truck sales have been quite difficult.

In summary, there were five key lessons learned from this campaign

1. Be Relentless about what you want to achieve in the brief, the target and the metrics.
2. Involve Everyone Early and communicate openly and constantly.
3. Challenge one another and ask questions.
4. Don’t be afraid to seek opinion.
5. Make Collaboration the rule, not the exception

We’ll be back with more after the next session.

9:00am

Good morning and welcome to The New Wizards of Digital Marketing, an IAB Agency Summit.  We have an exciting day lined up as we show how agencies are thriving in the digital world and what you need to do to keep pace with them.  The show is about to start with Wizards at Work - Powerful Results from Doing it Right: A Case Study in Collaboration.  Stay tuned throughout the day for highlights, photos and more!