Tag Archives: Advertising Age

Are Advertisers Willing to Forgo Effectiveness for Efficiency?

25 Jun

digital marketing spendIt was with great interest that I read Advertising Age’s article on 2013’s record setting ad spending levels for the “Top 100” advertisers.

Ironically, it wasn’t the total spending level of $108.6 billion, the 4.6% ad spend growth projection for 2014 or the fact that Ad Age’s leading national advertisers “accounted for about two-fifths (42.2%) of all U.S. measured-media spending in 2013” that intrigued me.  What caught my attention was the commentary from senior ad agency executives to various Wall Street analysts about the reasons behind their company’s higher share of spending in the digital media space.

The article quoted a handful of CEOs and CFOs touting their firm’s move to lessen their reliance on traditional media by increasing ad spending on digital media with the goal of realizing greater efficiencies.  Interestingly, there was no reference to improving the effectiveness of their advertising investment.  To be fair, perhaps they believe that spending more of their ad budget dollars in this low-growth environment (ad spending growth is outpacing company revenue growth) on digital will be more effective.

It makes you wonder about the extent to which the leading national advertisers have refined their attribution modeling to reflect the impact of an exposure to their messaging on a cross-platform basis.  Have they solved for the question on everyone’s mind regarding how various delivery channels such as television, print, OOH, online display and particularly owned media, impact consumer awareness, intent and purchasing behavior?  You would think so.  How else, could advertisers justify upping the share of spend on digital to nearly 25% in aggregate on an industry-wide basis?

In the proverbial “good ol’ days” budget allocation decisions were based largely on results attained as opposed to such a heavy emphasis on “what” something cost.  One had to balance effectiveness and efficiency if an advertiser was going to maximize their return-on-marketing-investment (ROMI).

No one argues the inherent benefits associated with digital media today when it comes to dynamic messaging, behavioral targeting and selecting relevant media inventory that is aligned with audience media consumption actions on a real-time basis.  Additionally, most industry participants realize that digital will become a much more viable media forum from an advertising perspective as time goes by.

The challenge with digital media for advertisers is primarily one of confidence.  Confidence in knowing that a high percentage of a dollar directed to a publisher website actually makes it to that site, that its messages have an opportunity to be seen and that the responses being generated to its ads are from target audience members and not bots and that participants in the social sphere are receptive to advertiser interaction.  Absent solid cross-platform audience measurement tools, transparency into the various links in the digital media chain and the ability to accurately gauge response, it may be a risky proposition to spend two out of every five budgeted ad dollars on digital media.

That said, it is clear that the digital “train” has left the proverbial station.  The good news is that advertisers, agencies and publishers are working with their respective industry associations to address some of the issues which need to be dealt with in the context of digital media.  However, history would suggest that an industry wide mandate or set of solutions could be some time coming.

So, what can an individual advertiser do to enhance their control over the digital portion of their ad spend in the near-term?

Perhaps the best place to start is to engage their agency partners in candid conversations to map out the risks and uncertainties in and around digital delivery with the goal of identifying various means to mitigate those risks.  Tighter controls, improved performance monitoring, more timely and thorough campaign post-buy analysis and more rigorous financial stewardship processes between advertisers and their agencies and third-party vendors can certainly play a role in this area.

Industry practitioners certainly understand the role of experimentation and the need to stay abreast of change within the media landscape.  As such, the potential benefits of digital media in all of its forms, merits attention.  However, when a media channel accounts for 40%+ of industry ad spend it is clear that we’ve moved beyond the “experimentation” stage.

It is right to applaud the pioneering spirit which advertisers have exhibited in so rapidly evolving their media mix to integrate digital into the fold.  Given that total digital media spending was $19.9 billion in 2009 (source: Jupiter Research) and in five short years later eMarketer is forecasting that 2014 global digital media spending will eclipse $137.5 billion, it is clear that advertisers are blazing new trails.

Merriam-Webster defines the term pioneer as; “a person who helps create or develop new ideas, methods, etc.”  The marketing definition of pioneer, however, has often been described as: “a person with an arrow in their back.”  The moral of the story?  Proceed with caution and a complete understanding of the risks/rewards inherent with aggressively moving into what is still an emerging media… at least from a performance validation perspective.

Interested in learning more about safeguarding your digital media investment?  Contact Cliff Campeau, Principal at Advertising Audit & Risk Management, LLC at ccampeau@aarmusa.com for a complimentary consultation on the topic.

 

Global Marketer Gets Lean & Mean

18 Apr

marketing services agency networkAt the beginning of 2012 PepsiCo announced a series of strategic enterprise expense reduction initiatives.  These included the elimination of 8,700 employees representing 3% of its global workforce plus additional cost reductions of $500 million per annum over the course of the next three years and an announced streamlining of its marketing services agency roster.

It was announced that part of the savings from that initiative would be invested back into marketing PepsiCo’s beverage brands to narrow the competitive spending gap with category leader Coca Cola.  According to Jefferies & Co. in 2010 Coca Cola spent 8% of annual revenues to market its beverage brands compared to 3% for PepsiCo.

On April 13, 2012 it was reported by Advertising Age that Pepsi’s North America beverage division had completed the downsizing of its agency roster.  The result?  Pepsi eliminated sixty-five percent of its beverage division’s marketing agencies, approximately 100 agencies.  Long-time agency partner Omnicom Group was the big winner, strengthening its hold on what has been a long-term client relationship.

To PepsiCo’s credit, it had recognized that its agency roster had become bloated in recent years and took aggressive action to right size its marketing services agency network.  So what will this move yield for the beverage giant?  Well for one, the consolidation of responsibilities across fewer agencies will yield a combination of agency fee and expense reductions tied to the elimination of duplicative efforts and overlapping roles and responsibilities across its marketing agency network.  Secondly, the reduction in the size of PepsiCo’s agency roster will enhance the marketing team’s focus and ability to effectively engage its marketing partners in a meaningful collaboration to build sales, market share and brand strength.

Managing and motivating a smaller group of suppliers is certainly less complex than doing so with an agency network numbering over 150 marketing agencies.  However, post-consolidation PepsiCo’s North American beverage division will continue to work with approximately fifty agencies.  While there will continue to be challenges in aligning agency resource investment and effort with the division’s business goals, establishing performance criteria and systematically monitoring progress across its media, creative services, digital, diversity, promotion and PR agencies this is clearly a step in the right direction.

Hats off to PepsiCo for taking a measured approach to identifying a supply-chain optimization strategy that has the potential to both save money and enhance marketing ROI.  In the words of Benjamin Franklin; “Well done is better than well said.”

Assignment Briefing Process: A Three Step Approach

30 May

assignment briefing processIt should be clear that advertisers’ “own” brand strategy and are therefore responsible for the assignment briefing process. With multiple agencies making up an advertisers marketing services vendor network, how can you have it any other way? Coordinating efforts across this collection of specialist agencies to achieve innovative, impactful, integrated marketing campaigns that deliver on the organization’s goals is the responsibility of the Marketing Team, which is ultimately accountable for generating a return on marketing investment.

There was an intriguing piece written in Advertising Age recently by Casey Jones of Jones & Bonevac on the assignment briefing process that identified results from a recently fielded survey by his firm. The survey found that 54% of agencies surveyed said that “fewer than 40% of the client briefs provided gave a clear indication of what the client expected from the agency.” And of that number; “… 30% said only 1% – 10% of briefs provide clear performance expectations.” This is an issue which creates pitfalls ranging from wasted time and money to ineffective marketing outputs and client/agency discord.

The remedy to this problem requires three relatively straight forward steps. The first is the easiest… develop an assignment brief template containing the requisite information fields necessary to be completed by the Marketing representatives responsible for the brief development. This would include information such as brand value propositions, key competitive differentiators, target audience insights, market/ competitive overview, historical brand performance data and quantifiable objectives for the project. Secondly, formalize an internal review and approval process which includes key stakeholders and senior Marketing management to provide an opportunity for both strategic input and discussion surrounding assignment “success” criteria and how the attainment of those criteria align with the organization’s objectives. Thirdly, construct a concise assignment briefing meeting format that the organization follows to present the approved brief to their agency partners, engage in dialogue with the agency representatives and clarify each agencies roles, responsibilities and deliverables.

Professionals within both the client and agency organizations are intelligent, motivated and desirous of a successful campaign outcome, thus formalizing a framework for the assignment brief can immediately improve the efficacy and efficiency of the entire creative development process. Why? A tighter assignment briefing process results in better creative briefs and stronger creative outputs.

 

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