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OPINION: Our Focus on Remnant is Costing Us Brand Dollars

Written on
Mar 13, 2013 
Author
Raj Chauhan  |

Zenith Optimedia predicts global ad spend will reach $500B in 2013 with online accounting for roughly 20%, leaving $400B spread across TV, Print, Outdoor, Radio and Cinema. These are big, traditional media channels with brand-centric advertisers who will be migrating their models to digital over the coming months and years (exhibit A: Newsweek). As these brand dollars shift from the offline to online columns in media planning spreadsheets across the globe, are our premium publishers in a position to capitalize on this immense opportunity? At present, I would say not.

Many media owners are swimming in red ink and instead of being able to initiate conversations with brand advertisers around the quality and value that they provide, their desperation for short term revenue gains has seen them enter into Faustian pacts with the demand side and discount their inventory. The effect of this is two-fold: an erosion in the perceived value of their inventory and downward pressure on long-term margins. They are literally sowing the seeds of their reduced capacity for future earnings. In the more immediate term, it shifts the narrative with brand advertisers to one of price over value; a much weaker position to enter a dialogue with brands.

So badly eroded is the perceived value of online inventory that I fear our industry may transform $400B of potential brand spend into $40B of performance spend. Value destruction on an incredible scale caused by publishers who don’t understand their value proposition to brand advertisers after years of pandering to the needs of performance advertisers.

Nick Blunden, Global Managing Director and Publisher of The Economist, provides sage advice on how media owners should be positioning their properties to advertisers. “(Publishers with strong brands) need to make sure that we are telling the right story about how valuable our audiences are within the context of our content. Whether it’s branding or direct response, people respond not just on the basis of the message but because of the context. Real-time buying shouldn’t be seen as just a relatively cheap alternative to site-specific buying.”

Many cite the difficulty in buying guaranteed inventory across multiple publishers as a reason for the momentum around RTB and its scalable, insertion order-less buying process. Indeed, it is painfully true that the transaction costs involved in buying a guaranteed display campaign direct is 900% more costly than executing a similarly sized deal on TV, but this doesn’t mean RTB is the only answer to our industry’s ills. The job at hand is to make the buying process for guaranteed inventory equally as efficient as buying remnant, because brand advertisers have unique requirements and by addressing those needs will the industry be able to re-build the value perception it offers advertisers and reverse the years of declining CPMs, margins and profits caused by discounting and over-supply.

If we take a step back, brand advertisers measure success against metrics such as brand lift (have you heard of my brand), message association (do you remember my brand’s message), brand favorability (do you like my brand) and purchase intent (are you more likely to buy my brand). To move the brand needle, a mix of strong creative needs to be matched with equally strong media that provides an advertiser with their desired reach and frequency. Given the highly fragmented nature of online, brand safety is an over-riding concern of equal importance.

Putting this into a real-world context, is a Ford Brand Marketing Manager who needs to spend $40m online for a new model launch better served by waiting for the day of the launch and using media traders to buy impressions on the spot market, or locking his media buy in advance through a forward market, knowing exactly the volumes his campaign is going to deliver? The brand manager may be able to achieve a cheaper price on the spot markets, but he’ll have less control over site placement, page placement (whether his ad will even be seen) and what volume of impressions his traders will successfully deliver. Not being able to address these 2 major concerns, context and scale, carries with it a high risk of under-delivery on awareness objectives and makes success on the showroom floor harder to deliver.

Most brand marketers in charge of large, iconic brands are a risk-averse bunch, citing a critical aspect of their job being brand guardian, noble defender and grower of brand equity. No marketer who takes that role seriously will sign off significant spend without knowing exactly where their brand is going to appear. Performance advertisers chasing downloads or registrations may be more cavalier, but when dealing with the idea of a brand’s health and how it is perceived by the market, quality placement becomes priority number 1 and simply “letting it fly” carries too much brand risk to be considered worth it.

Some wastage is tolerated at the campaign level brand marketers operate, as long as you can provide the scale and brand safety they need. It’s why Super Bowl ad rates continue to climb. Online has the ability to deliver on this promise, but we’ve been too busy applying the science of ROI and performance advertising while missing the bigger picture of setting up the infrastructure to handle the bigger prize of brands. We’ve doggedly built a fine drip watering system when we need a hose and I can’t help but think that if the resources spent advancing impression by impression audience targeting was instead focused on improving guaranteed buying infrastructure, we’d be in a much better position to capture the opportunity before us.

As Blake reminds us in “Glengarry Glenn Ross,” “Guy doesn’t walk on the lot unless he wants to buy. Sitting out there waiting to give you their money! Are you gonna take it? Are you man enough to take it?”  Brand advertisers are walking into your lot. Publishers need to refocus efforts on selling more of their guaranteed inventory at scale, ending, or dramatically limiting the discounting they’re providing performance buyers. Are you man enough?





Raj Chauhan, President, North America, Adslot

Raj Chauhan is an entrepreneurial, high tech media executive with over 15 years experience in business development and revenue generation for online media and technology companies. His most recent role prior to joining Adslot was GM, Publisher Business at OpenX. Previous to that he held multiple roles at The Rubicon Project including VP of Global Demand and VP North American Sales. Prior experience included senior roles at Yahoo!, Move and Click Agents.

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