Audience vs. Loyal Audience

It’s time to draw the distinction between audience and loyal audience. We are awash in conversation about audience online, but say very little about loyal audience.

It is equal to the difference between customer and loyal customer. For instance, occasionally I am required to shop for groceries at a supermarket other than my usual and preferred choices. On those occasions it is as close to smash and grab as I can make it: someone needs to stay behind and circle the parking lot in the car. Someone needs to make a beeline to the poultry section and grab a chicken. Someone grabs potatoes. Someone grabs frozen peas from the frozen foods section. Then, through the express check-out line and into the circling car to make a fast escape from the parking lot and away from the supermarket.

Such is a customer experience.

Under more favorable circumstances I would be at the butcher shop where I am on a first name basis with people behind the counter. They know what I like. I trust what they say. In fact, I trust everything in the store including the displays of gourmet food stuffs, interesting jams and jellies, olive oils and vinegars. It’s a satisfying experience and I am never in a hurry to leave. I pay-up for the privilege. Uncharacteristically, I urge people to go ahead of me in line. I am a regular, after all. I’m practically staff. The (other) customers must come first.

Such is a loyal customer experience.

In the first case I am not motivated by any desire to be there. I need to feed the family. I will take no chances, grab what I must, and exit the arrangement. In the second case, I am delighted to be there. I cook. I take all of my risks with new food products on the implied recommendation of the establishment: if it’s good enough to be displayed on their shelves, it’s good enough for me.

I care about food. So does everyone else that shops regularly at the same butcher and feels they can afford it, because if you care that much it will cost you – it will cost you weekends away if you’re on any kind of budget. And I care enough to make that sacrifice and the family still seems to love me.

The parallels to media and advertising  are obvious, or they should be. I am not the same person establishment to establishment, nor am I the same user one media outlet to another. Sometimes I am engaged. Many times I am not. Always, I am influenced by the surroundings, which are invariably influenced by who I am.

Under those circumstances, when I am less than interested, and at a place by necessity or chance - as a member of the audience, but not a loyal one – as a customer, but not as a loyal customer – the only way to take rational advantage of my presence if you are an advertiser is to pay less for the privilege.

Appropriately enough, this characterizes a substantial proportion of online advertising today. It is audience driven; therefore, the price is less.

It proves the system works according to how we sell it. Unfortunately, how we sell it is leaving substantial value on the table for brands which, themselves, depend on a value system that depends on customer loyalty. Online media needs to align better with that requirement by asserting its audience loyalty credentials: not just people in a place, but people in a place that matters to them.

This is an easy story for the internet to tell because it is almost exclusively an interest-driven media. Most media is somewhat interest-driven, but no other media can afford to serve-up interests in such well-proportioned slices so as to effectively do away with the uninterested. Such purity is called 100% audience composition.

Online was going to rescue audience composition, but it was shanghaied by the notion that 100% composition can add 100% of its value divorced from the circumstances of its creation. It cannot. You may know me as a cook from my observed media behaviors, but sometimes I am in the mood to cook and sometimes I just need to feed the family.

Dealing with this terribly small distinction wouldn’t matter if the fate of the brand marketing universe wasn’t utterly dependent on it. Brands, themselves, rely on even smaller distinctions. Soap is soap. I should reach for the generic brands if I weren’t so inexplicably attached to Dial. Perhaps it is only the color, or maybe the shape? It’s not the cost. I have no idea what the cost is. Dial works like other soaps work, but other soaps are not the same, don’t ask me why.

Such can be the nature of loyalty. Happily, I am much clearer about the reasons for my media choices, which conveys an instant advantage to the small distinctions of brands – and separates the value of an audience from the value of a loyal audience.

Don’t waste audience.

Ad Networks or Content sites? Content or Data? Confused? Listen to the Crowds.

If you weren’t paying attention you might be confused. Or, maybe you are paying attention and you’re still confused. Or, maybe in your confusion you’ve decided to quit paying attention and watch for signs of warmer weather.

Just in case, there is an interesting juxtaposition today in Ad Age between research from Advertiser Perceptions that reports marketers are accelerating the shift back to content sites for media buys (“Marketers Shifting Online Budgets to Content Sites”), and a column from investment banker Tolman Geffs arguing instead that the momentum is with the audience networks (“Get Ready for the Coming Land War in Online Display Ads”).

Says researcher Advertiser Perceptions:

A survey of agencies and marketers revealed that 52% of them plan to spend more on content sites this year, whereas only 35% said they were likely to increase budgets for ad networks. 

Says banker Tolman Geffs:

Online display, primarily a brand advertising medium (as measured by revenue), has traditionally been sold on the basis of sites and specific media placements, or via ad networks that aggregate sites into vertical channels. Now, with the evolution of online ad targeting techniques and the rapid growth of a market for consumer targeting data, it is increasingly common to sell advertising on the basis of audience, reaching individual web users based on specific data about that user.

Confused?

It might help to read the comments that followed each post.

In response to the Advertiser Perceptions piece the commentor wrote:

“I would hope that we don’t actually have to explain to marketers why it’s a better opportunity to surround yourself with good content rather than just a cheap spray and pray methodology… But… The reality is, I don’t believe that most of the agencies who have recently incorporated “digital” into their titles or their top-level pitches are actually staffed to be able to support content direct buys. This is why the networks will continue to thrive, is b/c it’s “easier” on the agencies and their wallets. If I owned a content site or portal, I’d do the same thing as ESPN and the others, and I’d ban all network based ads and force agencies to do a better job or at least properly staff up. That being said – content sites better be prepared to show ROI – whether it be brand or actual sales, or they will lose out faster than before… “

And in response to Tolman Geffs:

“You are right, it is a crowded space. (It does not take a genius to figure that out.) This game of musical chairs is not going to result in a wave of consolidation, it will result in a return to the fundamentals of media – content, audience and advertiser. The agencies have the revenue, the publisher has the content and the consumer is in control. When everyone decides to take their bat and ball home with them, these middlemen are going to be left with aging IP that does not generate revenue.”

It is wise in this case to listen to the wisdom of the crowds, starting with the need to fix agency compensation. Then perhaps, we can focus on value.

Let’s Be CLEAR

Following through on the industry initiative sponsored by the IAB called CLEAR, in the next few days Burst Media will begin to roll-out an icon on advertising it serves which users can click in order to learn more about the targeting techniques that are contributing to the delivery of that ad. For anyone desiring to know more and/or desiring to opt-out of targeted advertising, links to additional resources will be available.

Transparency has been a core promise of the Burst brand to publishers and advertisers for the length of the Company’s 15-year history. The foundation of that promise has been the tenet that the right message, in the right place at the right time succeeds at drawing advertisers and consumers together around a common interest. It is an open and honest formula – appropriate advertising in the right place – and the super-abundance of niche content online means the ingredients are always present to allow consumers and advertisers the chance to get along by being, as it were, on the same page.  

Behavior targeting – an awful name, sounding like a dark art – derives from the initial meeting between consumer and advertiser at the right time and place. Really, we should call it Interest-Based targeting which at least communicates value to the consumer. The Internet excels at driving interest-based value for consumers. In this, it prevails over all other media: timely and relevant content and, by extension, the potential for relevant advertising to support that content. With the use of anonymous cookies the Internet can sustain for much longer the interest-based value of the advertising until, eventually, the initial connections dissolve away into the anonymous jungle of the marketplace. It helps the content producers, it helps the advertisers and, in the long run, it helps the consumers.

 Which is what we hope to make CLEAR.

Advertising is sold, not bought

The article in Advertising Age this week reliving some of the points that were made at the IAB Leadership conference in Carlsbad, CA, about erosion in the middle of the online advertising value chain ushers to mind the old maxim, “Advertising is sold, not bought.” We’ll get to that in a minute.

For now, if you believe in the virtues of audience-based media over the virtues of place-based media, then you believe that publishers probably don’t matter anymore – or matter less – to the outcome of media planning decisions because media value today, to you, is in the data, not the position. You are among many, therefore, that may have read the Ad Age piece and thought, “So what” when it came to publishers.

If that sounds like you, and if you belong to the value chain at all, you probably belong to one of the provider-types in the crowded middle of the value chain (ad networks, ad exchanges, data providers and ad servers, etc) where the expectation is certainly that the online market will continue to grow, maybe even to $80 – $100 billion worldwide or more by 2015, but that value considerations will evolve along their present lines: that is, from advertiser – to second party – to third party – to fourth party – and, finally, publisher. Or, from high – to lower – to lower – to lower – and, finally, to bottom; Or, in the event of consolidation, from high – to lower – to lowest.

In this value environment, it matters a great deal that prices stay low because so much of what gets exchanged is dependent on cheap access to premium web inventory. Providers in the middle of the chain have proved ruthlessly efficient in this regard, going so far as to position audience-based targeting as a “new science” and an improvement on old-fashioned media planning (which would be according to place and time in addition to who). So far, however, the “improvement” has failed to extract a better price for itself or others downstream, and it is hard to see how it will given the stress it would put on provider-types in the middle.

But, again, if you believe publishers don’t matter any more – or matter less – to the outcome of media planning, so what? It is certainly worth thinking about the fact that place-based media has simply become too expensive to plan for in a fragmented media world.  

Fine. What happens if the market grows to $80 – $100 billion as some predict? How will the current value chain absorb the increase if not through price? Here are all the options:

Option 1 – Volume, which means more advertising pours into the Long Tail of the Internet unless comScore’s list of the top 100 web sites that account for 84% of ad network purchases (per research from Adify) grow in audience size dramatically;

Option 2 – There is no option 2, except price.

Now, the fact that (according to Adify’s research) 84% of ad network impressions currently run across the top web sites means that the likelihood of every incremental dollar between here and $80 – $100 billion going to the Long Tail is very slim. Media buyers have a built-in bias for branded media. It’s easier to sell to clients; it aligns with their client’s own brand sensibilities.

Pretend, though, that every incremental dollar from here to $80 billion, or so, does, in fact, flow to all new media inventory besides what is represented in comScore’s top site index. Prices can stay low under the circumstances. But, there will be many, many more publishers with significantly higher earnings that suddenly have the means and inclination to compete for a bigger share. Think of it as the G.I. Bill that introduced the possibility of higher education to a generation of Americans that never thought of it before. It will be game-changing, ushering in a potent “middle class” with decisive powers.

Or not. Maybe only half the next $40 – $50 billion seeks out new inventory and the other half must find a home within the premium inventory sector at the top. It becomes a closer race for space and opportunity, prices go up and the rich get richer.

Either way, more influence over the outcome of media planning and buying accrues to publishers, which is why the maxim “advertising is sold, not bought” elbows its way to the front. Even now, despite arguments about infinite supplies of inventory, there’s an argument afoot about supplier value. Publishers are whining because they feel pain. They will want advocates going forward.

This is an ominous thing facing provider-types in the middle of the chain for when the day comes to atone for value. The difference to them between now and $40 billion from now will be the difference that results from selling versus buying advertising. It will be about advocacy.

It is a sad fact that advocates for the poor have always had very little leverage in the world except moral leverage. Advocates for the rich, on the other hand, have always had commercial leverage, and a $80 billion market will undoubtedly create more leverage for the citizenry of the new media economy – the ones accountable for its upkeep and maintainance - which are its publishers.

Or not. The market could fail to grow. We could be done and dusted at $50 – $60 billion worldwide some day, in which case advertising explorers, acting on behalf of their brand customers, with nothing to report from the new media frontier but ad model chaos, may sail on to potentially more favorable places, such as easy-to-recognize interactive TV.

That’s a disappointing prospect given all the potential online, and it says that one way or another, advocacy matters. Value must get sold, advertising value included. And, ultimately, the value of the supply matters most  – if not to everyone, at least to the suppliers.

The Rise of the Audience Marketplace

The high-level disconnect in our conversation about online media and advertising – now in its 14th or 15th year – remains the notion that positioning matters to consumer brands but not consumer media.

Eric Picard’s thoughtful piece in iMedia today puts this on display again in his recounting of a panel discussion titled, “The Rise of the Audience Marketplace,” at ad:tech in New York a week ago. During the panel, participant Quentin George, Chief Digital Officer at Mediabrands, reportedly observed:

 ”In a world with such massive overcapacity, the only way for companies to differentiate and capture a disproportionate share of dollars is through building a brand.”

This was a very sensible assertion. Hold that thought.

The panel discussion then veered into talk about media planning and buying online with a great deal said about the rise of new buying solutions such as IPG’s Cadreon and Publicis Groupe’s VivaKi. These fall under the heading of demand-side buying systems, discussed in a recent post to this space.

Demand-side buying systems are energizing media buying companies with a renewed sense of empowerment. There is no harm in this. It represents a transfer of power from certain horizontal networks that have been conducting business this way online for a few years, and keeping the money. Now, the media agencies get to keep the money. The industry needs media agencies (all ad agencies) to feel energized and empowered, so to the extent that certain amounts of planning and buying can be conducted through demand-side agencies, there is no harm in this. Perhaps it will serve as a catalyst to help fix agency comp so that life can continue on a transparent basis ultimately favorable and necessary to marketers.

I digress.

In the midst of the panel’s enthusiasm it sounds like Bill Demas of Turn got up the nerve to suggest that most of the inventory wafting through the demand-side buying systems is non-premium inventory (much as it has always been through the horizontal networks) and that premium inventory is still making it to market thanks to human sales forces and their interactions with human media planners and buyers.

From Eric Picard’s recounting it then sounds like Bill Demas’s observations disappeared quickly under a pile of demand-side enthusiasts. Fellow panelists pointed-out that the idea of premium inventory is a relative concept. Brands care about quality content, but the quality of the audience is not measured by this alone. Basically, quality does not depend upon context.

This is the important question of our day: is the quality of an audience shaped by the context of its media environment.

Back to Quentin George who was on the panel. As he did, marketers will insist - with every justification – that brands matter, and the more complex the environment, the more imperative the need for brand. Brands differentiate.

What does that mean? It means context. Context is the differentiating agent. Context determines meaning. It is everything to brands. It says so clearly in the dictionary (from Answers.com):

con-text

 

n.

[Middle English, composition, from Latin contextus, from past participle of contexere, to join together : com-, com- + texere, to weave.]

1. The part of a text or statement that surrounds a particular word or passage and determines its meaning.
2. The circumstances in which an event occurs; a setting.

Brands are about meaning and circumstance. If they are not, then soap is soap. A car need only be black, as Mr. Ford would have had it, and get a traveler from point A to point B.  One smoke would be as good as another. Brands need positioning.

Yes, brands can certainly exist out of context for periods of time, like I can swim under water or a fish can flap on the ground. I use brands all the time unconsciously. But there are no unconscious brand champions and brand loyalists and there are no automated brands. In my house you will get one kind of vodka, which is an otherwise orderless, tasteless, neutral spirit with one purpose that can be met by any run-of-network vodka that will be (fall-down-drunk, for fall-down-drunk) cheaper. Yet, I am loyal to one brand. Go figure. 

Let’s be frank: really, the question is about money. The world is trying to impose cheap on marketing and context is not cheap. Neither are brands. Our world is hung-up on this problem and we know it. It is a dis-connect if ever there were one.

Truthfully, if there were enough great advertising creative in the world brands might be able to survive out of context. If every ad were brilliant, touching, funny, compelling – even simply polite – advertising could, perhaps, live and breath outside of a naturally supportive, media environment. We are not so fortunate. Advertising is hard. Great advertising is really hard. 

As we continue to bang around the miriad opportunities with which the Internet presents us in order to target our best customers let’s remember the obvious one, present from the beginning, the one that aligns us most with consumers, the one that made Google particularly rich: context. I don’t notice anyone else getting as rich as Google (or Google as rich from anything else).

The only thing I notice is the European Union and the FTC getting ready to drop a safe on our head. Then what?

Ad Agencies should be paying attention to potential opt-in legislation in Washington

Edward Barrera, Editor of Adotas, raises serious concerns that advertising agencies may be dozing through the privacy debate in Washington D.C. that is right now headed towards opt-in requirements for all advertising online. Opt-in means that any time a consumer is presented with an ad, that consumer will be required to accept or reject the cookies associated with that ad, which are there largely to provide the advertiser and their agents with the ability to manage the delivery of the message.

The truth is ad agencies are probably faking it. Their eyes are shut, but their eye-lids are twitching. They are awake and they are listening. As Edward suggests in his column, many are working on the assumption that privacy legislation is going to hurt them a lot less than many ad networks, with the result that they can recapture control over a great deal of media planning and buying online that they lost by treating most of the Internet as throw-away material. A blast at high altitude over the industry is just the thing, they think, to level the playing field.

Yes, perhaps. Agencies have a trump card which is the relationships they enjoy with the clients. In contrast, many purveyors of media space online, including many ad networks, enjoy relationships with advertisers or publishers that are only as deep as their last lunch and which can be easily swept away by the crosswinds of change, including, potentially, regulatory change.

But agencies should focus on what sort of world it might be once the smoke clears. As a consumer, it’s not a world I relish. I don’t even like the reminders Microsoft Windows pops to me each time I want to tinker with a document, let alone the opt-in intrusions that dooms-sayers suggest might attend every ad online. The freedoms that both consumer and advertiser enjoy online could be severely compromised by opt-in legislation that erects check-points every few yards. Doesn’t advertising have enough problems? People don’t like commercial interruptions. Now the potential exists to place an interruption in the way of the interruption?

There are fundamental advertising issues at stake here, the defense of which should be of paramount concern to ad agencies. They have been taunted relentlessly over the years by the digital upstart classes, and who can blame them for imagining a world where the taunters have been muzzled. Still, there is the question of an effective working relationship with consumers, which has been steadily eroding for years. Agencies should have no desire for an Internet experience that says “Kick Me!” every time consumers encounter advertising messages, something opt-in will surely contribute to the ”enjoyment” of an agency’s work each and every time.

Defending data from regulation

As reported in Media Post today, there was good news for a sensible approach to the issue of online privacy courtesy of the Technology Policy Institute, which released a study that says nothing much can be gained for consumers or companies by increasing the amount of  privacy regulation online. As quoted in Media Post the study, ”In Defense of Data”, said:

“Regulation should be undertaken only if a market is not functioning properly and if the benefits of new measures outweigh their costs…Our analysis suggests that proposals to restrict the amount of information available would not yield net benefits for consumers.”

Right. And besides all that, the argument has been made before in this space that the conversation about online privacy seems totally detached from the presence of far more intrusive forms of data-driven marketing offline. Really, how many online ads are intruding on dinner hour at home at night? In comparison to some offline tactics, behavior targeting online is thoroughly benign. Thus, apart from the benefits that may exist, the dangers of anonymous data online should be measured againsts the dangers of more extreme data uses offline – and there don’t appear to be many. Offline data use is frequently a nuisance to consumers, but not typically a danger. Online data use is neither.

For newspapers to survive there needs to be more of them, not less. That’s called living in a new media world.

Jason Klein, CEO of the Newspaper National Network, was in Ad Age yesterday with a thoughtful piece about the torments of the newspaper business today. Jason has a great vantage point from which to comment, given the NNN’s close working relationship with virtually every newspaper in the country.

I agree with almost all of his points - including, most importantly, the enduring value and ability of newspapers to survive as print properties. But, I don’t agree that the path to survival is fewer newspapers, and/or that the economics of the business favors one large newspaper per city.

To the contrary, the economics of the media business today favors the small. The Internet is only the most recent and obvious example of how the business of producing and distributing content has fundamentally been fragmenting into smaller and smaller units for decades, beginning with Cable TV. Nevermind how fragmentation has perplexed advertisers and media buyers. They will catch-up on their own to the new, narrower nature of things. The business of providing content that audiences find valuable, and for which they may even be willing to pay, favors the discreet. It favors the targeted.

Accordingly, the economics of newspapers going forward favor a return to multi-paper cities. Not one newspaper per city, but more-than-one, smaller newspaper per city probably divided along unique demographic, social or political interests. One-section newspapers, easily distributed, with carrying costs subsidized largely by subscriptions.

There may be a place for the consolidation of distribution and content at a national or broadcast kind of level, but it will be a battle to perpetuate: Ask any company trying to sustain those sort of franchises today, such as Yahoo! or even the New York Times.

Again, we should pay careful attention to the plight of newspapers (and traditional media, generally) lest history repeat itself in too short a time. As Jason Klein says, the bell is tolling for newspapers. But, it tolls for all of us.

Think small.

Now you can have your cookies and eat them too!

Google announced the beta of its Behavioral Targeting program today which will give consumers the chance to peek behind the curtain to see why a particular ad was furnished to their desktop. Leaving aside the potency of Google’s BT offering, which should be substantial, the consumer transparency provision will be very interesting to watch develop. Privacy regulators and marketers should both pay careful attention.

Regulators may discover that people aren’t that curious to know how the appropriate ad showed-up on their web page. Google should report on how many consumers actually inspect and then make changes to their categorizations. Personally, I’ll be surprised if people opt out, or in, of behavior categories more than once – which they might do initially in the same way we all customize web pages and then never alter – or pay much attention to them – again.

Google’s transparency commitment will mean different insights for marketers, namely how revealing is the behavior data in the first place? Some of that will depend on the duration of Google cookies. Is it 5 days? Is it 90 days? Depending, we may find that the cookie files of consumers reflect a boundless array of interests and opportunities, inviting questions about the significance behavior targeting may represent to advertisers positioned, as it is, further down the value chain of consumer engagement; or we may find that people are rather boring. A travel web site here; a pet care site there. Someone has a new puppy. In which case, behavior’s significance will be reinforced for building reach against a target audience, although, now that’s it’s transparent, advertisers may want to have the opportunity to better establish that it’s the right one.

Google may not have a lot to say about these variables over the next weeks and months, but industry observers will as they eagerly peak behind the curtain of the advertising served to their attention. It will be interesting to see what is revealed.

Have you had a “Truman Show” Moment

In this week’s Behavioral Insider from MediaPost, the results of some <shameless self promotion warning> Burst Media research on consumers’ concerns about privacy. The “Truman Show” moment is a perfect analogy for when you see an ad that is just a little too relevant, like when Laura Linney turns around and does the product promotion for laundry detergent, and Jim Carrey gives his googly-eyed all.

The key finding from the research is that 80% of people online are concern about their online privacy as it relates to age, gender, income and web surfing habits.

See the research here and subscribe here to future reports.