Targeting Evolution by Sarah Fay

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  • Thank you John and thanks to the whole X+1 team for having me here today. Up until last May, I was an agency executive from the media and digital marketing space. I’m here with the perspective now of an industry observer, with a keen eye to what is happening in the market that is affecting the businesses and approaches of agencies, publishers, and advertisers. As ever, there is never a dull moment and the pace of change has never let up since I entered the digital space ten years ago, and only seems to keep accelerating. Today, I’ll be talking about progress that is being made in targeting the right person at the right time with the right message - which has been the promise and the holy grail of digital marketing since its inception and is defining the evolution of targeting.
  • My friends in the industry know I took a step back from my position as CEO of a marketing services holding company last May, and it has been quite a year for me. I’ve been blessed to spend time enjoying life with my family and having some adventures in lots of different places. And I have to say after 16 years of workaholism at one company (which changed shape many times), it has been an amazing experience to re-charge my batteries.
  • However, because of the pace of change I was referring to, no one gets away with sitting out an entire year in the media industry without becoming completely irrelevant, so I thought I’d better find a way to stay connected and involved with the marketplace during the time between all that fun I was having. So I have been fortunate enough to become associated with a number of interesting and dynamic companies. What all of these companies have in common is that they are at the forefront of change in the digital market place. They all have new business models, and it is exciting for me to be working with all of them and learning about their specific areas. This offers me the big advantage of perspective where the market is evolving rapidly. Interestingly, all of these companies revolve around new forms of targeting, and when you come right down to it, that is what the digital space is all about: better targeting that allows greater relevancy. What I can tell you is a lot has happened since I left the agency space last May.
  • So what is changing? Sometimes it is hard to identify change because it doesn’t happen all at once, and some of these things have been taking place over a period of years. But I believe we are now seeing a marked acceleration of change in media planning behavior. How is this so? 1. Well, one thing that is happening in the performance marketing space is the rise of real time bidding options in display. Companies like Google, AdMeld, Pubmatic and Rubicon are making it possible to purchase media using the same kind of auction model we’ve been using in search engine marketing - and you know how much performance marketers love search. So this kind of network buying model is attractive for maximizing budgets and demand is on the rise. 2. Also, whereas the traditional media approach has been to work within the confines of developing a media plan against several buying segments, and creating an optimization plan to be measured and adjusted against a few key metrics (most often manually - involving spreadsheets and phone calls), data planning is becoming much more intensive. Some advertisers are targeting a wide variety of niche audience segments with distinct products targeted to each, and often hundreds of variables to measure and optimize against. For this kind of program, there needs to be a data strategy and an automated mechanism for measuring and optimizing. This is not unlike paid SEM programs, where today we can’t fathom the execution of those programs without bidding tools, because all of the search terms and all the derivatives of those terms mulitply into the thousands. 3. In fact, where media planners have typically begun with an assumed target audience that was painstakingly created with research and insights, it is now not uncommon to cast a wide net with a data strategy that allows for many variables to be measured, and to let the data strategy dictate the direction of the targeting plan. 4. Digital buyers are therefore focusing less on the media properties themselves, and more on the audience segments they are looking to reach. As a market, we are becoming much more comfortable with the long tail of media inventory. Now before anyone gets upset, I’m not saying there isn’t a place for bigger more immersive deals with the publishers, but in many cases, the data plan will indicate where those deals should be cut.
  • An indication of this trend is apparent in a recent eMarketer study of how US agencies and advertisers view ad networks. Ad networks are becoming less distinguishable based on their inventory or the kind of targeting they provide, and in fact price is becoming a much bigger part of the network selection process. This would suggest that media impressions are becoming commoditized.
  • And in fact, data strategies are coming to the fore to drive program success. In addition to all of the usual media suspects calling on digital media buyers (Yahoo!, Hulu, NBC, ESPN, etc, etc ad infinitum) we now have audience behavior targeting options (Blue Kai, Exelate, Media 6 Degrees, acerno, scanscout, etc, etc.) - and we have a new kind of service emerging and coming on strong to harness all of these things together: the Data Service Provider which provides technology that can help create an overarching strategy to harness all of these options together and that allows digital media buyers to target and optimize like we’ve never seen before. This of course, is the category that our host today, X+1 occupies. And as the photo suggests, this is a very sexy place to be. Sexy because we are given new insight that opens doors to new creative approaches, and sexy because there is a LOT of money involved.
  • This new campaign optimization and efficiency creates considerable additional budget margin to go after and all of the industry players are waking up to the fact that they need to control the ball to win the game so to speak... That is why we have centralized data control strategies emerging at companies like WPP with B3, Publicis with Vivaki, Havas with Adnetik, IPG with Cadreon, and my former company Aegis has announced a similar strategy to these recently. The agencies need to be in control of the data strategy in order to maintain the position of strategic council with their clients - and, many speculate, what is happening in the digital space will come to TV eventually. The vision is to buy inventory and develop what becomes in essence the agencies’ own media networks which are customized for individual clients, but also provide aggregated data intelligence for the agencies to mine and understand from a broader point of view. So agencies may be moving into the media network space - and nowhere is this more clear than with WPP and its ownership of 24/7. You also see the next closest player to the ball in red quite determined to take that ball. That would be the publisher. In fact, publishers are moving quickly to also develop their own proprietary systems to maximize the efficiency of inventory delivery and control on their own sites - and other sites! , particularly in vertical spaces where they can extend access to audiences similar to their own by developing networks of niche sites in high premium spaces. These publishers are on their way to playing the role of agency in many respects, many of them even offering creative and content assistance to advertisers. Also, you see the third player, who is not really near the ball at this point but is watching intently. That is the advertiser - our clients. And make no mistake, the client will become increasingly aware of the margin that is at stake and will be trying to figure out the best way to secure it - and don’t be surprised if the ball ends up in control of the far player at some point.
  • Today, this media drama is playing out almost exclusively in the performance marketing space. Advertisers that are driving major budgets to achieve transactions on the web are the most sophisticated when it comes to budget management strategies. At companies like Geico, Citi, Barnes and Noble (others to mention) the wheels of progress are constantly turning as to achieving greater efficiencies with the budgets they have to spend. These are the companies that employ PHd’s to positions like VP of Data Management, VP of Search Engine Marketing and so on. There are millions in hard dollars at stake, which is why these companies are motivate to stay at the forefront of using the latest technologies to cut every possible bit of waste from their media budgets, and achieve the highest possible returns. They are in an arms race with their competitors as well - so new targeting technology is every bit as much a threat if they don’t use it as an opportunity if they do.
  • Brand advertising is several steps behind in employing this kind of data strategy and there are good reasons for that. I recall an article that was written in 2005 by Andrew Cohen and Leo Toralballa called “Brand is from Mars, Direct is from Venus: How to Make the Marriage Work”. And just hearing the title, I think you can get it. Brand advertisers have always been about wielding bigger creative effects to achieve sales results that cannot be immediately measured and their campaigns are generally expected to have a longer life in the consumer’s memory. It is not uncommon to hear some level of disdane toward direct marketing tactics from brand advertisers, and as the title “Brand is from Mars” suggests, they control a much bigger planet (there are considerably more advertising dollars in the branding space than in DR.). Direct marketers have been just as disdainful of brand marketers. There are many who will argue that the art of DR is more difficult but more accurate than branding. Data strategies and algorithms are complex - they hurt the head. But a DR marketer always knows exactly how he is doing against goals, and can constantly benchmark and adjust - and predict the way to success. And the way of the world, particularly considering the role purchasing is playing in most organizations, is rewarding this kind of strategy. I think brand marketers know they need to employ more direct marketing practices - and to be fair, direct marketers are taking a page from brand marketing’s book as well. But we are just starting down this path.
  • Or perhaps I should say where they aren’t when it comes to employing DR tactics and strategies. The fact is there is a long way to go here. But agencies that touch both direct and brand strategies are poised to lead the way for brands into this space.
  • But how does performance marketing fit in with social media? An evolving media construct (and I’m borrowing this slide from my former company, Aegis) uses paid media to drive toward brand interaction (or brand owned media). Brand owned media is deeper content that is meant to invite and excite consumers to spend more time with a brand, and carry forward the message (this is called earned media, because the content has to be good enough to earn the consumer’s advocacy and spread the brand owned content to friends, perhaps in social spaces or by email. Performance marketing sits right between paid media and brand owned media. In many cases, paid media is being used to drive to brand owned content, and the program success is determined by how many people were driven to interact with the branded content and how efficiently - this is what we are calling cost per engagement, and we are seeing RFP’s to the media community from big brand advertisers with this metric - cost per engagement - as the key point of distinction and negotiation. So performance marketing is heating up in the branding space.
  • These types of performance metrics are ultimately what will drive more budget dollars online. You can see from this Forrester study done last year, that if the digital space proves itself with better targeting and measurable success that will be the impetus for companies to spend more in the digital space.
  • So all of this change has been taking place. What should we expect to happen in the future? I’ve talked mostly about what is happening in the media space, but creative optimization is just as important in achieving relevancy and impact. There are automated technologies that can help today with creative optimization and audience profiling. For example, X+1 goes beyond advertising campaign management to optimizing landing pages, creative delivered and products offered to given customers. 2. In order to deal with the level of complexity in crafting automated campaign optimization, a new kind of talent will become key and agencies will need to deliver on multiple Beyond using data for optimization they will need to integrate both qualitative and quantitative data and use it to create insight and improve an experience. They need to be able to use intelligence gathered from multiple interactions and multiple channels at any point of interaction. They must tie marketing analytics and metrics back to business results. Again, we see movement of agencies into the media network space, and in fact developing owned content in many respects - this may well become a profit center. Likewise, many publishers are offering services that help brands to create “owned content” and have the tools and existing margin to play with that could make them more strategic partners to advertisers than ever before. Forrester believes that 2010 is the year that TV learns how to think digital, and there are forces at work to validate that addressable TV can work. I know from my days at Aegis that the only limiting factor to Google TV was its small footprint - it is otherwise a regular part of the media diet, adding efficiency to almost any buy. This is a step toward what the cable industry is attempting to do through Canoe. The TV delivery system is now 100% digital. It is only a matter of time before the long tail of TV starts to be mined for the kind of efficiency and results that we see online. Targeting evolution will continue and in five years time our command and control systems will be the hubs that manage campaign and media automation across all platforms. So what can you do to be ready? I would say the main action of today is to push your own organization for innovation in data and targeting. You may not be ready to put all the budget against an automated strategy, but you should at least be getting your feet wet. Successes will naturally lead to using more budget against these strategies. Also, ask your all of your marketing partners to discuss their data strategies and approaches with you. In order to fully understand your own way forward, you need to take into account what is happening in the space around you. You can be sure everyone will be developing a data and technology approach. You will want to know what that is. Finally, ask yourself who are my trusted partners in data? Who can help lead my company into the future? This is an area to really not fool around. Nothing is more sensitive to a company than data intelligence and data strategies. This is an area where it pays to hire the best talent and the most solid and credible companies you can find. You can’t risk success in this space as advanced targeting and optimization represents such a big part of competing in the future!


  • 1. Targeting Evolution
    • presented by
    • Sarah Fay
    • to
    • NexTargeting Summit 2010
    • March 18, 2010
  • 2. My Year in Review
  • 3. In the Meanwhile...
  • 4. What’s Changing ? Rise of RTB CPM & CPC Dominant Media Planning & Optimization Data Planning & Auto Optimization Insights Used to Create Targets Targeting Used to Create Insights Media Property Focus Audience Focus
  • 5. Separation of Inventory & Data Media is being Commoditized
  • 6. Data is the New Black
  • 7. The Play for Margin Publishers Agencies Advertisers Margin !
  • 8. Direct Marketers are Leading
  • 9. Brand Advertisers Catching On
  • 10. Brand Marketers are Catching On:
    • 24% of them consider their organizations ‘digitally savvy’
    • 30% are using behavioral targeting to impact the allocation of the marketing mix
    • 64% agree that marketing departments should be organized around consumer segments, instead of brands
    • 47% agree that media should be bought and sold based ‘engagement ’ with brand
    • Source: Marketing & Media Ecosystem 2010, conducted by 4As, ANA. IAB, Booz/Allen/Hamilton
  • 11. Earned Media Bought Media Brand Owned Media Time and Effect Exponentially Increases
  • 12. Dunkin’ Donuts Brand Response
    • Leveraged BOTH key insights
      • Celebrated donut variety
      • Solicited donut memories
    • And promoted sharing via social tools and viral offers
  • 13. Paid Media Drives to Engagement and Viral
  • 14. Many finalists created Facebook fan groups to get out the vote online
  • 15. Jimmy Kimmel made fun of us with his “Sushi Donut”
  • 16. Measurable Participation
  • 17.  
  • 18. Targeting & Performance Metrics Most Important
  • 19. What’s Next ?
    • Advanced optimization will apply to all advertising experiences .
    • Data talent will become more prevalent.
    • Watch the space of agencies and publishers - new service models will emerge.
    • Online buying behavior will become prevalent in traditional channels.
  • 20. Thank you & Questions ?