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Informe sobre el aumento y las ventajas de la publicidad online, KPMG (versión en inglés)


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  • 1. COMMUNICATIONS & MEDIA Networked Advertising Growing revenue in a highly fragmented business ADVISORY
  • 2. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 3. Table of Contents Introduction 1 Digital Is in a Shakeout Period – Brad Armstrong, Martin Agency 3 More Complicated Than Ever – Greg Stuart, Former CEO, Interactive Advertising Bureau 6 Unmeasured Is Undervalued – Daniel Monistere, Nielsen 10 Listening to the Market – Tracy Benson, Best Buy 13 Technology and Brand Measurement – Dan Beltramo and Nick Rau, Vizu 17 Ad Networks Are Not Going Away – Mike Woosley, TidalTV 20 High Impact Media – Walker Jacobs, Turner Entertainment 24 In Summary – Intelligent Business Decisions Are Needed 28 © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 4. 1 Networked Advertising Introduction The advertising business has changed forever. Historical boundaries found in traditional print and broadcast advertising no longer apply online. In turn, broadcast television, cable television, print, and outdoor advertising are now challenged to adopt new paradigms. The industry is still very strong, but many leaders now insist that advertising as we know it will have to adopt completely new digital business models to survive and thrive going forward. Those new business models and new ways of understanding audiences will, in part, shape the future of the industry. What has caused such a dramatic and For this white paper, KPMG went to important change? The Internet and the seven leading executives in the digital notion of free content “when I want advertising ecosystem. We asked each it, where I want it, and how I want it” of these subject matter specialists to has completely upended the traditional address a specific perspective based on advertising networks. Even the notion company roles. They generously took time of data measurement has changed. to answer our operational, financial, and Executives across the ecosystem are process questions and share their broad struggling with declining subscriber knowledge about the digital advertising trends, data and revenue clarity across ecosystem—including the roles of other vendors, and consumer cost expectations participants. The result is a thorough look —all in an era where the consumer at the risks and opportunities ahead for “retail” experience is more expensive and advertising in the Internet era. Please risky than ever. Nevertheless, the roles read on to learn more about this fast- of the advertiser and consumer remain changing and complex space. essentially the same. Ad agencies still strive to create compelling marketing messages. Publishers still produce content advertisers want to associate with. Broadcast and cable television, newspapers, magazines, and radio still have the real estate and the means to reach the eyes and ears of consumers. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 5. Networked Advertising 2 Introduction, continued THE ADVERTISING The Digital Advertising Ecosystem ECOSySTEM TODAy Advertiser Ad Agency Advertiser. Seeks to promote goods or services via online/mobile properties. Ad Agency. Creates the online/mobile advertising campaign for the advertiser. Ad Server Ad Server. Technology that distributes the ads across online/mobile properties. Can be run by the publisher Ad Network or a third party. Publisher Publisher Publisher Publisher. Owns the online/mobile (Online/Mobile) (Online/Mobile) (Online/Mobile) properties where the ads are displayed. Ad Network. Manages and serves ads to a group of online/mobile properties. Ad Flow Content These groups may be controlled by Content Flow Consumer Owner a single publisher or aggregated by a Revenue Flow third party. Source: KPMG LLP Consumer. Receives the advertising when surfing online/mobile properties. Content Owner. Controls the content U.S. Online Advertising Spending, 2007–2013 (billions) that brings consumers to online/mobile 40 properties where ads are displayed. Can be the publisher or a third party. 35 $37.2 30 $33.7 $29.7 25 $26.8 $24.5 20 $23.4 $21.2 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 Source: eMarketer, April 2009. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 6. 3 Networked Advertising Digital Is in a Shakeout Period The Agency Perspective Brad Armstrong is group account director and partner at the Martin Agency, winner of the 2009 Advertising Age Agency of the Year Award. The 40-year-old firm is part of the Interpublic Group and has billings of about $600 million. The Martin Agency interactive department, created 15 years ago, is fully integrated with teams focusing on print, TV, direct marketing, and PR. Armstrong is lead account executive for Wal-Mart, the agency’s largest client. “It’s a high-energy, complicated, messy products and services they genuinely time right now, says Brad Armstrong. ” want to see. But marketers need more Companies are jockeying for position long-term comparative studies of and trying to decide what their core marketing approaches and consumer competency will be. Online media reactions to learn key points in user placement companies are undertaking search and conversion decisions. “Until creative work, and creative companies marketers are able to track user behavior are buying online placement and video online to understand how consumers companies. “Chief marketing officers transact a session on the Web, we’re not are confused about digital advertising going to be able to target effectively, ” and can’t distinguish the players, says ” says Armstrong. Armstrong. “They need a guide. ” He recognizes that the flip side of What consumers are willing to pay for obtaining enough behavioral data to online also is problematic. The newspaper generate patterns of usage is a potential business faces that problem daily as privacy backlash: “People don’t really more and more people read the news want every click and keystroke to be online and forgo buying a paper. known to the world. ” Because fee-supported online news Still, Armstrong has no doubt that has generally failed, Armstrong thinks researchers soon will create a program or advertising-supported online content is metric to make sense of online behavioral the way of the future. data so advertisers can understand the patterns of the people they want to BETTER DATA, STANDARDS ARE influence. “Digital marketers spend hours NEEDED online, tweeting, and Facebooking to better understand consumer behavior, The promise of advertising online is its but the average customer treats online as potential to collect data that marketers a utility, he says. “When we finally see ” can use to target consumers with where our message can intersect user © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 7. Networked Advertising 4 Digital Is in a Shakeout Period, continued behavior in that utility—when we crack Two things are important about the “Whoever figures out and provides the the code—online is going to be the most interactivity of mobile, he believes: One best interface between mobile requests cost-efficient marketing vehicle in history. ” is that users will be able to search and and the data response to them is going to get an answer wherever they are. Two do really, really well. ” One impediment to that vision of is geotargeting. “A year or so ago in efficiency is a lack of agreed-on data- Near term, he thinks it is possible that New York, I saw a bus come down Fifth exchange standards. The wide range of Google and the Android cell phone Avenue. It had a digital panel on its side proprietary technology formats creates operating system may provide an that advertised a restaurant a block away inefficiencies, and different groups open source alternative to fragmented from where I stood, Armstrong says. ” with different agendas promote vying operating systems. “Google wants to be “I thought, ‘That bus will go down Fifth standards. This complicates tasks as the organizer of the world’s information, Avenue—or anywhere—and depending on simple as reporting digital-content so that wherever you are, if you query its location and who has bought ad space, sales from downloads or streaming. Google, it will be able to give you the its message will change to promote Not only are current reporting and data information relevant to your search and, whatever restaurant is nearby.’” standards a problem, intermediary groups along with it, marketing communications continuously add to the load by creating Handhelds are already GPS-enabled from all the people willing to pay to talk to new mechanisms and programs that to a large extent, he continues: “As it somebody asking that question, he says. ” transfer digital information. becomes the norm, you will be able to Consumers will choose how much access search for information based on your Brand advertisers are not really aware of to their movements they permit, however. location. So if I’m on Fifth Avenue and standards as an issue. “What they want is Those who prefer not to be tracked 37th Street in New York and I’m hungry, someone to make sense of it all for them, wherever they go will opt out, says I can query restaurants on my handheld so they can make intelligent business Armstrong. Those who opt in will give up and obtain a list of nearby restaurants, decisions, says Armstrong. ” some personal information (as on joining perhaps with menus, Armstrong says. ” Facebook, for example) in exchange for THE NExT MOST-IMPORTANT access to the location-based data they SCREEN IS MOBILE want. “Google wants to be the The key screen went from the TV screen organizer of the world’s The traditional advertising concept of right to the computer screen, and the next key information, so that wherever you ad, right time, and right place continues screen will be the one you hold in your to be valid online if you add “right person” are, if you query Google, it will be hand, Armstrong believes. He sees that to the formula, he says. A message shift happening over the next decade, able to give you the information and ad may be right, but marketers driven by technology improvements relevant to your search and, have to identify the prime prospect and such as iPhone’s customization of the along with it, marketing understand his or her behavior to be able handheld screen. Consumers are getting to time the message. communications from all the used to looking at things in miniature, but people willing to pay to talk to The way things are going, Armstrong the medium requires different tools and thinks it is likely there will be $100 million different creative approaches, he says. somebody asking that question,” of mobile advertising media buys in the Armstrong says. next few years. “The technology and the © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 8. 5 Networked Advertising Digital Is in a Shakeout Period, continued data feeds are not quite right yet, but all built footage for online and mobile are makes a social network attractive to an that will change in the next couple years, ” behind the curve but will catch up quickly. advertiser is the level of involvement he says. “So will the behavior of the “You pay for additional production, but people have with it. Smart marketers carriers, who are notoriously protective of people are realizing that work customized are finding ways to woo such sites to subscriber data.” for the online space is more effective. ” get their message across. For example, communities of involved moms are RETURN ON INVESTMENT There’s significant pressure to provide gathering to share tips for raising their entertainment value with any message, kids. Marketers are trying to join those In theory, advertisers should be able too. A dry selling message irritates communities carefully by providing to have a more accurate notion of the people, especially if there’s a lot of information that helps them navigate their return on advertising spend (ROAS) in uninteresting noise attached to it. “The job as moms. an online world, but much depends on challenge for companies like ours is to the business. “I’ve seen 20 models in provide entertainment that is a gift. We’re “Small communities will emerge, I think, the past 12 months, and none of them the uninvited guest, so we’ve got to and they will consist of the 100 people is exactly right, says Armstrong. “Every ” entertain them or they’ll be angry at us, members really want to talk with—like major marketer is struggling to do a and we’ll be rejected. We can’t let that a family network, says Armstrong. ” mixed media modeling program and to happen. ” Companies are starting to provide understand the return from the different platforms for such small communities, mediums including online. There’s a long SUCCESS WILL HINGE ON and sponsoring them is a place where way to go before we can understand RELEVANCE a marketer can get traction. “Over the ROAS unless you’re a very structured next 30 years, we’re going to see the “Over the next 10 years, advertisers are seller of something online, and you can online growth of niche communities going to get smarter about how to target just track it right through a sale. ” that marketers join or sponsor, providing their messages and about what content information relevant to that group. ” One company is beginning to see more actually drives brand or transactional value success based on consumers watching for them, Armstrong says. “I foresee a ” ad-supported content online. Episodes huge shakeout, after which there won’t be on demand from are all ad- as many profitable information sites vying supported, using video advertising that is for advertising, but instead there will be a mainly repurposed from an original shoot lot of transactional sites that sell over the for television or cable. Because of the Web. Many colleagues think there will be expanding bandwidth, the opportunity for more information sites, but very niche- rich content is huge, he thinks. driven. For example, a site for people who own or are interested in Mustangs from Armstrong says, “Any players worth the ’60s is exactly the right place for a their salt these days are creating work seller of chrome replacement parts. ” specifically for digital use. It may be shot at the same time as the TV commercial, The social network space is not as utility- but if they know what they’re doing, driven as other online interactions, and they’re customizing it for use on the social sites are more relaxed and willing Web. Agencies not shooting purpose- ” to accept messages—but not ads. What © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 9. Networked Advertising 6 More Complicated Than Ever The Industry Perspective Greg Stuart has insights that stem from a diverse advertising career that includes five years as CEO of the Interactive Advertising Bureau (IAB)—an industry group of more than 400 leading media and technology companies that sell nearly 90 percent of online advertising in the United States—and coauthoring the book What Sticks (Kaplan Business Books, 2006) a research-based look at what makes advertising effective. “As the digital advertising ecosystem Online, a marketer’s dollar dwindles evolves at a furious pace, its myriad to nickels and pennies en route to a technical complications, options, publisher (or whoever touches the and opportunities seem almost consumer last), Stuart explains, because overwhelming, Greg Stuart says. ” of all the pieces needed to make a buy “The relationships between agencies, today. The online marketer can go directly media buyers, ad networks, exchanges, to the publisher or through an agency data providers, verification services, or an ad network or a connector to the measurement companies, publishers, new world of exchanges such as DataXu. and content owners have become “But I’m not sure any stakeholder fully interwoven, obscuring participants’ roles, understands how a network connects true value, data ownership, and consumer to other networks, to exchanges, or access. If—as an industry joke goes— to publishers, let alone how data gets ‘advertising was a business created for attached or how ads are measured, ” C students,’ that isn’t the case any longer. ” he says. To write What Sticks, Stuart and his Despite the fact that the advertising coauthor, Rex Briggs, conducted research technology ecosystem is so complex, against $1 billion of ad spending in the online sector and other digitally TV, radio, magazines, and online—the networked channels are well positioned entire media spectrum. “Our sponsors to gauge return on investment (ROI). were top-50 marketers who wanted to While still less than 10 percent of ad answer a simple question: What is the outlay, online advertising is more oriented value of each advertising dollar spent, by to applying ROI theories and processes. medium?” Their research led them to the Stuart thinks that may ultimately attract conclusion that more than $112 billion the brain power needed to really was being wasted of the then-annual total capitalize on the opportunities. of $300 billion in advertising spending. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 10. 7 Networked Advertising More Complicated Than Ever, continued WHAT GETS MEASURED… click measurement is a disservice to the strategic advantage should apply to field. Actual sales or purchase intent (or ” more than just ad impression counts. Stuart hosted about 20 dinners a other metrics whose value are still to be We have a powerful weapon in simple year with marketers and agency proven—the key being “proven”) are a ad effectiveness tools such as Dynamic representatives when he headed the IAB. significantly better measure of advertising Logic and Vizu, but our syndicated As he listened to dinner conversations, it effectiveness than click-through, Stuart research needs to be higher quality.” struck him that marketing professionals believes. had little grasp of how advertising really works and even less understanding of NUMBERS GAMES “If you had told me five years online advertising. “Digital has really ago I’d spend four hours or shown that the emperor has no clothes One of the best things the industry accomplished during Stuart’s tenure at more a month managing my —that meaningful education, training, and insight are in very short supply in the IAB was to clean the metrics used relationships on LinkedIn and advertising, Stuart says. ”That is probably “ to count ad impressions, which is the Facebook, I’d have thought ‘no why we found that 47 percent of the 30- underlying currency of the industry. way.’ Yet I do just that today,” odd campaigns we measured for What “Before 2003, ad servers had major discrepancies in ad impression counts Stuart says. Sticks failed before a media dollar was spent, and 83 percent of those campaigns of from minus 50 percent to plus 100 lacked optimized spending allocations. ” percent. The IAB worked hard to get Online advertising’s complexity makes it a global technical standard on how to hard to verify whether an ad reaches the “What I think is wrong with advertising measure impressions, so such differences consumer without an independent body overall, he says, “is that within the ” now are about 10 percent or less, Stuart ” tasked to do that. Anchor Intelligence, industry, incentives are completely says. “Getting a technical standard in for example, has “developed technology misaligned. Agencies often are paid on place showed us there was a lot of that a single agency could likely never either percentage of spend or hours human error in how campaigns were build” to verify whether a click was valid. invested, neither of which puts the focus executed. Process standards are needed, Other services to verify that an ad really on advertising effectiveness—which too,” Stuart says. ran when and where it was supposed should be the goal. Everyone says that’s to are in development. These services the goal, but in my experience, their “If advertisers don’t trust online’s need more support and more industry actions suggest otherwise. ” numbers, the medium is dead or guidance. To the extent that they validate dreadfully stalled,” Stuart says. “Also, Asked what he thinks has been the effectiveness of digital campaigns, we made a strategic decision in 2002 to the biggest mistake made in digital they will provide insight and confidence measure actual ad impressions rather advertising, he says, “No research to marketers and agencies. The days of than just the content, which is what other anywhere in the world validates that simply watching to confirm that your media measure based on ‘opportunity- a click has any relationship to brand commercial aired during 60 Minutes, to-see.’ (TV or radio measures average effectiveness, yet click-through is the de are over. quarter hour in program; print measures facto measure most online marketers the complete magazine or newspaper.) and their agencies use. Overreliance on Using numbers/data/research to © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 11. Networked Advertising 8 More Complicated Than Ever, continued WE NEED TO TURN UP THE HEAT COSTS WILL DROP I’d have thought ‘no way.’ Yet I do just that today.” Stuart says serious complications also “Can content be monetized profitably? result from the fact that the Internet is Of course, Stuart says. He cites an ” It perplexes Stuart that marketers don’t a global medium that can be accessed early-2002 Wall Street Journal editor’s see the opportunities. “As a former anywhere in the world. “I know of letter on Internet media that said CMO, it bugs me that they don’t see some publishers that knowingly sell advertising would never support online the advantage of jumping in early. My international audience impressions— content. Skeptical, Stuart checked the background is in economics, and it was worthless in the United States—to data of all the relevant public companies. clear to me in 2001 that high supply domestic advertisers, he claims. “That’s ” (increasing consumer Internet access) “It was a difficult period, he says, “but 35 ” and flat marketer demand would make egregious, Stuart says. ” percent of the public companies projected online media the deal of the century. My “In 2002, we went to the IAB board profitability by the end of that year, and book research just proved what should about the issue of selling international 95 percent projected profitability by the have been intuitively obvious, Stuart says. ” audiences to domestic advertisers end of the following year. And they all Today, he thinks exchanges and demand without notification. A few publishers did achieve profitability. The Wall Street trading platforms such as DataXu and did not want this fact made public or to Journal just hadn’t looked at the data. MediaMath offer great opportunity. change their practices. When the wrong Meanwhile, advertisers accepted that incentives are in place, companies don’t editorial view as fact and stayed out of MOBILE—A MOVING TARGET? act in the interest of their customers. ” the online medium. ” “I did some research for an Adweek Similarly, a CEO who realized his company Reports that YouTube doesn’t make article a few months ago, and 76 percent had huge fraud issues in its system wrote money annoy him as well. YouTube of advertising people said they would to several second-tier companies in the generates a lot of revenue, Stuart asserts, accept advertising on their mobile phones search ecosystem to suggest organizing and its consumer and content acquisition only ‘over my dead body,’” Stuart says an industry-level effort to eradicate click costs are low. That suggests its reasons with amusement. Regardless, “Mobile fraud. His contacts said “good idea” for not being profitable may be that the meets my qualifiers for being a valuable and went to talk to their internal people. company is choosing to invest for the media vehicle in that it does something Reportedly, many came back to him and future. Stuart thinks marketers may be unique by offering marketers consumer said, “I’m sorry, we can’t participate in using faulty information to not explore the proximity and greater personalization, ” this. We make too much money from click channel, which is a big missed opportunity Stuart says. fraud.” for them and their brands. “Consumers distrust mobile advertising So it goes back to incentives, says Stuart: However, the biggest opportunity right because of how badly other media, “If the media company or the search now in online media is likely social media, including online, have acted. For instance, companies had been judged solely on which is becoming “deeply engrained in the television industry is crazy to think producing effective results at the sales consumers’ lives, Stuart says. “If you ” that nearly 20 minutes of commercial level—rather than on revenues or clicks had told me five years ago I’d spend four time in an hour show is acceptable to —those people would not have made hours or more a month managing my consumers. And the Internet was nuts to those choices.” relationships on LinkedIn and Facebook, have done pop-ups, Stuart says. ” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 12. 9 Networked Advertising More Complicated Than Ever, continued “Consumers are transferring their BE CAREFUL WHAT yOU WISH FOR THERE IS STILL A LOT TO DO distrust to new media, where they have more control. On sensitive issues such as In the end, advertising is still all about Infrastructure needs to be built, including privacy, they have little basis to trust that putting the right message in front of the tools to make it easy for big and small, we, as an industry, will act properly. Those right person at the right time. Targeting national and local advertisers to come issues are manageable only if the industry is one element of doing that, but Stuart onboard. Ads have to become as really polices itself. Under Randall thinks targeting is both overvalued today dynamic as the content, with increased Rothenberg, the IAB just took a big step and underestimated in what it means for personalization and targeting of consumer to do that, and I applaud him for it, Stuart ” the future. “The challenge of targeting interests. says. “Mobile will need to handle the is to avoid ending up with such a narrow “On one side, complexity and the rate same issues. ” audience that it becomes an inefficient of change are causing marketers and channel, Stuart says. “Most people in ” While mobile has been around for agencies so much angst, and on the media companies think targeting means more than ten years, Stuart finds other, there is so much opportunity and getting a premium, but the premium it disappointing that it does not yet excitement for those of us trying to craft seldom offsets the complications of generate $1 billion in ad support. The and capitalize on this new world, Stuart ” managing inventory, overseeing a Internet was generating revenues of $8 says. “I’m very positive we all will learn campaign, or reading results. ” billion per year five years after its birth. how to use the opportunity this transition “Mobile has got the worst sense of That said, targeting is potentially offers. It is just a matter of when. ” timing of anything I’ve ever seen. Every the industry’s future salvation, after time it got some legs (in 1999–2000 and infrastructure and other systems have 2007–2008), the economy changed, ” been developed to make it work. “But Stuart says. “They’ve announced ‘This what most people miss when they is the year for mobile’ ten years in a discuss targeting as Google’s “big idea, ” row now. The waiting is killing me. Now, is that Google’s system and economics though, smart phones might be a game really worked, Stuart says. “Against ” changer. ” millions of intent-driven opportunities, Google brought hundreds of thousands of advertisers to the table—and made it self-service. They solved both sides of ” the equation, not just better targeting. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 13. Networked Advertising 10 Unmeasured Is Undervalued The Media Research Perspective Daniel Monistere, Nielsen senior vice president, has more than 20 years of experience in media research. In 2001, he joined Nielsen as vice president and in that role implemented quality metrics tracking across all service offerings. Nielsen is a leader in monitoring and measuring global Internet activity using proprietary tools, syndicated services, and custom analytics. A CLEAR CURRENCy WILL EMERGE huge data-processing requirements. Being able to provide credible measurement data “With online/mobile in its infancy, people in the online/mobile industry will depend are not sure what role they will play or on developing clear protocols for standards, exactly how they’re going to monetize disclosure, and transparency: their investment, says Daniel Monistere. ” “ advertisers, agencies and media As • To determine standards, industry buyers, publishers, and the content groups will have to agree on which people who attract advertising improve metrics are relevant, which are not, their understanding of how digital media and devise a way to process those work together, they’ll figure out how to metrics. implement their core competency. ” • A system for disclosing the measure- Today, online measurement has ambiguity ment process, with ground rules, is compared with Nielsen’s television necessary. “One problem is the sheer audience measurement, which people complexity of the data. When you can quantify. Billboards used to illustrate ingest the data, you’ve got to apply “If 85 million people watch a that conundrum: To quantify ad exposure, cleaning and editing rules to filter what do you use traffic counts or plot the ad’s to keep and what to discard, says ” program on TV, your reach is 85 longitude and latitude? Today, we could Monistere. “Nielsen discloses exactly million. If 5.5 million people view where we make edits and the amount cross ad placement with tracking panel that same program online and an members via GPS. “To be correctly of cleaning in the data-ingestion piece.” increment of 1.5 million sees it valued and demand its proper share of • Transparency, whether through audi- Internet only, there’s a 4 million ad dollars, networked advertising has to ence measurement disclosures or overlap of people who watch a be measured, says Monistere. “Having ” third-party audits, is essential for letting so many metrics for quantifying what an parties review and evaluate data. program on television and stream advertiser is purchasing is holding back it online,” he says. “You can make There are attempts in the marketplace to industry growth. ” write standards to quantify ad exposure the argument that you increased The Holy Grail of online/mobile advertising and to establish certification. The Media your reach to 86.5 million.” is pinpoint targeting, he says, which has © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 14. 11 Networked Advertising Unmeasured Is Undervalued, continued Rating Council (MRC) has developed and Cell phones are limited by the amount of The data are there for everything people do continues to refine online standards, commercial content the user will put up online, and Internet server log subscriptions disclosure, and transparency protocols. with and screen size. Sports or news works from a variety of major U.S. Internet service Many video properties with their own Web better than some other programming. providers will tell you accurately what types sites can apply to the MRC to have the way “The biggest wild card is the under-18 of people are going to what types of sites. they count hits on their site accredited. generation. Because I enjoy the feel of Measurement that follows the audit trail Web sites that want accreditation can paper, I’ll still read a newspaper, but my that people leave triggers privacy concerns. apply to an independent party to assess two boys, who are 12, are comfortable with Log services provide a level of granularity their standards, which mainly come from LCDs and don’t mind watching on a little that is close to census, which is always the Interactive Advertising Bureau (IAB). screen, says Monistere. “ ” Attitudes may very desirable, says Monistere, but they The process adds value for an applicant change as a younger group grows up with have limitations. For instance, set-top box but is not a prerequisite to doing business. the medium. ” data will reveal what programs go into the For every one that voluntarily undergoes Getting good mobile measurement data household but not to whom. this rigorous process, thousands don’t, is tricky as well. Carriers are extremely and media buyers are not assured of a Even with census data, any picture of protective of their consumer relationships, systematic counting mechanism. consumption will be incomplete. TV and any software solution means going audience research must represent people HyPE AND REALITy ON MOBILE through the carrier. Any hardware solution with all forms of carriage…those who has to be compatible with all the hardware receive their signal over the air only and Nielsen measures Internet viewing activity in use. “If we replace audience cell people who receive cable or satellite. that takes place in the home, and it has phones with ours, how do we do that in a Within the cable sector, some homes have a service that looks at Internet usage methodologically sound way?” Monistere set-top boxes, others don’t, and some have remotely. For cell phones, it is still trying to says. “Cell phone usage is part of the larger a combination of the two. Of the universe figure out an appropriate way to measure ecosystem—wherever television is, we with set-top boxes, whether cable or —on-device measurement or some other want to measure it. ” satellite, some segments don’t have DVRs, method. CENSUS: THE TRUTH IS OUT which is a driver of viewing behavior. For Internet streaming and cell phone THERE many of these groupings, census data can measurement contrast with TV in that the be harvested. commercial content is different. “Some Anonymous data helps both advertisers In the online space, consumers already can people say consumers would rather watch and consumers in ways we take for join sites by agreeing to e-mails soliciting a program online to avoid commercials, ” granted. Many things are free or are opt-in participation in different surveys. If says Monistere. “If that’s true, adding cheaper because advertising offsets the they agree to take the survey, they get 5 commercials will drive audience away. cost. “But people are sensitive to anything points; if they qualify to take the survey, And if you don’t, you can’t monetize your that is electronically census based, says ” they get 75 points. They become or remain investment. Different clients we’re working Monistere. “I don’t think anyone knows part of the panel to accumulate points in with are alarmed about siphoning away the solution to finding that balance order to redeem some type of prize or viewership to a free form. Newspapers did between getting advertisers and marketers reward. “There’s a question about how that, and they now have big problems. ” information that they want and maintaining representative that is, says Monistere. ” the level of privacy the public wants.” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 15. Networked Advertising 12 Unmeasured Is Undervalued, continued “But it may be a good way to supplement a counter to the industry fixation on the To assemble demographic information, randomly drawn panel.” threat the Internet poses to television, and advertisers are going to need a way to that advertisers are migrating because the quantify the people who redeem marketed Essentially, all Nielsen-run panels require 18-to-34 demographic isn’t watching TV products. Nielsen movie theater research panel member consent—people check a anymore, he says. ” helps drive the in-theater ads we see before dialogue box that says “do you agree?” or a film, for instance. To implement location- “I accept. “Any time you can engage the ” Nielsen funded a study from the Council based advertising, advertisers will need to person who is being measured, you don’t for Research Excellence, an industry client know the characteristics of mobile device have as many privacy concerns as when group. The objective of this study was to users. you’re harvesting census or server data, or quantify, through observation, people’s data sets that come back to a central area, ” exposure to different media. To see the “We’re not close to having reliable, full- Monistere says. target group’s habits, a device tracked their population census data. People see how consumer media exposure around the easy it is to exploit personal information OPTIMISTIC NUMBERS clock, including simultaneous exposure to and are very hesitant to give it, Monistere ” telephone, Internet, TV, and radio. The study says. Identity theft is a public problem today “As we move forward with various forms of found that in-home television viewing was that has increased audience resistance video on demand and Internet streaming, about 94 percent of total content exposure. to anything that invades privacy. In the marketers have got to be careful not Only about 6 percent occurred exclusively past, there was mass pushback to the to cannibalize the main audience, says ” on the cell phone, away from home, or on introduction of Social Security numbers. Monistere. The relationship between people the Internet. That ultimately changed. He speculates that who view a program on television and some form of identification, via the Internet those who stream online isn’t necessarily DESCRIBE THE AUDIENCE FOR or a personal device, could become the exclusionary, either. “If 85 million people ADVERTISERS new Social Security number. watch a program on TV, your reach is 85 million. If 5.5 million people view that We’re moving to a toolbox approach and “Is the concept of right ad, right time, right same program online and an increment will find the device that we can most place still applicable to online advertising? of 1.5 million sees it Internet only, there’s seamlessly get into, Monistere says. The Definitely. Right place and right ad will a 4 million overlap of people who watch a 2002 movie Minority Report depicted future always be in play. Online, right time program on television and stream it online, ” technology that scanned Tom Cruise’s depends on how ads are cycled. Right time he says. “You can make the argument that eyes as he entered a subway station, for does apply with television, says Monistere. ” you increased your reach to 86.5 million via example, and tailored an ad to him. To “Even factoring in DVR time shifting, more supplementing with the Internet. ” plan the movie, the producers used think than 75 percent of viewing is live plus same tanks to project the future; today, retinal day. For brand building, timing is moot, Indeed, without the ability to stream on scanning is used in some airports as part but for opening a movie, delay may make the Internet, viewers might have watched of the security screening process. “ future A a difference. With anything on demand, something else. The issue is how audience mechanism might be a thumbprint, a heat the Internet is pretty much time-shifted by behavior changes based on being able to signature, or a device, but it will facilitate nature. ” stream. If viewers have only X number of location-based advertising, especially with hours for entertainment, streaming may GPS applications on mobile phones, ” let them watch your program at a more says Monistere. convenient time. “This probably runs © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 16. 13 Networked Advertising Listening to the Market The Advertiser Perspective Tracy Benson, head of Best Buy Interactive Marketing & Emerging Media, spoke to KPMG about her role as senior director of consumer brand digital marketing for the world’s largest specialty electronics retailer. Benson’s group is responsible for Best Buy’s digital customer brand advertising strategy; interactive marketing; and mobile, social, and emerging media product development. The roles that populate the contemporary determine influence as it relates to return advertising ecosystem are becoming better on spend for advertising, investment, or defined according to Tracy Benson. “Today, the conversion, Benson says. “It’s also ” from a marketing and communications/ challenging to understand the defining click advertising perspective, I know who is or optimal click sequences that produce responsible for online display advertising, the final action. ” search engine marketing, or video Publishers, advertisers, and agencies marketing, Benson says. “But social and ” have their own measurement systems, mobile media roles remain a challenge. ” as do third-party ad servers. “When you Also challenging is the specifications try to define where the last click came overload created by competing platforms. from, you can get duplicate data sets. “If I want to advertise across 20 So if a publisher tells me, ‘You’ve got different publishing sites and 20 different .13 percent click-through,’ but I know my placements, I have four different platforms customer searched on Google while he (mobile, social, pure Web and publishing, or she was in a tabbed browsing window or interactive TV), says Benson. “Without ” clicking through the ad, using a shopping uniform development standards, we have comparison engine in another, and to create everything unique and custom. surfing in a different tab, That can increase production costs by five-, then what really drove the click versus ten-, and twenty-fold depending on the which media influenced the last click?” number of creative units and content. ” Trying to “de-duplicate” the data obscures where effectiveness comes from. Lack MEASURE OF SUCCESS? of standards and systems integration is a barrier to efficiency and media Lack of data exchange standards is accountability. another big problem. “In the online space, there’s an issue about who takes Online advertisers in general have become credit for what click, whether first, last, better at figuring out how to pull multiple or subsequent multiple clicks. If you data sources together to look at the path can’t define accountability, it’s hard to for display advertising, Benson believes. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 17. Networked Advertising 14 Listening to the Market, continued That applies to search marketing, too, The need for tools or dashboards that have online components such as a social which still does not track paid and organic accurately aggregate data so marketers application or mobile experience driving search as one click stream. can make fast, real-time business decisions that product to a sale, where is an industry-wide issue. “Omniture, did the sale come from and where did the Benson trusts click-through numbers at the for measuring your own Web site traffic, influence and engagement originate or individual data source for her ad serving, gives granular reporting, Benson says. ” complete?” Advertisers need integrated but loses confidence in the funnel toward “It provides a single-channel view of what data systems and a single view of the conversion. “There I have to combine customers do when they shop, browse, customer’s purchase path to be able to tell multiple data sets, Benson says. “Without ” and buy at But we are a the story from the top to the bottom. an aggregate and single analytical view of multichannel company, and it doesn’t tell the customer’s complete behavior from Integrating data systems and expanding us how customers’ research start to finish, it is difficult to interpret and beyond traditional measures is a big influences what they subsequently do time consuming to assemble. If I were able opportunity, she thinks. “Display in-store or through our call center. To get to say my customer started with this click, advertising is still measured primarily a complete view of the multi-channel went to these five other places, displayed on click-through. But in rich-media ads, customer, we must bring together the these three behaviors on our site, displayed success might include engagement richest data from the most available these two behaviors on the Web, and then behavior, Benson says. “If we serve a ” sources including purchase data, behavioral came back and converted—and I could see rich-media display ad, and you respond by data online, and even qualitative survey that entire path in one data stream—I’d be engaging in the brand through the ad— data. I don’t think we stand alone on this much more confident that I understand or move over to our Facebook fan page challenge.” what my customer is responding to and to talk to others about the ratings and why. ” ROAS IS NOT ABSOLUTE reviews, and then start to search Google to shop and compare for price, was the ad She continues: “We also have to apply To determine return on ad spend (ROAS) effective? I believe so—but the role that what we know about the current economy. Benson aligns expectations with strategies. each vehicle and messaging strategy plays If, from a search perspective, the industry “Best Buy is a brand advertiser and a is unique to the mindset of the customer in typically measures on a seven-day window, product retailer, she says. “The ROAS ” the purchase funnel. ” but I know search behavior has changed to threshold will look very different when a 14- or 21-day window because customers She continues: “Or suppose I’m a we go out as a direct response marketer now search in a more precise and focused Starbucks customer who buys a four- versus when we go out as a brand, way, define longer query strings, and take dollar latte once a week. I look great to where our focus is customer satisfaction, more time in their decisions, then we need Starbucks; I may be in their high-value awareness, or creating brand preference to to adapt our measurement window so that pool. But if I’m a customer engaging in the influence purchase intent. ” we have a solid picture of the customer in experience of Starbucks who buys a single their time frame from search to purchase. Best Buy measures ROAS for direct coffee every day rather than a four-dollar Our revised solution, given what we are response “just like everybody else—in latte—and I conduct business in the café seeing through our search partners in this the closest window, Benson says. “The ” and bring my friends in there—am I less new economy, is to look at that seven-day challenge is determining what medium or valuable? ROAS won’t be accurate until window plus the 30-day window before combination of touch points effected the we move beyond point-of-sale numbers deciding what to dial up or pull back on. ” conversion. If we run a television spot and and start to understand how engagement, © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 18. 15 Networked Advertising Listening to the Market, continued interaction, and word of mouth influence “Search outperforms display advertising MOBILE WEB IS READy TO BOOM purchase decisions as well as those of about nine times out of ten for us. Search the brand’s friends, family, and networked is customer initiated behavior that is pulled Best Buy is one of the largest sellers acquaintances. ” versus advertiser initiated behavior that is of mobile devices for all carriers. “Our pushed, says Benson. ” customers show us they are ready to take on the mobile Web and consume Search is the ultimate form of “But the volume of display advertising mobile media, says Benson. “Recent ” versus the volume of search that we tests during holiday this year demonstrate behavioral targeting, because support can look a little skewed. If I spend that, for our core target, mobile media people target themselves. $3 million on display advertising to get is more effective than traditional online “The consumer is actually telling broad reach across all publishing sites advertising such as display, as evident you what he or she wants,” and spend $3 million on a small subset of through click-through, engagement with key search words, display may seem less video ads, and targeted content. Mobile ” Benson says. effective; however, when we combine media, marketing applications, and mobile Search companies figured search and display, it is generally more commerce are opportunities in which out how to monetize that self- effective. Best Buy is investing and is starting to targeting through advertising that “The key to our consumer marketing and see early success, based on the launch of feels less invasive to customers. advertising is to first identify the marketing, BBY phone application, idea. Then we think about how best to and BBY Android applications, which went SEARCH VERSUS DISPLAy? push and pull the right vehicle levers to to market recently. integrate and optimize the message when “Where we see the best mobile growth Search has become a pervasive behavior and where it can be most effective. It’s opportunity is centered on mobile Web. in people’s daily lives. Online advertising really important to figure out the role Our ability to make our store portable is not a behavior. “People don’t inherently of each medium in the campaign and is critical to distributing our brand say, ‘Feed me some display advertising how your customers may engage,” experience when and where customers and distract me with more advertising,’” Benson says. want it on their highly personal mobile says Benson. “But search, they say, ‘Give me access to information, so I can look “I might be aggressive with search in a device” says Benson. At, for what I want when I want it, and get particular campaign and display advertising customers now can browse, research, the information that is relevant to me for direct response. If the goal is to use read reviews, shop, compare, and transact and my needs, whenever, wherever, and search to support product comparison full commerce on their mobile phone. The anytime I want it.’” Ironically, search is or to help customers find a local store, BBY applications today apply a simple user the ultimate form of behavioral targeting, conversion’s going to look different based interface designed for application use, but because people target themselves. The on the objective. It’s very campaign- then connect to the mobile commerce cart consumer is actually telling you what he specific and strategy-specific messaging. to transact. or she wants. Search companies figured Managing this complexity is something In the near future, a commerce API will out how to monetize that self-targeting like a symphony. You’ve got to get the help distribute commerce capabilities through advertising that feels less invasive conductor going, the horns and the strings across any and every Internet enabled to customers. playing, and the orchestra producing that device. “In terms of mobile marketing, beautiful sound.” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 19. Networked Advertising 16 Listening to the Market, continued we don’t see this type of advertising “Collectively, we need to shift from The importance of collecting customers’ as a stand-alone but rather as part of pushing products to building long-term opinions is growing. “Our brand has a an integrated marketing campaign. customer relationships. Social platforms responsibility to participate in the social Typically, we tie mobile as a call to action provide immense opportunities to expand networks appropriate to the medium. or a complementary experience to our how we connect with our customers Our customers expect us to respond other online and offline communications and employees and explore new ways to to their needs, so we do. They expect strategies, Benson says. ” grow the business. Social media takes our us to provide the latest and greatest customer-centric strategy and expertise information, and we do that, too. They Tying mobile measurement and mobile beyond the traditional channels (in store, expect us to let them voice their opinion— data collection into existing systems is online commerce, and call center), and good or bad—and we do. And they expect a gap Benson says Best Buy is actively brings Best Buy and its brands directly us to be authentic, real, and provide a working to close. “This is a new capability to the conversations. Plus, they connect closer connection. We are continuing to for most retailers today, and we simply us with our employees, communities, learn when we’ve overcommunicated have to grow our mobile analytics and partners. We strive to ensure the or have tried to promote too many capability to understand what to measure experience someone has with us via any messages. For us, it’s early and we are to ensure that we can learn and grow social media channel is consistent with absolutely still figuring out how to be from what our customers show us on any other experience we offer. We’re helpful, useful, inspiring, and effective in this device. “The technology and tools are seeing evidence of success in social this new medium, Benson says. “Social ” out there now to crunch the data, but you media because these channels are an networks and social media also give us a have to be able to get to it and interpret extension of our business model. good way to make sure product decisions it in the context of the full customer reflect our customers’ real-world needs. experience and media ecosystem. ” “We’re all pretty early into figuring out We’ve always been a customer-centric how to build these customer relationships BRAND BUILDING RELIES ON company with a strong customer- through social networks and the real DIALOGUE centric culture, and social networks just learning will happen over the next 24 make perfect sense for us to take our months, says Benson. An example of ” “We understand how to advertise online, relationships to new places and spaces. ” how Best Buy has begun to learn is but building a social brand is about through its focus to build a Facebook building customer relationships with branded experience. The growth from two-way dialogue. Not too long ago, 27 ,000 fans (mostly employees at the brands could get a message out to a large time) to more than 1 million fans and population with one real option, one-way followers was driven by a keen eye for mass communication. Today, we live in a providing value-added content, discussion more socially connected world and have threads, shopping and browsing a host of options to not only push but options, service and listening tools, and pull the customer into the conversation entertaining applications. “While we may and serve them in unique ways because be responsible for creating content that we can have more direct one-to-one is entertaining or useful, our customers relationships, Benson says. ” and employees have taught us how they prefer to use the platform, says Benson. ” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 20. 17 Networked Advertising Technology and Brand Measurement The Brand Lift Perspective Dan Beltramo is CEO and cofounder, and Nick Rau the chief technology officer of Vizu. Vizu is a privately held, California-based company that specializes in measuring how online ads influence viewer perceptions. “We’re establishing brand lift instead of themselves as an authentic brand-building click-through rates as the appropriate organization rather than one competing metric for branded campaigns online, says ” just on price and general audience Dan Beltramo. The company’s innovative characteristics. Advertising agencies, on technology collects data that documents the other hand, use Vizu’s data to show brand lift to show how online advertising their brand clients that they are good effectively supports brand building. Most stewards of their online advertising dollars, online advertising has been direct response as well as learning organizations. based primarily on click-through rates and Less frequently, Vizu works directly with real-time transactions. Brand advertising the brands themselves. How online online has lagged because there wasn’t a advertising achieves branding goals is good way to verify its effectiveness. information brand advertisers use to ADVERTISER FRIENDLy METRIC establish baselines, norms, and best practices for the online marketplace. Brand lift is the percentage increase in Such a framework will encourage the primary objective of an advertising industry competence and growth. In campaign. That objective can vary to offline advertising, brand managers For truly useful online metrics, reflect different elements of the brand- have long been guided by norms they the emphasis needs to be on building funnel such as awareness, have developed based on consistent relevance and a familiar frame favorability, preference, or purchase intent. measurement and metrics. Measurement of brand lift indicates to of reference so everyone in LOGICAL PROCESS brand advertisers the extent to which their the advertising ecosystem investment is achieving the desired goals. When an ad campaign is trafficked with a understands them. Standardizing on brand lift as a metric tag from Vizu, it cookies everybody who “You don’t want people to spend aligns the three primary groups in the sees the campaign. Vizu counts which more time explaining what the online ecosystem—the brands themselves, ads people see, where they are seen, advertising agencies, and publishers— and how many times they see them. metric is than what the metric against a common advertising objective. Concurrently, it asks a small subset—less means,” says Beltramo. Publishers also use Vizu’s data to position than one percent—of the people who saw © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 21. Networked Advertising 18 Technology and Brand Measurement, continued the campaign a question based on the messages or types of media—video, rich first, few people in the online control group campaign’s primary objective. media, or static banners—show the best say they plan to purchase this product. lift and which sites perform best. It also can Then, after a big TV and print push, people For purchase intent, Vizu might ask, “How analyze by number of exposures to show in the online control group who haven’t likely are you to purchase Acme Product the optimal frequency to drive brand lift. seen the online ad start to say they plan to X in the next year: very likely, somewhat purchase that product. The lift in the control likely, neutral, unlikely, or very unlikely?” Online advertising has tried to develop group then becomes a real-time measure It then asks the same question of a group new metrics such as “engagement, but ” of offline advertising impact. of people on the same site at the same these are not measured consistently and time who have not seen the advertising often are not truly relevant. “If you don’t “Once you start to use the right metrics campaign. These effectively are two know how an ad affects viewer perception, online, says Beltramo, “the data can then ” identical populations, but one has been measures of time spent or engagement are flow back to the offline world, much as exposed to a stimulus and one has not. meaningless, says Beltramo. To achieve ” offline creative has flowed to the online The different way the two groups answer truly useful online metrics, the emphasis world. ” the same question can be attributed to needs to be on relevance and a familiar the advertising. That’s what generates the frame of reference so everyone in the MOBILE’S UNIqUE CHALLENGES brand lift. advertising ecosystem understands them. “Mobile brand advertising is still in a very “You don’t want people to spend more An algorithm randomly decides when to primitive state, says Beltramo. The tiny ” time explaining what the metric is than sample the audience in order to catch screen can’t convey richness of information what the metric means, added Beltramo. ” some people with one exposure, some in terms of words or images or sound, with two, and some with three, four, or RECIPROCAL BENEFITS and tiny text links are not conducive to five. “We built randomness into it so we brand building. But every medium has a can capture a representative sample of Like direct response technology, which sweet spot for reaching the consumer with the people who have seen the campaign has dashboards that permit constant your message, and you have to learn it. at various frequencies of exposure, says ” tuning to improve click-through rates, Vizu’s Developing the right advertising content for Beltramo. technology breaks brand lift down and mobile is a discovery process. provides data in a real-time dashboard so If 12 percent of the people who have seen “The most successful tactics for clients can optimize campaigns that are still the advertising say they’re likely to buy brand advertising online are immersive under way. Acme Product X in the next year, and 10 advertising formats such as video and percent of the people who have not seen Online data can be gathered more quickly Flash-based media, says Nick Rau. Most ” it say they are likely to buy Acme Product and robustly than in other media, and some mobile platforms are not yet at the maturity X in the next year, that’s 12 and 10. So 12 Vizu clients are starting to use their online level that they need to be for wide-scale minus 10 leaves a numerator of 2 over 10 = metrics to measure the effectiveness adoption of those formats. AT&T restricts 20 percent brand lift. Vizu can not only say of their TV or print ad campaigns. For the kinds of data-intensive apps and whether a campaign has 20 percent brand example, imagine launching an online programs that run on the iPhone. Apple lift but it also can show which ad units or campaign for a new consumer product. At does not yet permit Adobe’s Flash player © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 22. 19 Networked Advertising Technology and Brand Measurement, continued to run on its devices. These are examples Also, more steps are involved for online is in direct proportion to the amount of of how mobile networks and device video than for TV. As bandwidth speeds value the content provides. manufacturers need to improve, and Rau and standardization issues get worked Most of us think of video advertising in believes that will happen fairly quickly. out, video advertising on mobile will be terms of TV commercials. So far, online optimized even further for a mobile screen. Mobile also has so many different video ads consist primarily of overlay (a platforms that even within one handset No one is sure what type of video format tactic of layering a simple graphic ad over manufacturer, there are multiple platforms. works best online, either. Should it be a a video stream that can be dismissed by “The cost of implementing an ad campaign pre-roll, which is intrusive, or an overlay, the user). Publishers used to be reluctant when you need to translate over 50 which is less intrusive? The video that does to impinge on the viewing experience, different platforms, all at tiny scale, is appear online is often repurposed offline but the tougher economy has advertisers prohibitive, says Rau. ” TV footage. “So far, we haven’t seen very demanding more prominent advertising. much purpose-created content for the Another key technology problem is the For all online media, technology standards online space, says Rau. Advertisers will ” lack of any standardized persistent data need to improve, but it will take time to start shooting more purpose-built video storage on clients, something analogous put the right technical standards in place. advertising for the Web as more people to cookies. Tracking information is tied “The big breakthrough we are enabling in migrate to watching programs online than to the presence of these tactics, which the industry is being able to measure the on cable or TV. largely do not exist on mobile today. That return in terms of brand-building objectives, is also a piece of what will have to evolve SOCIAL MEDIA AND USER- and then the cost-per-point of brand lift, ” before advertising can scale up in the GENERATED CONTENT says Beltramo. “Advertisers always knew mobile arena. what they were spending, but they didn’t How to monetize social media content know what they were getting. ” VIDEO IS EFFECTIVE, BUT… is a very big question. A point in favor of social media sites as an effective brand- Video advertising online has strengths building environment is that advertisers and weaknesses from a brand-building get targeted data and often know a lot perspective. In campaigns that mix about the users. The drawback is the sheer standard display and video, video generally quantity of impressions. outperforms standard display, often yielding three to five times better brand-lift, Social media sites could be a huge according to Beltramo. It costs more, but it opportunity for brand advertisers who jump is very effective. in early, primarily because costs are low, Beltramo thinks. The key to monetizing One limitation is quality video content. user-generated content will be generating Brands want their advertisements the right brand-building messages. Video associated with professionally produced tends to run a little longer, and where content rather than user-generated everybody is active, it’s harder to get content, and the highest-quality video sites somebody to stop for 30 seconds to pay are mostly sold out because there’s so attention. How much someone will watch much demand. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 23. Networked Advertising 20 Ad Networks Are Not Going Away The Ad Network Perspective Mike Woosley is chief operating officer and chief financial officer of TidalTV, a network specializing in video ad distribution on the Web. It delivers brand messages against a target demographic to enable publishers to monetize audiences across all demographic segments. Woosley and other TidalTV colleagues previously ran, a display advertising network that became the Web’s largest and was acquired by AOL in 2004. THE RACE FOR SUCCESS IS AN flows through our systems. We provide an ARMS RACE infrastructure that enables optimal moneti- zation, whatever the sources of supply and TidalTV’s strength in all-digital advertis- demand. Optimal means better economic ing is serving ads one at a time, which is results for buyers and for sellers. ” a trend in television. “The software and decisions that attend that process will Since the trafficking, serving, fulfillment, start to infiltrate high-performance cable and reporting for campaigns can be distribution in the next few quarters, ” complicated, part of TidalTV’s job is to says Woosley. “We provide platforms that make it easy for the agencies and clients span that infrastructure, enabling market- it services, especially in spot markets. A ing messages to be selected and tracked core capability of all networks is the ability optimally when data becomes available to insert ads, track, log, record, report, and to make messages addressable one at a do the accounting on the insertions so time, whatever the screen. ” clients can verify stats, bill, and fulfill pay- ment. Most display ad serving software Generally, networks function in a couple is not built for video, although interactive of roles, Woosley explains. One is ag- agencies could adapt programs such as gregation, which requires data to cor- DoubleClick’s Dart to build an ad network. rectly expose desired audiences. TidalTV TidalTV’s ad-serving technology is special- bundles inventory and packages it so it can ized for moving media and video, including be more easily bought. “We aggregate support and tracking for companion ban- ‘under-monetized inventory,’ which may ners and overlays. not be sold for a variety of reasons includ- ing demand conditions, market discovery, “Our real specialty is optimization and de- or lack of bulk, says Woosley. ” cisioning, Woosley says. “In aggregating, ” the objective isn’t strictly creating an ex- Woosley says that today platform is in change that connects buyers and sellers in some ways a better term than network. the moment. If you do that, you are limited “We neither buy nor sell all the traffic that to a pie that’s a certain size. We specialize © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 24. 21 Networked Advertising Ad Networks Are Not Going Away, continued in making the pie ‘bigger’ by optimizing that networked inventory is “low-quality. ” The interactive marketing our network. An airline seat could be sold “That’s a misperception, says Woosley. ” either to a leisure traveler or a business “The nature of the context is an attribute industry has done a better job traveler—if I don’t have an analytical fore- clients can select. Some advertisers value of protecting consumer privacy cast on whether a business traveler will the audience more. Others value the envi- than it is given credit for, Woosley show up later, my instantaneous decision ronment more. We leave it to the genius of believes. to buy or sell now might be suboptimal. the client to make these strategic deter- “A guy making $200,000 a year minations. We fill a technological gap be- “Exchanges are usually instantaneous. cause we have good ‘clearing’ technology. and driving a Jaguar may be With an advertising exchange network, a Agencies are responsible for nurturing the more accessible to an advertiser usable impression is relatively perishable, ” client’s brand—we focus on fulfillment. ” on Facebook than elsewhere. The Woosley says. “If you know your network, you can forecast traffic by segment, and MEDIA BUyING IS DIFFERENT NOW technology now exists for you know the segments the ad fits, so you us to make that identification can perform an optimization that is time- A lot of TV ad placement, including for independent. That is a big part of shifted. If a campaign will pay two dollars local and regional cable, still is done on for male viewers 18–34, but we have faxes and phone calls, but things seem the arbitrage of our business.” someone 18–20 for whom the advertiser to be changing rapidly, he says. Viewers will pay five dollars, we can fulfill that now don’t worry if they miss a favorite program; Some big publishers or big agencies view because our forecast tells us we will have they can see it online or download it. networks skeptically. We know of several more males later. Over time, optimizing “Cable companies provide Internet service very large Internet brands that don’t use allows us to pay publishers more (which now, so they have to react to that, says ” them. “They have their own rate card and helps us compete for inventory with other Woosley. “Usually their cable system is their own yield management problem to networks and advertisers), charge advertis- higher margin because people pay for 200 solve, says Woosley. “Networks provide ” ers less, and have something in the middle channels even if they watch only a few. a valuable service to publishers in terms that is meaningful for our business. ” The one-to-one type of advertising and ad- of monetization, and they bring novel dressability common on the Internet may technologies into the field. For example, at Trying to bootstrap supply and demand come to television quite quickly. Our role, technology we developed is a challenge for any network. “If you is to provide technology and decisioning to could address someone with an ad or a have enough supply and demand, you make that process efficient and clearable. ” sequence of ads wherever you saw them can exploit optimization techniques and in your network. That’s a capability driven technologies, says Woosley. “But if you’re ” Another indication of how media use is be- by a network’s unique reach. Networks small, you lose the economies of scale coming more individualized is the nascent also innovated such technologies as and averaging. We’re new, so we are just trend away from cable TV service. Woosley geo-targeting, which the portals followed. getting to the point that we have enough points out that the majority of younger Today, TidalTV is introducing technology publishers to enable us to rotate ads on an people, when they graduate college, don’t that builds a brand measurement study optimal basis.” get wire line phone service anymore. right into a campaign. ” Similarly, they now are beginning to choose The real economic opportunity for a not to pay $100 a month for 200 channels The balance of power may shift with hyper network is in taking a risk on inventory. of cable TV service when they’re going to segmentation, he believes. “Big content Difficulties include a perception issue watch only five and can do it online. providers probably should protect certain © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 25. Networked Advertising 22 Ad Networks Are Not Going Away, continued types of content, but others can be better If you register on an e-commerce site, In terms of performance and return on monetized more broadly, Woosley says. ” they do know that stuff. But e-commerce investment, an advertiser typically draws “Social network trends are driving this sites don’t trade that type of information a line somewhere about what data it will somewhat by audience rather than by without your explicit consent. Old school share and what it will not. “How much it is property. A guy making $200,000 a year direct-mail recipients ceded much more willing to share with us sets the terms we and driving a Jaguar may be more acces- privacy than you forfeit on the Web via can optimize on, Woosley says. “TidalTV ” sible to an advertiser on Facebook than anonymous methods. Those direct mail technology is about optimization. ” elsewhere. The technology now exists for guys know where you live. ” “For TidalTV, we’ve emulated the report- us to make that identification independent. The industry wants consumers to know that: ing used in the television industry. TV That is a big part of the arbitrage of our buyers that buy on gross rating points business. ” • Consumers are in control. (GRPs) and target rating points (TRPs) • Targeting is anonymous. need to reach a certain demographic. On PRIVACy PERCEPTION IS DIFFERENT FROM REALITy • Where there is a direct online TV, a GRP is about a million people. On the commercial relationship, personal Web, a TRP is a million males 18–24, says ” The interactive marketing industry has information is not shared without Woosley. “We thought most people who done a better job of protecting consumer specific consent. bought sight-sound-and-motion advertis- privacy than it is given credit for, Woosley ing on the Web would want that. That was feels. Personally identifiable information “We do expose demographic segments how we planned to attract a portion of the really doesn’t exist unless you give it up, to advertisers, because the advertiser $70 billion of TV spend for the Web. What he points out. Certain basic principles are has more weight, less waste, and wants we found is that even buyers who want respected by any compliant publisher, to pay us more,” Woosley says. “But it’s traditional measurement also want mea- advertiser, network, or middleman such more efficient for consumers, too. You’re surement that’s unique to the Internet. as TidalTV. going to be exposed to a certain number of messages a day. Why not let them “Advertisers want us to measure it, First, users can either block or delete be relevant?” they want us to optimize it, and they are cookies, which eliminates 95 percent of looking very closely at it. Today, we are behavioral targeting. Second, for data MEASUREMENT RULES ROAS measuring cost per customer, cost per providers and properties that target, such application, cost per acquisition, cost per as or Wall Street Journal, Woosley says measuring return on adver- sale, and click-through rate. I expect that users can employ a targeting-opt-out tising spend is easier on the Web than as more TV dollars go into one-to-one cookie—although they may have to take with current televised advertising. That marketing channels, we will be selling the initiative to pick up the opt-out cookie. hasn’t changed in 10 years. “We started more in terms of GRPs and TRPs, but as a performance based we’re flexible. Web rating points are sup- ” In terms of Web-based targeting, cook- display network because we couldn’t get plied by comScore and Nielsen, among ies are all anonymous. “We might know brand advertisers back then. People didn’t others. You don’t buy a hot show but that you like Jaguars, says Woosley. “But ” trust the Internet. We were always tracked more like 100 or 1,000 sites and a million we don’t know who you are or where on cost per action (CPA), Woosley says. ” impressions. you live, and we can’t easily find out. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 26. 23 Networked Advertising Ad Networks Are Not Going Away, continued AD NETWORkS ADD VALUE “We help a lot of publishers increase lift, yield, and economics. Our success depends on theirs. Content providers not only have to decide what they are going to do with their flagship brands but they have to draw their own optimization conclusions for lesser brands and traffic. When we serve in our network with our publisher partners, the more information we have about the impression we are getting, the more we can sell it for to an advertiser. That benefits the publisher. “The publisher might say if the value of my demographic is high, we will just use that to sell for more. But knowing what the inventory is worth is a big part of our business. Being competitive is also good for the properties. If they worry we are going to use what we know about their traffic to sell it for more, we don’t have to apologize for that. “Some of our arrangements with agen- cies are blind segments. We may not know what Alpha Bravo Charlie means but we get a map of what ads to serve to those segments. That way they keep demographic data for optimization. But the more we know, the more opportuni- ties we can find. “Ad networks are not going away. They provide a valuable technology service that allows tracking and logging. They provide aggregation, which is valuable to advertisers. They provide monetization, which is valuable to publishers. They are innovators.” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 27. Networked Advertising 24 High Impact Media The Publisher Perspective Walker Jacobs is Turner Sports and Entertainment Digital’s senior vice president in charge of online advertising sales. “Many things get lumped into a bucket and called digital media,” he says. “It can be confusing for people trying to analyze the marketplace and for those who want to know how our business is stacking up. The common denominator in digital media advertising is an interactive, measurable end product.” When Turner considers how best to MODERNIzATION, OPTIMIzATION, deploy new media campaigns across AND OVERHEAD the Web or mobile, “We think about Traditionally, media companies develop what unique aspect of the platform will an audience, then try to determine the deliver maximum value to consumers and optimal way to sell to it and maximize advertisers, Jacobs says. “The format ” yield. Many of their reach and frequency should deliver contextual relevance, high models don’t totally align with digital. impact ad placements, and reach and “Somebody who buys a print ad is getting frequency efficiencies. ” a frequency of one against the entire reach Most media-plan budgets for broadcast, [circulation], says Jacobs. “But despite ” cable, print, and digital rely on metrics, talk about total audience, total pagings, incremental goals, and campaign objectives and total unduplicated uniques, few online that advertisers use to “back into the advertisers buy a frequency of one against appropriate media mix. Digital line items in an entire audience. ” media campaigns can have different tactical Many traditional publishers thought they objectives as a result, Jacobs says. “Often, ” could manage their audience by selling as marketers want to do high-impact things much inventory as possible at a premium with a company like Turner to activate rate, he says. But because digital is in their sponsorships across our portfolio of real time, they can’t accurately forecast premium brands, and then complement their distribution. “Some online publishers that with other efficiencies they can get were using secondary channels to try to elsewhere on a very low CPM or CPC sell every impression, even if it was only basis. That’s smart. They should be doing for pennies. Their logic was that if they that, he says. ” didn’t monetize activity then and there, the chance was gone forever, Jacobs says. ” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 28. 25 Networked Advertising High Impact Media, continued Ad networks, in many cases, do help meant full monetization, but Jacobs isn’t branded applications, and mobile Internet niche and small publishers monetize sure most Web publishers still believe sites that have common analytics. That themselves into viable businesses, he says, that. “We have unwittingly enabled an gives Turner the ability “to offer high- because it saves them the cost structure entire competitive set that does not quality contextual solutions for mobile of a sales organization. But the density of have the same cost infrastructures, says ” marketers,” Jacobs says. impressions in ad networks, and on the Jacobs. “These companies don’t own and “Enterprise-software outfits have Internet in general, comes from social operate Web sites or ad agencies. All the approached us about the mobile space, network inventory—Web-hosted software data informing the targeting models is mainly with ideas that involve providing ad products, e-mail, instant messenger, social coming from either the ad placement or serving or enhanced targeting capabilities; networks, and chat rooms. “Those pages the publisher placement—and the fastest- the hidden downside is that those audience spin off so much tonnage of inventory that growing sectors of the market over the past databases would get built on the back of it’s impossible for the inventory owners to ten years have been companies able to offer our brands and audiences. We’ve eschewed monetize it without the added insights of optimal targeting and lowest cost.” this approach. Instead, we offer our mobile audience-based targeting, Jacobs says. ” THIS yEAR’S MODEL inventory and access to our audience in As a result, parties using audience-based premium branded environments that take Monetizing advertising via mobile has targeting to “help” publishers monetize into account consumer needs and how different challenges, with tactical and excess capacity actually have been our brands can offer maximum value to strategic ways to address them. For arbitraging their own inventory, brands, and consumers and advertisers. We’re going to instance, says Jacobs, “The 2009 PGA data. That arbitrage, taken to the extreme, figure out the mobile business models as Championships had an iPhone application essentially offered advertisers a substitute we go. ” that showed live score and live video with for buying the core publishing brand. “It an overlay of social network communities BENCHMARkS was a difficult analysis for traditional media exchanging dialogue throughout the event. companies, many of which had to watch it For almost every type of advertiser, return That was a dual-revenue-stream effort: play out before they saw the effect. It could on investment is seen in the advertiser’s subscription ($1.99), with ING sponsoring have been an efficient way to monetize sales, revenue, and share price. For the iPhone piece. You’re going to see more excess capacity if ad networks had not pure direct response, online metrics are of that. ” bundled inventory, Jacobs says. ” powerful, and search has served those Jacobs isn’t sure what form the mobile marketers well. But marketers with broader “Their business model shows that each business will take. “We’re not trying to objectives are now using digital. impression the advertising networks are put cable networks or Web sites on a acquiring has a different price point, and Before Turner begins any advertising cell phone. We try to think about what is they have an incentive to deliver the most campaign, “we work with clients to unique to the mobile phone (location-based profitable impression each time. Premium ” thoroughly understand their objectives targeting, small screen) and how we can traditional media ads are generally more and make sure their key performance customize our content for that platform, he ” expensive, which creates an incentive to indicators and our program align, Jacobs ” says. “That could be real-time scoring, video arbitrage. says. “That increasingly relies on proprietary highlights, or text alerts for breaking news. ” research, advertising effectiveness studies, The core challenge is how to optimally From an infrastructure standpoint, Turner and analyzing how digital fits into the monetize an audience. Conventional has large audiences on platforms that advertiser’s overall program.” wisdom was that optimal monetization combine iPhone applications, other © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 29. Networked Advertising 26 High Impact Media, continued Turner’s size and resources give it the determine the best place to invest their THERE WILL BE A CONSUMER capacity to implement advertising programs money,” Jacobs says. BACkLASH across television, online, and mobile. Such “The problem with panels is that to a Many different data sets are being integrated programs are highly successful, marketer, a journalist, or an ad agency exchanged and brokered. Advertisers and although no one yet knows whether an buyer, every impression and page view on advertising agencies look to certain data outdoor ad seen at your local 7-Eleven, the Internet looks exactly the same, Jacobs ” sets to inform their buying decisions. on TBS on-air, or in Web site promotions says. “I’d like to see the measurement Publishers look to other data sets to type drives conversion. The right cross-platform companies classify inventory types to their audiences. For a slew of technology campaigns can be both impactful and cost- distinguish which percentage of MSN, companies, data sets are a lifeline. effective for the marketer, Jacobs says. Yahoo!, AOL, and Google is search; e-mail; There are two distinct issues at play with “Our cross-platform campaigns are always messenger; professionally curated content; regard to data sets. First, what are the about the client. First we learn what’s going video; and UGC and social networking. ” data sources that inform the data sets to move the needle for the marketer’s Jacobs thinks the ad networks, search and who can rightly leverage them? Many business, says Jacobs. “Then we look at ” companies, and portals want to make sure companies that sit between publishers and our assets: mobile, Web sites, on-air, and that never happens. advertisers in the online media value chain print affiliate. Few other companies have (from technology vendors to other business the digital scale and audience we have for “This is an opportunity for partners) are claiming ownership of the data pure-play television or pure-play digital. ” measurement companies,” Jacobs and building businesses from their access IT COMES BACk TO MEASUREMENT says. “Computers and algorithms to those data sets. This will continue to cause tension between these companies, Turner doesn’t need to estimate audience are behind so many decisions advertisers, and publishers. because its servers “pick up every single that the more transparency we viewer,” Jacobs says. “We know who The second issue at play is how the can provide about what’s real, the comes to our Web sites, when, where data sets are being used, the potential they come from, how long they spend better the marketplace is going to ramifications of the use to publisher and there, and what their activity was.” be in the long run.” advertiser privacy policies, and consumer experience considerations. For the People often complain that measurement consumer, there’s a big difference in online panels are inaccurate, he notes. But “This is an opportunity for measurement experience as it relates to engagement and panels aren’t really about measuring companies, Jacobs says. “Computers and ” environment, from a single session on an how many people come to a Web site. algorithms are behind so many decisions automotive site to reading a three- or four- They are about providing a relative that the more transparency we can page newsletter to seeing an advertisement measurement of how big a Web publisher provide about what’s real, the better the for a sedan or researching a piece of jewelry is compared to competitors, along with marketplace is going to be in the long run. ” to surprise your wife with. other relative audience insights such as Black-box algorithms that make targeting demographic and psychographic variables decisions in an opaque way will change As database companies and technologies compared with the broader marketplace. when people in the marketplace insist on get better at targeting, data crunching, “Advertisers use tools like Nielsen and better categorization. “Ultimately, we have and understanding behaviors—and comScore to figure out the relative to provide what buyers need to make the addressable advertising can deliver on its reach of an audience they’re buying and right decisions, Jacobs says. ” promises—inevitably the consumer will © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 30. 27 Networked Advertising High Impact Media, continued find it creepy and we will experience a backlash, Jacobs believes. “We’ve already seen this with social networking privacy policies, he says. “That will be the death ” of a lot of companies that offer behavioral targeting and sit somewhere in the middle of the value chain between publishers and advertisers. Turner fundamentally believes ” it can deliver high-quality target audiences without mining data from advertising partners. “Turner Sports and Entertainment Digital is taking extreme precautions to make sure we are on the right side of a backlash when it happens, Jacobs says. ” “We have a very high standard in terms of protecting consumers in our digital environment. We have an audience-based targeting product that puts all our sites and products on a common platform with a common ad domain and a common cookie. Hypothetically, we can do the data mining that other businesses do, but having that ability doesn’t mean we should do it. ” Today, the methodology driving Turner’s audience-based targeting is panel based. In sections of individual sites where it has very high concentrations of certain types of people, it clusters them in the form of audience-based targeting. “That is very different from tracking personally identifiable data sets, Jacobs says. “Our ” commitment, as the business evolves, is to always be conservative in our practices and completely transparent, both with our privacy policy and strategies. First and foremost, we’re protecting our brands in the eyes of consumers and advertising partners. ” © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 31. Networked Advertising 28 Intelligent Business Decisions Are Needed Key developments are continuously redefining the online advertising ecosystem. In our interviews, we inquired about a number of themes. Several issues worth noting are presented here: 1. TARGETING/PRIVACy 2. DATA ExCHANGE STANDARDS The capacity to analyze online behavior AND REPORTING ACCURACy to determine consumer preferences and Fragmented systems and incompatible deliver targeted advertising continues data exchange standards continue to to be the “Holy Grail” for the indus- frustrate accurate measurement. As try. The downside is that behavioral a result, the accuracy of reporting on targeting deeply alarms consumers and advertising activity remains a barrier could trigger a backlash. Cracking the to growth in the industry. What gets code for distilling patterns of usage to reported from an overwhelming define online markets without violating amount of data sometimes may be consumer privacy remains a key ques- only slightly better than a “best guess.” tion. Some believe strong emerging The good news is that the work of technology will offer a solution within a industry organizations like the IAB and two-year horizon. In the meantime, the others is directly focused on solving the Interactive Advertising Bureau (IAB) has reporting-accuracy problem. launched “Privacy Matters, a campaign ” to advance consumer awareness of on- 3. ROAS line privacy issues. The campaign, which Developing the ability to more ac- provides resources to help consumers curately measure ROAS will require a manage their privacy online, is part of an very sophisticated study that compares ongoing industry-wide effort to develop marketing plans and analyzes and more robust self-regulation of online be- tracks consumer behavior in substantial havioral advertising practices, increase numbers over time. These and other transparency, strengthen data security, problems are expected to yield to tech- and design practical consumer choice nology advances—but mistakes go with mechanisms. being early in a cycle. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 32. 29 Networked Advertising Intelligent Business Decisions Are Needed, continued 4. MEASUREMENT STANDARDS in trying to develop standards for mobile 9. BRAND-BUILDING ONLINE Unlike TV ratings where Nielsen ratings advertising measurement. Google’s Technologies focused on brand-building are the currency, nothing equivalent has Android operating system for wireless continue to increase the efficiency yet emerged online, though Nielsen, phones looks poised to extend the of measuring brand-lift online (Vizu). comScore, and others are firmly search company’s market lead in display Coupled with the leveraging of social focused on establishing such measure- and search to the mobile realm. networks, such tools are giving ment standards. To continue to increase advertisers a better understanding of 7. VIDEO ADVERTISING the credibility of measurement data, new and powerful avenues for building a transparency in how that data is gener- As a medium, video advertising is brand online. ated will be critical. still in its early days. The question of whether purpose-built video for online 10. AD-SUPPORTED VERSUS PAID 5. SOCIAL NETWORkS is more effective than repurposed CONTENT The promise of social media as a vehicle footage from TV advertising mimics The debate about how best to monetize for advertising is bright. The target- the same debate that has gone on online and mobile content is reaching a ing benefits that social networks offer about the content itself. fever pitch. Some media moguls such as advertisers who wish to reach any Rupert Murdoch have seemingly decided 8. ECOSySTEM ROLES given network’s user base are not to be that advertising revenue is simply underestimated. More recently, we are Roles in the online advertising ecosys- not enough and are now instituting seeing a ripple effect to publishers’ sites tem are still unclear. The ongoing debate “paywalls” on their Web sites to extract when they permit the use of established about the merits of third-party ad net- payment for newspaper content. On the social network credentials to register on works and ad exchanges demonstrates other hand, ad-supported music servic- their sites. The most prevalent example this lack of clarity. While some camps es such as Spotify and Vevo are gaining of this is Facebook Connect, which is hold that third parties obtain a dispro- traction. YouTube also is becoming much evolving into a de facto standard that portionate amount of data on consum- more creative about how it monetizes may increase registrations tenfold.1 ers with little effort and at the expense its vast and ever-expanding library of of publishers, others believe that third video content via different advertising 6. MOBILE ADVERTISING parties bring significant efficiencies to units and applications. Mobile advertising is growing. At the the market. This is especially true in the close of 2009, the mobile advertis- context of helping publishers monetize ing space saw more than $1 billion in remnant inventory that might otherwise acquisitions, with Google’s purchase go unsold. of AdMob for $750 million and Apple’s purchase of Quattro Wireless for about $275 million. Industry groups such as IAB and others are now fully immersed 1. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 33. Networked Advertising 30 Intelligent Business Decisions Are Needed, continued GETTING THERE FROM HERE kPMG’S TEAM TO HELP yOU SUCCEED Harnessing the power of digital media is Innovation and change have always been constants in the media and entertainment essential to meeting the business demands industries. But today’s new technologies and economic climate have elevated change of the 21st century. Our culture continues to a new level, forcing companies to switch gears quickly as they deal with the many to embrace new advertising methods implications of digital media transformation in the advertising business and beyond. and tools and to refine their development KPMG’s Media & Entertainment professionals offer the insights needed to turn these and usage according to solid ideals, but challenges into business opportunities. Our sector professionals combine deep indus- getting a handle on the digital advertising try experience with a knowledge of digital and traditional media to help you increase piece of today’s fast and fluid communica- revenue, improve controls, mitigate risk, and reduce costs. All of which can add up to tions is a lot like analyzing the vectors of helping companies like yours succeed in a very competitive marketplace. a Class Four rapids after you’re already in it. In either situation, it always helps For more information, please visit our Web site at to have good guides. KPMG thanks Brad Armstrong, Greg Stuart, Daniel Monistere, CONTACT Tracy Benson, Dan Beltramo and Nick Rau, To learn more about how KPMG can assist you with your challenges, please contact any Mike Woosley, and Walker Jacobs, the of the following individuals: thought leaders who generously took the Tony Castellanos time to help us navigate today’s digital Partner advertising waters. Communications & Media Sector Leader These thought leaders represent a cross- 212-954-6840 section of industry functions and interests, bringing depth to the conversation. We Carl Geppert believe their answers to our operational, Partner financial, and process questions reveal an Communications & Media Advisory Leader ever-evolving industry that is focused on 303-295-8827 understanding and addressing the complex issues it faces. We further believe their Sanjaya Krishna answers will inspire ideas for meeting the Principal challenges and opportunities ahead. We Communications & Media Digital Services Leader look forward to continuing the journey. 212-954-6451 © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 34. The information contained herein is of a general nature and is not intended to address the circumstances of any particular © 2010 KPMG LLP a Delaware limited liability partnership , individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such in- and the U.S. member firm of the KPMG network of inde- formation is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such pendent member firms affiliated with KPMG International information without appropriate professional advice after a thorough examination of the particular situation. Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered KPMG LLP the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative , trademarks of KPMG International Cooperative (“KPMG (“KPMG International. ) KPMG International’s member firms have 140,000 professionals, including more than 7,900 partners, in ” International”), a Swiss entity. Printed in the U.S.A. 146 countries. 21436NSS