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Professional Thesis - How to reach audiences in a fragmented Media Environment - Romain VILLA

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Professional Thesis - How to reach audiences in a fragmented Media Environment - Romain VILLA

  1. 1. Romain VILLA THESIS ORAL: 26TH NOVEMBER 2015 | FOLLOWING TUTOR: MARGHERITA PAGANI How to reach audiences in a fragmented Media environment? SPECIALIZED MASTER MARKETING AND SERVICE MANAGEMENT HAVAS MEDIA GROUP
  2. 2. 1 Table of contents Executive summary.................................................................................................................... 5 Introduction ................................................................................................................................ 7 I/ Marketing Communication: diverse ways to reach people thanks to Media.................. 9 1°) Media functioning and organization..................................................................................... 9 a- Press and OOH (Out Of Home): 2 old and local Media ........................................................ 9 b- Radio and Television: the beginning of the mass Media model.......................................... 11 c- Emergence of the Internet and the mobile technology: Evolution of how to measure and to know customer preferences...................................................................................................... 13 d- The roles of Media agencies and the case of Havas Media ................................................. 16 2°) An environment which knows deep modifications ............................................................ 16 a- A political and legal environment that have a strong influence on the Media landscape.... 16 b- Technology has helped in disrupting the economic environment….................................... 17 c- … answering to new customer needs................................................................................... 18 d- Intensity of the variables in the Media landscape................................................................ 18 e- Analysis of the different forces in presence for Havas Media ............................................. 19 3°) Links and relationships between brands, Media agencies and customers.......................... 20 a- The service brand relationship value triangle ...................................................................... 20 b- The evolution of how to reach customers and how it can be measured............................... 25 c- Challenges for advertising agencies..................................................................................... 27 4°) Presentation of the interviews: a qualitative study to understand those challenges........... 29 a- Explanation of the methodology and the people interviewed.............................................. 29 b- What are the main ideas presented?..................................................................................... 30 II/ A media landscape which knows different evolutions in its functioning ..................... 32 1°) Presentation of the programmatic technology.................................................................... 32 a- The model of programmatic buying..................................................................................... 32 b- Focalization on the Real Time Bidding processes............................................................... 35
  3. 3. 2 c- How entities make Real Time Bidding primordial today?................................................... 37 2°) A technology which meets different objectives for brands and Media agencies ............... 39 a- Advantages of Programmatic and the need of programmatic technology to help in the strategic choices ....................................................................................................................... 39 b- Applications to every Media and evolutions ....................................................................... 41 III/ Challenges of Programmatic: a need of a better understanding ................................ 44 1°) A need for brands and Media agencies to understand their audience ................................ 44 a- Media agencies have to be “agile” and to be creative.......................................................... 44 b- Make understanding the benefits of programmatic to announcers ...................................... 45 c- But the French legal setting is obsolet ................................................................................. 47 2°) Technologic limits.............................................................................................................. 48 a- Telecommunication operators and the need of unification.................................................. 49 b- The case of Adblock: a threat or an opportunity?................................................................ 49 IV/ Havas Media has the possibility to develop Audience planning, by accompanying the evolution of the Media landscape.......................................................................................... 51 1°) A need to help in change .................................................................................................... 51 a- How to restrict data and technical limits?............................................................................ 51 b- How to consider the Adblock software?.............................................................................. 53 c- A need of changing of the law for this field......................................................................... 54 d- What about ethics?............................................................................................................... 55 2°) To develop research and rethink the role of Media agencies............................................. 56 a- A need of change of the Media agencies remuneration? ..................................................... 56 b- To develop researches about data ........................................................................................ 57 c- A need to build Media planning thanks to Audience planning and to accompany the Media environment to change ............................................................................................................. 59 Conclusion............................................................................................................................... 60 Sources..................................................................................................................................... 61
  4. 4. 3 ANNEXES............................................................................................................................... 64 1st Annex - PESTEL analysis of the Media landscape............................................................. 64 2nd annex - 5 Porter forces analysis on the Media agencies environment .............................. 67 3rd annex - Audio characteristics in France, Mediametrie Global radio and Kantar Media, 2014.......................................................................................................................................... 69 4th annex - Video characteristics in France, Mediametrie Home Devices and Global TV, 2014 .................................................................................................................................................. 71 5th annex - Publishing characteristics in France, Press Observatory, 2014.............................. 73 6th annex – Programmatic ecosystem and examples of principal actors.................................. 75
  5. 5. 4 Special thanks I particularly want to thank Margherita Pagani, who has followed the evolution of my entire professional thesis and helped me a lot in the development of my problematic. I also want to thank Camille Bellemon, Consultant Director of Havas Media, who has been working with me for six months. Her advices and her follow up have allowed me to find all information I need. I also think about Deborah Wits, who has helped me a lot in the understanding of programmatic. Finally, I also want to thank all people interviewed. Their testimonies helped me a lot in understanding the Media environment. I could not have analysed issues and recommendations the same way without their experiences.
  6. 6. 5 Executive summary With the development of new technologies and particularly Digital, Media environment has deeply changed. Offer diversification and devices have been developed. Consequently, audience has been fragmented and the technologic development to understand this audience has strongly increased. Media agencies had the reflex to adapt their advertising campaign management, evolving from a model of Media planning to Audience planning. We move from a Media centric to a user centric vision where Media agencies do not buy anymore a Media but an audience. Considered as more efficient and answering lots of communication issues, we can ask if Audience planning is not going to make disappear Media planning. Traditional Media, evolving in their Business Models and the development of their offers have more or less adapted their technologies to the evolution of audience tracking. To finance their models and to adapt their advertising revenues, Media as TV use IPTV to find its audiences, and Radio develops its offers in Digital. However, it is still rare to see those transactions done in real time. Media agencies have developed programmatic to analyse audiences by getting data. One of those aspects, RTB or Real Time Bidding, is a buying system, where locations are being auctioned, in real time, in function of the Internet user paths, and is spreading quickly. Programmatic, characterized to find the good customer at the good moment and at the good price disrupts advertising codes. Audience targeting implies new rules in data collecting but also in its analysis. Different traditional Media are thinking in how they can develop programmatic inside their offers. And Media agencies have to adapt to this evolution. Media agencies need to be agile and to make evolve their offers. Programmatic development seems today to be ineluctable and Media agencies have to take advantage of it. Processes transparency has to be taken into account. These companies know technologic limits due to telecommunication operators but also software, and an obsolete French law. Competition also forces Media agencies to innovate in their data analysis. Moreover, they have to understand new needs of customers and to be actors of the change.
  7. 7. 6 They have to adapt their offers, considering the different limits, technical or legal, and to make understand that Media agencies have to evolve in their remuneration and to reconsider it. They have to take advantage of new software as Adblock which can refine audience and show that advertising can be a true service given to consumers. As a consequence, ethics questions become central and the constitution of departments dedicated to researches around data analysis seems necessary. The development of communication campaigns on Media planning and Audience planning models answers to different objectives. It is not one against the other but one with the other. Media agencies have to take advantage of technologic evolutions and manage their issues.
  8. 8. 7 Introduction « Programmatic development has come from the existence of an incalculable number of supports, and the difficulty to reach audiences in a fragmented environment” explains a Havas Media Consultant. Due to difficulties in their business models, Media agencies use new ways to reach audiences. Digital and innovation seem today unavoidable. Media agencies role evolves more and more from service providers to Business partners. The Media environment (Television and Cinema, Radio, Digital, Out Of Home and Press) has radically changed, particularly since the arrival of Digital. Media are easily accessible and develop more and more a freemium Model on Digital. Moreover, with the arrival of new channels and numeric platforms, Media have to develop their offers to prove what audience they reach. On the other side, announcers have to innovate in their communication to reach customers and they need more and more to address their messages to a precise audience. By answering this, Media agencies have to find new ways to reach this audience. But what tools and technologic innovations could help them? Communication campaigns are traditionally organized on a Media planning model. The objective is to use a Media to reach a particular kind of audience. Traditional Media have developed their technologies to find audiences. Moreover, thanks to Digital, new tools have been developed to analyse audiences and gather data. Programmatic is one of the biggest revolution in the Media environment to reach the good audience. It allows to gather data and to analyse Internet user behaviours. Programmatic is considered as a system to find the good audience, at the good moment and at the better price possible. With this technologic evolution, the objective is not to use a Media to find an audience but to target the Internet user directly. For many people, it allows to measure the audience and to have precise data that can be analysed to adapt messages. Theoretically, programmatic is the best tool to target audience. More and more people think that this model is going to spread to every Media. But is Programmatic can answer every Media objectives? In the context of a fragmented Media environment, does the audience planning is going to remove traditional Media planning?
  9. 9. 8 Audience planning implies lots of innovation, in the service given but also in processes. It needs a deep adaptation of the Media environment and particularly Media agencies. It is first necessary to analyse how the Media environment is constituted and to determine how Programmatic can influence them. It will permit to understand issues and understand that Media agencies have the possibility to develop Audience planning, questioning their Business Model and role.
  10. 10. 9 I/ Marketing Communication: diverse ways to reach people thanks to Media 1°) Media functioning and organization Understanding the Media landscape and knowing its specificities on its Business Models allow us to see why they are more and more willing to use new technologies to find their audiences and become more efficient. a- Press and OOH (Out Of Home): 2 old and local Media Press is the oldest Media in the world. It has appeared on several forms: manuscript news, lampoon, almanacs… It has particularly been developed during the 17th and 18th centuries. The first one Relation Aller Fürnemmen und gedenckwürdigen Histortien is launched at Strasbourg in December 1605 by Johann Carolus1 thanks to the decline of paper prices and the high development of printing. In France, the first printed newspaper is La Gazette, created by Théophraste Renaudot and published at Paris, during May 1631. The development of written press has let the development of famous titles that we still know today, as Le Figaro (1826), La Dépêche du Midi (1870), La Croix (1880), Les Echos (1904) and “L’Humanité” (1908). The Business Model of paying written press has been developed since today. The coming of the free newspapers in the middle of the 20th century implies a new Business Model, only based on advertising to finance the publications. More local at the beginning, the regional free newspapers have been developed during the eighties with the creation of Les Nouvelles d’Orléans in 1980 by Michel Gaudron and Etienne Verdier or Le Petit Solognot, in 1983 by Gérard Bardon and Dominique Labarière. But we had to wait until February 2002 to see the first national free newspaper Metro (which is now a pure player, the paper version has been stopped in July 2015), followed by 20 Minutes and Direct Matin. To finance their publications, press companies can sell their newspapers but also being paid thanks to advertising. But, with the development of Digital, Press has changed its Business 1 World Association of Newspapers, wan-press.org
  11. 11. 10 Models. The high numbers of free articles on the Internet have changed the ways people consume Press. They can have an easy access on every subjects. The example of Metro shows that the Internet has changed how to reach people. The decrease of publications forced this free newspaper to change its Business Model, to become a pure player and only available on the Internet and not more on paper versions. Most of traditional newspapers have changed their offers as the example of Le Figaro or Les Echos which are now based more on a freemium model. You can first access to some articles every months but you have to pay if you go on more than 5 articles for Les Echos. For its part, Le Figaro lets access to the majority of its articles but some of them are reserved for subscribers, for example. More and more newspapers and magazines pursue their mutation to the Digital. However, the loss of revenue for the paper versions are not counterbalanced by Digital revenues. According to the OJD, during its “25th Press Observatory”, professional Press has declined by 7,4%, the national daily Press, by 5%, and magazine Press, by 3% in 2014. On the contrary, the websites frequentation of those titles have increased by 22% between 2013 and 2014, and mobile frequentation raised by 39% on the same period. 18% of French people, aged of 15 years old and more, read at least one press brand on tablets2 . But this augmentation does not compensate the losses of written Press. 3,8 billion paper copies have been produced in 2014, according to the 24th Press Observatory in January 2015 and 43,9 million copies in numeric versions (PDF). Business Models of Press evolve. According to Future exploration3 written Press could disappear in the United States by 2017, and in France, by 2029. Press is considered as a qualitative Media where brands place their advertisings, responding to brand image problematic. Press is, in fact, considered as a Media of quality and permits to brands to be as close as possible to their customers. However, the decrease of revenues are a real threat for this Media because it implies that the quality of this Media in general is on the decline. And if the quality declines, audience will decline, as the advertising investments. It is a vicious circle that can be counterbalanced. The pursuing of mutations also shows that new ways to find financing are possible, and are going to be studied in the coming paragraphs. OOH (Out Of Home) is also a “proximity Media”, which puts products in our daily life and is considered as the last contact point with customers. It appeared during the 15th century 2 Mediametrie: Audipresse One Global – Mediametrie, April 2015 3 Ross Dawnson, Newspaper extinction timeline – When newspapers in their current form will become insignificant, rossdawson.com
  12. 12. 11 in cities to stick up the announcements of public town criers and particularly developed during the 17th century with the development of alphabetization. The offers have been developed and when we speak about OOH nowadays, it can be public posters but also flyers or placemats. It is a Medium which resists more than others because it is less replaceable. With an increase of 0,4% of investments in 2013, according to France Pub, it is considered as solid but also modifies its offers4 . Thanks to new technologies and possibilities along with smartphones, the 2 world leaders, JCDecaux and Clear Channel have deleted lots of their big format (1500 to 2000 for JCDecaux, 1500 for Clear Channel) to be more concentrated on interactive support (billboards become more and more digital for them with 2941 screens in 2013, 500 more than 2012). b- Radio and Television: the beginning of the mass Media model During the 19th century, characterized by the evolution of multiple inventions, from the electric telegraph and Morse, invented by Samuel Morse in 1841, the discovering of hertzian waves in 1886-1888 by Heinrich Rudolf Hertz as examples, the first application of radio in France have begun in November 1898 with Eugène Ducretet who has made the first public transmission with “Wireless Telegraphy” between the Eiffel Tower and the Pantheon. The first Radio emission destined for public has been made in December 1921 by Radio Tour Eiffel. The interwar period has seen the development of private and public radios to the nationalization of every radio in March 1945. French radios had to wait until 1981 to see official private radios opening and 1982 to attribute the hertzian waves with the creation of the “High authority of audio-visual communication”. It is the first Mass Media model. Millions of people can hear the same message in a very short period, with free access. The Business Model is also built on advertising to finance programs. Today, the debate is on the TNR (Terrestrial Numeric Radio), which has started in 2012 with Paris, Marseille, Nice, and after in Lyon, Nantes, Brest… Hertzian waves are now saturated in France and independent radios demand to expand TNR in order to develop their coverage on the territory. TNR permits in fact to broadcast far more stations, to improve the sound and to give the possibility to have associated data (song, title, picture, games…). But the biggest groups as Radio France, NRJ group, Lagardère Activ and Nextradio TV, which gather 4 Alexandre Debouté, L’affichage résiste en France, Le Figaro, 22nd November 2013
  13. 13. 12 the majority of the hertzian waves estimate that the TNR is expensive and non-operational. Independent radios consider that big private groups make a lobby action to restrict competition and to keep their audience base. Radio is a Medium which changes a lot, particularly with the development of the Internet which modifies the listening habits. In September – December 2013, they were 43,3 million people who have listened to the radio daily and 3 hours on average5 . According to Mediametrie6 , in 2014, 89,4% of people aged from 13 years old were listening to the radio on radio post, 3,8% on mobile and 6,7% on other supports. But if we focus only on the people aged from 13 to 24 years old, the proportion of radio post is 70,9%, 16,5% on mobile and 12,5% on other supports. A modification in the habits that radios want to change by using more and more digital to have revenues. The beginning of Television, for its part, was in 1880-1881 when Georges R. Carey, Adriano de Paiva and Constantin Senlecq had developed the concept of sequential analysis principle that is at the base of every animated image transmission. In France, the first image transmission occurred in April 1931, thanks to René Barthélemy. The first emission is transmitted in January 1937, every evening between 8 p.m. and 8.30 p.m. Canal+, the first private and paying channel is created in November 1984. TF1 is privatized during 1987. France Télévision, for its part has been created in January 2000 and the cessation of advertising on this public service between 8 p.m. and 6 a.m. has begun in January 2009. TNT (Terrestrial Numeric Channel) has been created in March 2005 with eight more channels (TMC, NT1, W9…). As it was defined before, TNR would be on the same signal than TNT. The signal has then permitted to welcome more channels like BFM TV or France Ô. Except France Television, which is financed, in part, by the French government, and some channels, like Canal+, in part by subscriptions (around 13,4 million today according to Mediametrie7 ), the majority of TV channels is financed by advertisement. Television (with Cinema) is the major Medium in terms of investments in France and in duration of watching (3h41 per people in 2014 every day). At the end of 2013, 83% of French homes had a television8 . As other Media, laws have been voted to legislate advertising. France 5 Chiffres clés de la Radio en France, Mediametrie and SNRL (Syndicat National des Radio Libres), 24th November 2014 6 Mediametrie Global Radio 2 December 2014, Monday-Friday 5a.m. – 12 p.m., 13 years old and + 7 Communiqué de presse, Médiamat’thématik – L’audience des chaînes sur le câble, le satellite et la TV par ADSL, du 2 septembre 2013 au 16 février 2014, Mediametrie, 13th March 2014 8 Key figures of French Audiovisual: 2nd Semester 2014, ASC (Audiovisual Superior Council)
  14. 14. 13 has the particularity to ensure the listening quality for every Media. But it implies numerous restrictions: the sponsorship is highly delimited and advertising has to be at the national scale (Décrêt n°92-280 on 27 March 19929 ). Only a few Media, as France 3 Régions can have advertising at the local scale. Television is also a Medium which knows lots of mutations, particularly since the beginning of video on the Internet and the arrival of new actors as Netflix or Youtube. Watching habits has changed. According to Mediametrie, 2 million people in France (15+ years old) watch Television on another screen in 201410 . It is 82% more than 2 years ago and they spend 4 minutes on it every day. 40,5% of people 15+ years old watch TV on another screen, but this rate climb at 58,7% for the 15-24 years old people11 . A modification that channels have identified. c- Emergence of the Internet and the mobile technology: Evolution of how to measure and to know customer preferences World Wide Web has spread at the end of the nineties and has been particularly developed at the beginning of the 21st century. We have to go back in 1934 to find the first vision of the Internet rising with Paul Otlet in its Documentation treaty. The first informatics connection with a high distance has been made in 1965 with Lawrence G. Roberts and Thomas Merrill between Massachusetts and California. The Internet is organized in more than 47 000 autonomous networks and the World Wide Web is one of the applications of the Internet. The Web, as we know it today has appeared at the beginning of the nineties with the HTML technology and the first browser in 1993. In September 2014, the Internet (as we will call it to refer to the World Wide Web) has one billion websites for 3 billion Internet users. And those figures are still increasing. The Internet and its digital applications have deeply changed our habits and the ways we are linked to the world and to Media. 75% of French people (46,2 million) aged of 2 years 9 Legifrance: décret n°92-280 du 27 Mars 1992 pris pour l’application des articles 27 et 33 de la loi n°86-1067 du 30 Septembre 1986 et fixant les principes généraux définissant les obligations des éditeurs de services en matière de publicité, de parrainage et de télé-achat 10 L’année TV 2014, Mediametrie, 28th January 2015 11 Global TV, april-june 2014
  15. 15. 14 and more have access to the Internet12 , 55,7% (30,4 million) are mobile users13 and 29,1% (12,6 million) are tablet users14 . Mobile is said to spread far more in the coming years and is considered as the future principal device for Media. In 2014, 9 million French homes had 4 screens by average (1/3 of French homes)15 . To establish a picture of the Media landscape, we can see in this scheme the repartition of Media investments and the evolution between 2013 and 2014: Digital has become the second most powerful Medium in terms of advertising investments in 2014 (it represents 2,89 billion of Euros in France, increasing by 4% comparing to 2013). In more details, according to the SRI (Syndicat des Régies Internet), in Digital, mobile advertising investments have increased by 80%, programmatic by 66% and video format by 65%16 . The evolution of Search, Display and other levers is shown in this scheme: 12 Measure of the fixed Internet, 2 years old people and more, Mediametrie, February 2015 13 Telephony and Mobile services - 11 years old people and more, Mediametrie, 4th semester 2014 14 Observatory Web - Internet users 15 years old and more, Mediametrie, 3rd semester 2014 15 Home Device - November / December 2014 16 Olivier Chicheportiche, Pub en ligne: Internet dépasse la presse écrite pour la première fois, zdnet.fr, 29th January 2015
  16. 16. 15 Display is the ensemble of classical formats (banners, interstitials…), video formats, Programmatic and Mobile. Search is referring to search engines like Google or Bing. More and more Media uses the Web to develop their strategies and to enlarge offers. Every one of them is becoming more and more digital. OOH has interactive billboards, radio and TV can be listened and watch on the Internet and Press titles publish more and more on their websites. The model of “Freemium”, characterized by a free part and a paying premium part, which allows access to a bigger part of those websites or removes advertising, is spreading. Platforms are also rising like Deezer or Spotify for music, Netflix and Youtube for the Video or e-Press and LeKiosk for Press and disrupt the codes of Media. Media world evolves. A new kind of the advertising is developed and Media are searching for new ideas to know their audiences. Digital Marketing has lots of challenges today, as Programmatic, and technology permits now to target the good audience at the good moment. But the applications are different today, in function of every Media.
  17. 17. 16 d- The roles of Media agencies and the case of Havas Media A Media agency advises an announcer in its Media choices and accompany it in the setting of its communication strategy. In the case of Havas Media, it has to elaborate Media strategies, to plan campaigns, to negotiate prices of locations of Media sellers and to measure the profitability of Media investments. Havas Media is considered as the sixth international group in terms of turnover. It has been created in 1999, with the fusion of Media planning in Spain and Mediapolis in France. The two companies work on the same activities but are complementary on the geographic repartition. It has developed its Trading desk Affiperf to manage new technologies and to be able to make programmatic buying. Media consultant at Havas Media work in intern with different department, specialized on every Media to organize multi-Media strategies, responding to the objectives of brands. They are always searching for new ways to reach the good audience in a Media environment which is constantly changing. 2°) An environment which knows deep modifications A Macro-environment analysis permits to understand what the biggest issues of a Media agency like Havas Media are, and to understand what are threats and opportunities. The PESTEL analysis (see annex n°1), from the Havas Media point of view, allows a better vision of the Media landscape and permits to have a first study of the issues. a- A political and legal environment that have a strong influence on the Media landscape Modifications of the Media landscape are numerous. Some agencies can even sometimes work for nothing when there are invitations to tender. The aim is after to keep the announcer and to propose diversifications of their Media campaigns to make money. But this kind of proposal can be problematic, particularly for small actors. The question is to know if
  18. 18. 17 modifications have to be brought by the government or if it is all actors that have to coordinate their remuneration and to reconsider their work. Havas Media has to make understand that it has to modify ways it remunerates. Remuneration is largely made on volumes which have been sold. Reconsidering Media agencies, at the centre of the Media environment, as Business partners and not only location buyers is now primordial. There is a lack of transparency between actors. The development of Media sellers inside Media agencies has caused a temptation to compensate losses of invitations to tender in a lack of transparency in their Media buying. Laws restrict for the moment the possibilities to make local advertisements. Development of programmatic in Media needs an adaptation of the law to permit to target people, even on Mass Media and make personalized advertising. b- Technology has helped in disrupting the economic environment… Digital has brought lots of opportunities, but it has also disrupted the Media environment. In fact, more and more content is available on the Internet, freely and it has changes ways for Havas Media to target the good audience. This audience is fragmented and Media agencies have developed programmatic, for example, to target precisely the good audience. One of the biggest issue today seems to be the lack of transparency in the Media agencies processes. Another issue is the lack of measurement for the advertising campaigns. Technologic innovation and Digital has permitted to have more measurements on how customers can consume Media. The tracking on the Internet and the development of new KPIs (time spent on website, click rate…) allow to understand more the consumer behaviour on Media, and particularly Digital. More and more tools in advertising, like brand safety software allow to delimit the environment of diffusion of brands. New automations of processes also help in the organization of a Media campaign.
  19. 19. 18 c- … answering to new customer needs People spend more and more time on Media, particularly with the development of Mobile. Media agencies have to understand that new generations consume Media differently. Havas Media uses software as SIMM-TGI to understand what Media can be consumed, in function of the audience and the subjects. If Havas Media wants to reach them, it has to be multi-devices and to understand their behaviours. Moreover, customers have now the possibility to remove advertisements on their browsers thanks to software as Adblock. Lots of customers consider that advertisement can be intrusive and the question of tracking data on Digital is also a very sensitive subject. Havas Media has to demonstrate that advertising can be a service for customers. d- Intensity of the variables in the Media landscape The following scheme allows to measure the impact of each variable for Havas Media: The Media environment knows lots of modifications. The most important one is the technologic variable which influences a lot Havas Media. It allows to automate processes and
  20. 20. 19 to diversify devices. Moreover, Digital technology, applied to TV or Radio has permitted to develop devices and has directly influenced the development of offers. The major issue for advertising agencies is to manage new technologies and to understand audience behaviours. e- Analysis of the different forces in presence for Havas Media The following scheme shows the intensity of every forces and measures their impacts on Havas Media: The five forces are completed by a qualitative grade, classed from 1 to 4. The French market is mature and firms, with an international network are already presents. But, innovations in Digital are increasing and Media agencies have to remain alert. So the risk of potential new entrants (as it has been the case for Facebook or Google for example) can increase in the coming years. Moreover, Media agencies and Havas Media will have to rethink about their remuneration and Business Model, with the development of the need of transparency by announcers.
  21. 21. 20 Havas Media has integrated, the entire value chain in the advertising campaigns. However, announcers can also hire Media consultant and develop their own Media departments inside their companies. It could help them in data securing by limiting its share. Suppliers, as Media, have a stronger negotiation power. Strong actors as Facebook, Youtube or Google can impose their rules. However, the fragmentation of the Media landscape and audience have driven down the prices of traditional locations. Customers are central in the Media agency strategy. The diversification of ways they can interact with brands (particularly thanks to social networks) have given them more power, by contacting them directly, under the watchful eye of others customers. Moreover, with the development of Adblock software, people can choose, if they want, to have advertisements or not. To understand audiences and their needs is a challenge for Media agencies which demand coordination from the ensemble of Media actors. To understand them, Media agencies have developed their technologies to get data on Media. Data management implies all actors of the Media landscape. Security, share and ethics of data analysis are some of the biggest issues in the years to come. Data will be one of the future comparative advantage in the Media environment. But we have to understand links between every part to understand this question of data. 3°) Links and relationships between brands, Media agencies and customers Media agencies have a central role in the Media landscape. Understand their position in this environment will allow to see how Audience planning modify their links. a- The service brand relationship value triangle Before the arriving of the Internet, the biggest challenge for marketers was to know how to reach in another way the contact and how they could interact with him. Personalization is still a big issue today to create more contact with the customer. But the creation of this contact implies that Media agencies have to measure it. Measuring marketing communications results
  22. 22. 21 has never been easy. And measuring the returns of Integrated Marketing Communication (IMC) seems to be doubly difficult. IMC is a strategy of Communication and Marketing, aimed at integrating in such a way as to be coherent and efficient, all the communication canals of a brand. The IMC challenge is how to measure the results of a combination of elements or activities or communication forms that may or may not interact with each other and may or may not create enhanced results. There is no one, single, agreed-upon measure of advertising or marketing communication effectiveness which is widely accepted in either country. As for Don E.Schultz, from the Northwestern University and Agora, in IMC Measurement: The Challenges of an Interactive Marketplace, historically, some experts said that the value of the communication must be to the consumer or prospect (Keller, 2003; Lavidge & Steiner, 1961; Rust, Zeithaml and Lemon, 2004). Others said that it must be determined by what financial returns are generated by the marketing organization (Schultz, Tannenbaum & Lauterborn, 1996; Lenskold, 2003, Shcultz, Barnes, Schultz and Azzaro, 2009). Others think about social returns: marketing communications activities must support corporate sustainability and to contribute to the well-being of the society as a whole (Sharma & Starick, 2002; Kotler, 2010; Kotler Kartajaya & Seitawan, 2010). The initial efforts in IMC measurement were not necessarily based on communication effects, but on behavioural responses by consumers. During the eighties and mid-nineties, the focus of most Marketing communications measurement was on expending and refining the wide variety of techniques that had been developed over the previous fifty or so years. For advertising, that meant measuring communication effects. For the functional groups as Media agencies, it generally involved behavioural measures. It was the challenge of finding ways to combine and to coordinate the various communication activities. It has been traditionally measured by addition or subtraction, not multiplication. It is also one of the big issues today: how to combine human and technologic forces to target the right audience.
  23. 23. 22 A Media campaign is prepared as followed: In the mid 90’s, digital communication came on the scene. It radically changed the control of the entire communication system. Where historically marketers controlled most of the market and Marketing information, the interactive systems began to enable consumers and customers to access information from sources other than the marketing organization as third party sources such as websites, consortiums, resource centres, other customers... Marketing Communication began to be interactive.
  24. 24. 23 It has a major impact on all forms of marketing communication as it is shown in this exhibit: It has been called the development of the “push-pull” marketing communications system. Marketing organizations continue to send out planned Marketing communication messages through traditional outbound Media systems. These are called “Push” approaches: the marketer pushes communications out to the customer or prospect. Marketers tried to connect into an efficient communication delivery system or generate some type of consumer responses, either attitudinal or behavioural. “Pull” methodologies customers are now using to acquire the information or material they want or need. Three broad approaches are currently being used: - The Internet and World Wide Web (search), - Mobile communication where consumers can connect to other customers, - New electronic word of mouth systems, which often are called social Media. In each of these “Pull” Media forms, the systems are driven by the consumer. Today, most marketing communication measures are based on some application of the hierarchy of effects models. The problem is how to separate or to quantify which activity generates the attitudinal or memory change. The marketplace is complex and the brand has become particularly central as it is shown in the next scheme:
  25. 25. 24 In the world of communication, it is necessary to understand how to manage every part of the brand relationship value triangle. Brands are central and at the heart of the communication. Another issue must be taken into consideration: the synergy or the potential multiplicative effects that may occur as a result of consumer’s exposure to multiple Marketing communication messages. Before, organizations activities as advertising, sales promotion or direct marketing were measured separately. Now, the synergy between and among them becomes an important emerging measure that must be considered. 3 major IMC audiences must be taken into account: - Consumers/customers/users of IMC, - The Marketing communication organization that develops and delivers IMC programs, - Other, more global audiences such as the general society where issues of sustainability and proper allocation of social resources are involved. To estimate the impact of a communication campaign and to measure it have never been easy. However, particularly thanks to new technologies, ways to reach customers have evolved.
  26. 26. 25 b- The evolution of how to reach customers and how it can be measured We are more and more today on the problematic to reach the right audience at the good moment. Advertising agencies speak more about “Audience Planning” than “Media Planning”. Media Planning is the action which consists in “choosing, in the framework of an advertising campaign, Media and supports to be used, the choice of the diffusion moments and the establishment of a campaign calendar”17 . It is more focused on the Media to use in order to reach the ensemble of a target. For example, for an advertising campaign, you can use a particular radio that reach the SCP+ (well off Socio-Professional Category) 25-59 years old men. The message will be send to every people who listens to the radio, which means particularly the SCP+ 25-59 years old men, but also other targets. Audience Planning refers to the “process which consists in reaching a target, answering to precise characteristics, without having any a priory on the places or the advertising supports used”18 . It has been born thanks to digital campaigns with the “Ad-exchanges” which we are going to develop in the next parts. A typical example is “retargeting campaign” where you have to quickly reach the people who has left a website, thanks sometimes to “cross device”. Cross device is the “problematic which consists in following and recognizing a user when he uses successively some screens or connected displays”19 . With Audience Planning, Havas Media reaches a precise person associated to data and not thanks to a Media (Media planning). Every time an Internet user is on a website, he interacts with it, leaving data-rich digital footprints. It reveals pages a consumer visits on a website, where he engages, subscriptions, cross-device behaviours… It permits to Havas Media consultant to understand their audience and to reach them. When you know your audience, it means that you interest in its interaction with brands and how you can interact and make them understand your message. Havas Media uses KPI’s (Key Performance Indicators) to measure the impact of an advertising campaigns. If we take the example of a radio, the average time of listening and the number of persons who listens to the radio are considered as KPI’s. Audience planning also allows to have KPI to measure the impact of the advertising campaigns. Those KPIs can be the behaviours of the website visitor (Average time on the website, click rate, number of pages 17 Definition Media planning, Définitions Marketing 18 Définition Audience planning, Définitions Marketing 19 Definition Tracking cross-device, Définitions Marketing
  27. 27. 26 visited…), purchase data, Newsletter subscription… If we take KIA motors France for example, KPIs could be the number of visits on the website or the car tests requests, answering performance objectives. With the Internet, all Internet users can be “followed” to understand their propensity to answer favourably to an advertiser’s message. The understanding of the customer behaviour allows to identify the good strategy to adopt in order to deliver a message. To understand the customer, marketers use “first”, “second” and “third party data”: - The first party data is defined as the information of your own company about your audience. It is most often cookie-based data and it can incorporate information assembled from website analytics platforms, CRM (Customer Relationship Management) systems and business analysis tools. It is the major strategy of Amazon: their personalized recommendations are a first party data example. They understand their customers behaviour and create dynamic and personalized advertising to make convert customers, which means, in this case, to buy other products linked to the customer’s interests, - When companies do not have first-hand information, second and third party data become useful. Second party data is somebody else’s first party data. The two trusted entities find an arrangement to share their customer data, - When a company sells its data, it is considered as a third party data. This kind of company is also known as DMP’s (Data Management Platforms) or data aggregator. They are esteemed to gather a vast amount of data and they make their data accessible to competitors. So there is not a unique audience intelligence and it is possible to adapt the strategy, answering competitors which can use the same data20 . One other difference between Audience and Media planning is the optimization of the campaign. Once a Media-plan has been agreed, it will be mostly stable, at least for a first part of a campaign. But with Audience planning, it is possible to have direct feedback and to adapt the campaign. Real-time campaign performance authorizes to modify the segmentation and targeting model. To allow new insights and to enrich the KPI’s permit to modify the targeting, to identify trends and sometimes to change the strategy adopted by a company. 20 Kathleen Limon (Product Manager), The difference between first, second, and third party data and how to use them, Retargeter Blog
  28. 28. 27 Audience targeting has deeply changed the marketer approaches on online Media. And we know that, very soon, all Media are going to be planned differently as more and more channels become digital. c- Challenges for advertising agencies To be successful in the new Media landscape, marketers must adapt their environment, understand the effectiveness of every Media and the information collected. But it implies numerous challenges as the transparency of the data. With Audience planning, you move from a media-centric vision, proper to Media planning, to a user-centric vision. It is a considerable step forward to the transparency of the data and to know the impact of the advertising message. But, with the online advertising, there is also the problem of “robots”, which are considered to make lose around 8 billion euros in the world in 201421 , according to IAB (Interactive Advertising Bureau). Moreover, they consider that 25 to 50% of online advertising investments are wasted in impressions and are never seen by Internet users. It is one of the bigger challenges to take up in the years to come with the rise of programmatic advertising which is going to rise to 28% in 2013 to 65-75% in 2017, according to the IDC (International Data Council). The value of an advertisement depends on the public interactions with the website. To make this advertisement valuable, it is possible to make the announcer paying the click or the page viewed. We speak about advertising fraud when software are used to simulate the traffic on another website. Thus, the impression is never seen by the Internet user and the statistics are deformed. Technically, a person can create a website and register it on an ad-network which sells advertisement locations thanks to an ad-exchange. After that, this person can develop or buy easily on the Web a software which imitates an Internet user behaviour, opening different pages on the previous website created, and can do it endlessly. Announcer can, this way, identify a website which correspond to its target, bid on the inventory and give impressions to 21 Ari Levenfeld, Publicité en ligne: combattre les robots, ou comment régler un problème à 8 milliards d’euros!, e-marketing.fr, 12th January 2015
  29. 29. 28 robots. And if the ad-network or the ad-exchange detects the fraud and expels the website, it is possible to create a new one. But there are measures taken to guard against this fraud. Google for example has acquired spider.io which is specialized in fraud detection. They have identified a fraud of 6 million dollar lost per month to announcers. Facebook has sued Martin Grunin for the misappropriation of 360 000 dollars. Buying platforms also changed: it is now possible to dismiss suspect websites by distinguishing human to robot behaviours. Humans for example buy on the Internet thanks to their credit cards and not robots. Moreover, a human will not visit thousands of websites every days on short periods. The IAB has published an ensemble of anti- fraud principles to help in having a reference in protection against trickery. Another challenge for advertising agencies is to diversify their Media landscape: “We are facing a macroeconomic crisis and a strong evolution of the Media landscape, with new entrants in TNT, technologic evolutions and usage modifications” says Luc Tran- Thang, president of Starcom (Publicis Group)22 . With the decrease of press publications and the rise of online journalism, press diversifies its revenues thanks to its websites but the online advertising stocks are cheaper than printed press. Media consultants can use Programmatic and analyse data to be more user- centric. Using ad-exchange permits to use a precise targeting. Luc Thang adds: “data permits to make the link between different channels, to understand better the consumer path, whose contact points are more and more multiple. It permits to go from a Media orchestration system to an inter-Media integration”23 . In the same trend, Media are more and more “social”. People do not always fill forms but they can “tweet”, “like” and “comment”. Everyone produces deliberately data which can be analysed. Dominique Delport, from Havas Media France evaluates that there is an increase of audience from 10 to 20% on deferred diffusion. It is now possible to create direct contact with the customer. During the last Super Bowl, when advertising screen interrupted by a blackout, the creative people of the brand Oreo have developed an advertisement in a few minutes with the slogan: “You can still dunk in the dark”, the verb “to dunk” refers to put an 22 Capucine Cousin, Les 5 Enjeux des agences médias, Stratégies.fr, 25th April 2013
  30. 30. 29 Oreo in milk. Oreo created a direct link with customers and ensured it a large scale communication. Moving from a Media-centric to a user-centric vision implies many challenges. To pay attention to online advertising fraud and to diversify the Media landscape by using Programmatic or social networks permits to answer to the Media crisis by finding other ways to find money. They are two consequences of the need of traceability of data and the need to maintain or develop a good Media editorial quality thanks to more measurable communication. And the development of more and more digital suggest that Programmatic will spread to other Media than only the Internet. 4°) Presentation of the interviews: a qualitative study to understand those challenges It is primordial to understand Consultants points of view, regarding their own departments. Their testimonies permit to understand what biggest direct issues are for them and will allow to give recommendations. a- Explanation of the methodology and the people interviewed In this study, we aim at searching if new technologies help in the organization of a Media agency campaign and if they are going to replace the traditional Media planning. To understand this, a qualitative study is necessary to understand what actual challenges are and the feelings of the people interviewed. It has permitted to have their points of view about the impact of technologies on their jobs and how they manage it. Their testimonies are anonymous. To complete this study to understand the new ways to reach customers, 9 people have been interviewed. Those interviews had three main objectives. The first one was to make an inventory of fixtures of the Media landscape and how to reach customers, which means if they make a difference between Media planning and Audience planning and if they know the functioning of Programmatic. The second objective was to understand their work and to see what the evolutions were and how technologies have made evolve their jobs. The third objective
  31. 31. 30 was to see if they consider that there was challenges for Media, brands and Media agency. This way, it was interesting to know how they consider their work was going to be in the coming years and what could be done. People interviewed all work in the Media field in front (in direct contact with customers and brands) or middle office (people who manage campaigns to meet with the objectives). They work in Media agencies or Digital advertising companies. Those people work with all types of Media, online and offline and are directly confronted to new technologies which modify the way they organize campaigns. b- What are the main ideas presented? Programmatic is one the biggest revolution in the Media landscape of the last years. All the people interviewed are aware of it and make a real difference between what we called Media planning and now, more Audience planning. However, they do not make sometimes the difference between RTB (Real Time Bidding) and Programmatic. By and large, they are globally positive about programmatic buying and consider that it can give something new in the organization of a Media campaign. Two of them are not convinced by the pertinence of the model and do not consider that it will spread to every Media. Others think that it is very positive and the campaign organizations will be, except for precise fields as luxury for example, totally based on the model of programmatic buying. They all agreed for the moment that the luxury field needs to be on the model of Media planning to ensure the “quality of the impression”, argument highlighted by everyone and particularly the 2 people who are more reluctant to programmatic buying. For programmatic in open market, the uncertainty of where the advertisement will occur is also featured and is not reassuring for announcers. On the other hand, the main advantages pointed out are the quality of the audience targeted. I have heard from all of them the idea to “get the right audience, at the good moment and at the good price”. Programmatic is presumed to give, for the moment the best audience, depending on the quality of the data and it is possible to understand when to give the good message. Geo-localization or double synchronization permit to help in understanding those moments. If someone watches an advertisement on TV, he will be retargeted on a second screen on a very short period. It is what we call double synchronization. Programmatic buying
  32. 32. 31 is based on bidding, so, Media agencies will try to get the best target at the better price. But they all precise that the quality of the targeting is linked to quality of the data. Data quality seems in fact to be one of the biggest challenges in the years to come because it will ensure the pertinence of programmatic buying. If Media and Media agencies manage to prove that they can ensure a good quality of their audience on the good supports, programmatic has a good chance to spread more. This data also has to be measurable. New KPI’s can be found and habits have to be more and more analysed. The quality of impressions is also considered as a challenge. Media agencies and announcers have to be agile and to innovate in their communication to attract consumers. Even if they did not speak about it spontaneously, Adblock can divide. Some of the people interviewed considers it as a threat for Digital. But they consider that solutions are going to be found. On the contrary, others consider that it improves the quality of the audience. In fact, if a people do not want any advertisement, he will not be sensible to messages. So it permits to focus only on people who could be sensible to them. Another challenge is the actual consideration of Programmatic and how to adapt the message to announcers. Programmatic was used at first to fill the unsold locations on websites. It has gradually been developed to target people. But it still has the reputation to deliver a low quality inventory. But beyond those challenges, their interviews indicate that there are limits to the development of programmatic buying in France. The first one is legal. On mass Media, except some cases, it is necessary for the moment to send the same message to everyone at the national scale. Laws become more and more obsolete, as Programmatic becomes popular. The second limit is technologic. It is necessary that telecommunication operators (as SFR, Free, Orange or Bouygues Telecom) use the same technologies for their Internet boxes to help in the development of Programmatic in traditional off-Media. Programmatic buying is now considered as unavoidable, even if some people are not convinced by the model. The understanding of the functioning of programmatic buying will allow a better analysis of the challenges and will help in the research of recommendations.
  33. 33. 32 II/ A media landscape which knows different evolutions in its functioning 1°) Presentation of the programmatic technology Programmatic disturbs the Media landscape and ways Media agencies can organize their advertising campaigns. Understand its processes will allow to understand how Media agencies can give a precise service for announcers thanks to a better targeting. a- The model of programmatic buying Audience planning is a direct consequence of programmatic buying. The most complete definition should be the one of Yannick Lacombe, Strategy and Numeric transformation director of France Télévision Publicité (FTV): “The programmatic buying is a new manner to consider a commercial transaction between an announcer and an advertisement seller. It is about to introduce a buyer to a real time seller, through technologies (DSP, Demand Side Platform and SSP, Supply Side Platform) on marketplaces that can be opened or constrained (Ad-exchange, Private Ad-exchange). The most usual buying way is the RTB, which means Real Time Bidding of each advertising elements of a website or an application, on standard display formats or video. What we observe is that we do not speak only of the Programmatic but programmatics. In fact, the impression acquisition can be dealt thanks to bidding but also thanks to ID Deals which fix a precise CPT (Cost Per Thousand). It can be with or without an inventory guaranty. Programmatic is more and more qualified with labels as: programmatic guaranteed, priority programmatic (preferred deals), programmatic with private access (private marketplaces), or open programmatic (open marketplaces). The relationship was an exclusive link between trading desk and an ad- exchange, we observe that companies which organize Media planning and advertising agencies can be programmatic deal creators, and trading desks with Ad exchanges, operators of those deals. Programmatic starts to be protean and complex”24 . 24 Définition: qu’est-ce que des achats programmatiques?, Ad-exchange.fr
  34. 34. 33 Targeted audience is at the base of Programmatic. To target this audience, it is necessary to use data and the quality of the audience depends on the quality of the data. As explained in the previous parts, three kinds of data are available. As for a Media consultant interviewed: “The first party data is the data which belongs to your announcer. If Carrefour wants to make programmatic, it wants to have Allocine data for example, and make a deal with it to have access to its data. It is what we call second party data. Third party data comes from specialized companies in data mining. They are providers of the data”. To analyse those data, it is necessary to understand the technology. In Programmatic, automation is a real technologic innovation but the influence of people is also very important (Media consultant, data scientists…) to know how to react in function of the progress of campaigns. The data is essentially collected thanks to cookies installed on machines. They permit to build Internet users profiles as age, gender, city, center of interests, navigation historic… Those data permit to target more precisely the audience. They are managed by databases called Data Management Platform (DMP). It is a predictive way to target audience. Another way is declarative when Internet users fill forms for example. Two things are already sure today: the use of Mobile and Programmatic are going to spread more in the coming years. In the United States, programmatic market is now around 15 billion dollars with an annual growth of 20%. Business Insider anticipates the fact that around 65% of online advertising will be programmatic by 2020. According to the E-Pub-SRI- UDECAM-PWC25 , for the French market, programmatic buying has increased by 125% in 2013. It represented 117 million euros. PWC estimates that programmatic will represent around 32% of French display market in 2017, 42% for the United States, 30% in Great Britain and 28% in Germany. Digital is the only Advertising segment which increased in 2013. 25 Rencontres de l’UDECAM, Livre Blanc - Les révolutions de l’achat programmatique, 25th March 2014
  35. 35. 34 To make an ensemble vision, the programmatic buying can be summarized in this scheme: Type of inventory (reserved, unreserved) Pricing (fixed, auction) Participation ( one seller - one buyer, one seller - few buyers, one seller - all buyers) Other terms used in Market Other considerations Guaranteed transaction with fixed rate Reserved Fixed One - One Programmatic guaranteed, Programmatic premium, Programmatic direct, Programmatic reserved. Prioritization in the ad server, Data usage, Transparency of the data... Unguaranteed transaction with fixed rate Unreserved Fixed One - One Preferred deals, Private access, First right of refusal. Private auction Unreserved Auction One - Few Private marketplace, Private auction, Closed auction, Private access. Open auction Unreserved Auction One - All Open exchange, Open marketplace. The reserved inventory is an advertising space on a publisher’s website that is put aside for a specific advertiser for an agreed price. The fixed price is any arrangement where the buyer and seller agree on a flat price that the buyer pays rather than the highest bidder in an auction environment26 . Four kind of programmatic buying can be done today. A guaranteed transaction with fixed rate is similar to a classical direct sale, negotiated between an editor and one buyer. Price and inventory are guaranteed. It is a real time automation process with a targeted audience. With an unguaranteed transaction with fixed rate, the price is fixed in advance but the location 26 Matthieu Tranvan, 5 paradoxes de l’achat programmatique RTB aujourd’hui, matthieu-tranvan.fr, 2nd August 2015
  36. 36. 35 in the inventory is not guaranteed. Private auction is an auction where a group of buyer is selected. The editor defines the minimum price. Other criteria are activated and give restrictions to those who participate to the bid. Finally, an open auction is a classical bid, which is accessible to every buyers. The editor defined the minimum sale price of impressions in its inventory. Every locations and every announcer can access the bid. A common mistake is to make the confusion between Programmatic and RTB. Programmatic in general is to reach the good audience at the good time, and indirectly, at the better fixed price. In addition to those criteria, RTB includes the notion of auction. Open and private action are based on RTB model. For a better understanding of the challenges, it is necessary to analyse processes and actors who make up RTB. b- Focalization on the Real Time Bidding processes RTB business network and processes can be represented as followed: RTB is a Business Model which allows, thanks to a technology based on an algorithm, to bid in real time on advertising locations online, with pre-defined parameters in function of the needs and the objectives of the campaigns. When an Internet user selects a web page which
  37. 37. 36 uses RTB, the URL tag “calls” an ad-server which makes the link with announcers, ad-networks or ad-exchanges. The Internet user is targeted thanks to cookies. If some announcers want the same location, process of bidding appears. If the Internet user who is the target by the announcer visits a website page, the advertisement impression available on this page will be auctioned. Depending on his profile and moments, an Internet user do not see the same advertising than another Internet user. According to Magna Global, (IPG Mediabrands), transactions in programmatic represented 21 billion dollars in 2014 for the 35 countries studied. 44% of this amount has been programmatic (around 9,3 billion dollars). They also predict that more than half of RTB buying will be for mobile in 201927 . “Website editors continue to sell classically via Media agencies which whom transactions are made directly. But RTB is taking more and more place”, explains Richard Strul, Resoneo founder and Vice-President of IAB France (Interactive Advertising Bureau). RTB has been born the 23rd October 2000, when Google has launched its Ad-words system. If an announcer wants to publish an advertisement when an Internet user is searching for a special keyword, he will make a bid to buy this keyword. The announcer who has the most elevated auction and respects limits fixed (as daily budget or the number of impressions…) wins the impression and its advertisement is published. All this process of bidding is done in less than a second (around 120 milliseconds, according to Tradelab). In 2015, RTB is based on the same model but it includes banners or video pre-roll. Programmatic was, at the beginning, created to sell the unsold locations, which had not been sold to announcers. It was a promise to buy a cheaper location but also less qualitative. But this notion have changed, because of the development of new actors as SSP (Supply Side Platforms), DSP (Demand Side Platforms) which allow to optimize the Internet user targeting, the buying of locations and to sell them at the better price. Between DSP and SSP, there is the ad-exchange platform which permits the consolidation between Offer and Demand and finalizes the financial transaction. It is a virtual marketplace. Trading desks manage and optimize for announcers and Havas Media, Display, Video and Mobile Media buying on ad-exchanges. 27 Le Marché mondial de l’achat programmatique augmentera de 52% cette année, Journal du Net, September 2014
  38. 38. 37 DMP (Data Management Platform) and others data providers manage large amount of data. They use first, second and third party data to create audience segments. Internet giants has invested on this technology as Google which has its ad-exchange, Facebook has Facebook Exchange (FBX). Twitter has bought the start-up Mo Pub which has developed its RTB technology. If we take the example of the operation realized by Rocket Fuel ad-exchange for the Lufthansa Company, they have made an increase of 11% of their conversions, decrease their CPA (Cost Per Action) on the plane tickets by 50%, thanks to programmatic behavioural targeting. The theoretical success of programmatic model forces traditional Media as TV or Radio, to invest on it, and to think about the technologic possibilities to spread this model. Those advantages of RTB are possible thanks to the components of the environment of RTB. But how do they help in optimizing the audience? c- How entities make Real Time Bidding primordial today? SSPs are technological platforms, as AppNexus, which permit to sellers to facilitate the managing of their inventory. Those platforms identify available locations and automate their sell on ad-exchanges. It permits to gain time for Media sales houses and publishers. DSPs are technical platforms which negotiate prices with ad-exchanges. Mediamath, Invitemedia, Turn or TheTradeDesk are examples of DSP. There are 2 kinds of DSP: - Open APIs (Application Programming Interfaces) which allow to buyers to plug their own technologies to optimize Media buying, - Closed APIs which are simple campaign monitoring, which capital is essentially human. It is an automatic process where a Media agency, for example, is searching for an available impression to target a precise audience. It gathers different ad-exchanges and data providers. Agencies and trading desks can apply their different strategies to buy spaces available on the DSP. As ad-exchanges, some DSPs specialize on Display,Video or Mobile. Ad-exchanges are virtual marketplaces where sellers (websites editors, mobile applications, social networks and Media sales houses) meet buyers (announcers, agencies and technologic service providers). Sellers provide inventories with a minimum price and buyers
  39. 39. 38 can bid on it. The highest bid wins the publication. Audience Square, La Place Media, Facebook, DoubleClick by Google, Hi Media or Orange are famous ones. Trading desks, for their part, manage and optimize Display Media buying, Video and Mobile on ad-exchanges for announcers and agencies. It exists two types of trading desks: - Affiliated structures to Media agencies as Affiperf for Havas Media, - Independent structures as Tradelab. In those trading desks, there are “simple” Media buyers but also technologic providers. The last ones are Media buyers but they also guide the advertising investments of their customers by building technologic solutions. They can personalize their technologies to answer announcer problematics but there is also the “human capital”, which means that trading desks have people who can manage campaigns and provide solutions in function of the objectives as TradeLab or Vivaki. They know which kind of audience are on ad-exchanges. Ad-servers permit to manage, in a centralized way digital advertising. It manages display but also ensures statistics to know the number of impressions generated on a website. There are two types of ad-servers: editor’s ad-servers which manage display zones on their websites according to announcer imperatives and agency’s ad-servers which allow to media agencies to control the productivity of their advertising campaigns. It is composed of two principal elements: - A campaign computer manager which allows to input visuals and to configure the order of displays and the location placements on the website, - A zone computer manager which configures the number and format of every advertising location on the website. It furnishes scripts for every zone. It permits to broadcast the visual. Finally, DMPs allow to transform data in insights and audience targeting. This audience is qualified to be transformed in data and utilizable information for Marketing. DMPs nourish the advertising targeting of the trading desk. The 6th annex, page 73 allows to see the principal actors who manage RTB.
  40. 40. 39 2°) A technology which meets different objectives for brands and Media agencies To deliver their services and answer to brand strategies, Media agencies have to develop Programmatic inside their agencies and to manage its issues. a- Advantages of Programmatic and the need of programmatic technology to help in the strategic choices A Commercial Director explains: “The first advantage of Programmatic is the data part, the targeting part, the contact that I am going to reach. The second advantage that you are going to give is the notion of costs. Ultra-targeted contact also means performance. […] You can work, not on short term but on long term, on a tactical way”. It seems that the more your data is “clean”, the more your audience will be precise. The highlighted advantages could be resumed in this scheme:
  41. 41. 40 Thanks to Programmatic, campaigns are more and more measurable and it is easier to have KPIs and to analyse the Returns On Investments (ROI). From a total theoretical point of view, Programmatic is now the best way to target precisely the audience and can help in answering the need for announcers to see what the effects of their investments are, and how they can improve their campaigns to have ROI. They also know precisely where their investments are gone and how many impressions have been done. Programmatic can help in strategic choices, as engagement or branding. Thanks to RTB, an advertising location, which is not clicked by the Internet user, will not be bought by the DSP and SSP takes in account that it does not interest the Internet user. Moreover, RTB allows to target precisely the website pages which can interest the announcer. Only some pages can be chosen to broadcast a campaign. It allows to announcers to know more about where they are going to publish their visuals. To understand what is important in the use of programmatic but also issues that inhibit its use, Chango trading desk have questioned marketers from the Fortune 500 members. They have ranked their priorities in the two following graphs28 : 28 Que savent vraiment les annonceurs en matière de marketing programmatique, Ad-exchange.fr
  42. 42. 41 Whether it is the driving or the inhibiting in the use of Programmatic, the issue which seems to be the most important is the data management. It shows that, if data is well managed and if Media agencies prove that they control locations of publications, Programmatic has a chance to spread more in communication campaigns. In a general way, programmatic seems to be one of the biggest issues today. And the development of it in digital seems to be, for the moment, a necessity for Media and Havas Media to find new ways to develop their offers. But is programmatic developed for other traditional Media? b- Applications to every Media and evolutions For TV, as a Media Consultant, “we do not make programmatic buying. If I hesitate answering you, it is because TV channels pride themselves in making “guaranteed GRP [Gross Rating Point] cost” and already making programmatic because we give them precise briefings: targeting, day type, daily pressure… And it is on those bases, those ultra-quantified data that they automatically program thanks to specialized software screens. They build and rebuild plans every day to reach the performance objectives. If I tell TF1 or M6 that I want to buy at a guaranteed costs, it will be a form of programmatic buying. However, it will not be in real time,
  43. 43. 42 but in advance, some days before the diffusion. Negotiation is neither in real time. It is a negotiation by mutual agreement and we find conditions to have a GRP cost and the channel manages the delivering”. GRP is a pressure grade on a precise target to know how many contacts are going to be reached by an advertising campaign. It can be calculated thanks to the coverage rate multiplied by the medium repetition rate. It is one of the principal measures to know the efficiency of the campaign. TV channels sell screens with a type of audience they know. The next step will be to target this audience but in real time. It implies that TV will be personalized to every viewer. The experience has started in the United States and United Kingdom. French TV channels are working on it. Today, IPTV (Internet Protocol Television, which means, all forms of TV broadcasted on a network using Internet Protocol) works on a programmatic system. In the United States, programmatic TV could represents 4% of total advertising TV turnover. As for a programmatic Director: “Today, we already have IPTV on the Internet boxes. You can go on replays or TF1 Replay. There is not notion of targeting but you have inventory at your disposal”. There is a development of audience targeting and buying is automated. In 2015, Canal+ Régie has shown its “All Ad In” project aimed at launching personalized TV. Problematic of Programmatic are quiet the same for radios. As for an Audio Director: “All our campaigns will not be in Programmatic tomorrow, but the day after tomorrow, yes”. He adds: “That’s all new! It is “Work in progress” because audio programmatic did not exist before, except in the United States or United Kingdom […]. We are starting the first campaigns […]. The programmatic specificity has come from the existence of an incalculable number of supports and difficulties to reach audiences in a split environment”. Three ad-exchanges, specialized in audio have been born to develop programmatic for audio as Adwave, A2X and Radionomy. Deezer and Spotify develop their targeting on their platforms and use more and more the data. Media consultant estimates in general that Programmatic will be harder to apply on OOH and press. For OOH, a programmatic Director asks:
  44. 44. 43 “How is it possible to drive programmatic for this offer? We can make automatic and combine Decaux or Clear Channel inventories but, even if we make this totally automatic, you do not have audience. If you have your Sephora billboard on digital screens, you can identify my smartphone to know if I am nearby the screen but you do not know If I will be receptive to this advertising […]. The challenge for tomorrow will be: how can we add this notion of Audience planning in this notion of OOH”. OOH screens are more and more digital and can be personalized. But audience measurements have to be developed. It is the same problematic for Press but we also have to understand that Press environment is still changing a lot and we do not know if printed Press will still exist in the coming years. Programmatic has a huge impact in the Media environment and changes in many ways the vision that we can have of communication, thanks to better measurements and a better estimation on ROI. But what are the challenges of it? How to accompany Programmatic development?
  45. 45. 44 III/ Challenges of Programmatic: a need of a better understanding 1°) A need for brands and Media agencies to understand their audience Innovation and adaptation are two rules in the Media environment. But what roles Media agencies can have and how it can influence their environment? a- Media agencies have to be “agile” and to be creative Consumers are now multi-devices and are very exposed to advertising. If a person consumes around 6 hours of Media every day, with the average number of advertisements every hour, this person could see around 350 advertisements every day and this number can increase in function of the Media used. Segmentation is harder today and audience is less a monolith. People are more and more on 2 screens. Double synchronization, permits to target a people on a second screen after he has watched an advertising on TV. It permits to announcers to reach him 2 times and to improve memorization. This is especially true especially as customers can now interact with their brands and advertising. Advertising has to be done for the customers but also with him. Social networks and Digital in general permit to interact more with them. However, as they gain power in the brand image with the developments of links, particularly thanks to social Media, brands and Havas Media have to adapt their messages and be aware of customer’s reactions. It is the duty of Havas Media consultants to build multi-Media strategy and to understand the Media landscape to reach customers. Mass Media are useful to target a large audience but the principal need today is personalization. Understand channel diffusions allows to improve communication effects. Media consultants will need to give advises to announcers and to improve the links between the technical part of advertising and announcers for a better understanding of what message to give at a certain moment for a certain person. The real added value for Havas Media is to make understand what the better way to make advertising is.
  46. 46. 45 Moreover, a Programmatic Director adds: “Programmatic is, beyond targeting the good audience, you need creation […]. You are going to address to people who are more or less engaged in a transformation tunnel, in the knowledge of the brand and you decide what message you are going to give”. If someone knows the brand, is used to buy its products, an adaptation of the message is necessary and could be for example an invitation for a private sale. Indirectly, it is necessary to understand how it is possible to reach the customer without annoying him. Differentiation of the message is really important and it depends a lot on the creation and which words are going to be used to attract customers. As for a Commercial Director, “the biggest issues today, if you want that RTB works and has sense, is, firstly the quality of your data and secondly, the quality of your advertising”. One of the biggest issue today for announcers is the “quality of the impression”. The quality of the creation and location are obviously primordial but the quality of the data seems to be the most important. b- Make understanding the benefits of programmatic to announcers An Audio Director explains that “the issue in programmatic is the data. It is necessary to have all necessary resources to have a precise targeting. I think it is one of the biggest challenges. We have technologies to activate data segments, to geo-localize, to make precise targeting and retargeting. The issue is to have the “cleanest” data, to have a clever and efficient targeting. The second challenge is to measure those campaign results to learn lessons and adjust tactics if what you have activated is not pertinent”. The most important is to improve the quality of the data and to find new ways to measure customer habits. The more Havas Media will prove that announcers can have good ROI, the more the use of Programmatic will become widely accepted. Furthermore, Havas Media has to change the vision of communication for announcers. Traditionally, announcers have the habit to choose one Media, so they know precisely where they are broadcasted. With programmatic, you have a better comprehension of your audience
  47. 47. 46 and data, thanks to precise targeting. However you do not know precisely where your locations are. A Media Consultant explains: “If you have to work the audience, those actors want to have guarantees of contexts and locations in which they are going to appear. They need in priority to know where they are going to be present before knowing which specific target they reach”. And it is comprehensible. He has given an example: “The FDJ [Française Des Jeux] cannot address its message to people aged under 18 and they are really aware on websites where they have appeared. We are going to work more on programmatic than RTB. We cannot be on open RTB. We are going to search for a specific website list, safe, secure to ensure a presence on locations which correspond to their target”. Media consultants have to make them understand that they can reduce the diffusion list and select specific website lists. There are also more and more brand safety tools as Adledge, Alenty or Integral Ad Science which exist and help in giving a quality diffusion list. Brand safety concerns, in fact, every stakeholders. Brand safety tools permit to control where the publications occur, to respect brand image. It can reassure brands in their list diffusions. It is necessary to explain that it is possible to control the diffusion environment. It is also important to explain that Programmatic is not only RTB and it is possible to control diffusion. A Programmatic Director tells: “I think the priority issues are reassure and reinsure announcers on the pertinence of Digital and that is an unavoidable Media. The 0 default cannot exist, you will not necessarily see your brand. But engagement is measurable. Everything is measurable in Digital. Your money is well invested”. Brand Safety tools also allow to detect robots. Considered as a real problem, many studies have estimated that around 25 to 50% of traffic on Digital is not generated by Humans (and it was only 6% in 2011)29 , causing a reckoning loss of 5 billion dollars. “We cannot see our announcer in the eye and say that the 25 million impressions I diffused have not been seen by robots. Today, we cannot guarantee that. But it is the case of Digital since the beginning. It is a big issue. There is KPI notion (click rate, bounce rate, arrival 29 Internet: la fraude au clic fait planer une menace sur le secteur, Les Echos, 22th September 2014
  48. 48. 47 rate, spent time…) which allows to know if you are a robot or a human. There are programmatic solutions which allow to know ahead if there are robots”, admits a Programmatic Director. Education about Programmatic is one of the biggest challenge in the coming years for Havas Media. It is important to make understand that the diffusion environment can be controlled. But French law can be restrictive. c- But the French legal setting is obsolet One of the law which legislates advertisement is the Law n° 93-122 relative to corruption prevention, economic life and public procedures transparency, approved the 29th January 1993, which is also Sapin Law, in reference to the name of the minister who developed it. The article 18 highlights that “every producer, service provider, wholesaler or importer, has to communicate to every product buyer or service provider for a professional activity, who makes the demand, price scale and selling conditions”30 . This article, for example, is considered as obsolete in the Media environment. It is not possible to know, for RTB the price of the impression before the publication and the process of bidding. With the Macron law discussions in 2015, Digital should be under the legislation of the Sapin law. The Sapin law has permitted to have more transparency in the sale of advertising locations. One more problem is the status of seller – buyer. With the Digital, and particularly RTB, locations can be bought by actors (“retargeters”, trading desks…) and resold. Digital needs a new status of buyer and reseller, as for the UDECAM (Union Des Entreprises de Conseil et Achat Media). They want to create a new status of “location transformers”, for those who buy locations and enrich it with data to sell it again in a global service setting. The president of the UDA (Union Des Annonceurs), Pierre-Jean Bozo explains: 30 Legifrance, LOI n°93-122 du 29 Janvier 1993 relative à la prévention de la corruption et à la transparence de la vie économique et des procédures publiques
  49. 49. 48 “We do not want to come back on the Sapin law. We want its maintenance, but with an application circular concerning online advertising and the respect of the non-confusion principle between the buyer and the seller of advertising locations”31 . UDECAM, SRI and UDA are trying to change the status of those who buy locations to make understand that they are now, more “Marketing providers”, thanks to data than simple buyers. They want to make them remunerate, not on the volume but on performance and time spent on the campaign. They also think about the legislation about targeted and locals advertising. A programmatic Consultant explains: “French law stipulates that, at the national scale, everybody has to get the same advertising, it is the law”. It is, for the moment, impossible to make local advertising on mass Media as TV. If Programmatic is developed to traditional Media, French law will have to change. Digital needs a setting and traditional definitions are jeopardized. However, legal settings are not the only limit. 2°) Technologic limit One of the future biggest limits to the development of Programmatic is the technologies restrictions, hold by telecommunication operators. Moreover, more and more tools on the Internet have been developed to block advertisements on the Internet. 31 Loi Sapin et Internet : Annonceurs et agences médias prêts à l’autorégulation, Les Echos, 26th March 2014
  50. 50. 49 a- Telecommunication operators and the need of unification “There already are synergies which are set up but there are so many actors… If we take the topic of TV and its big issues, as we will not be able to identify who is behind his TV and to standardize Internet boxes, in order to have a unique and identified information, we will not be able to make case by case”, adds a Programmatic Director. Technology has to be at least national. If telecommunication operators agree to unify their technologies and to harmonize the way they gather data, it will be possible to make a better targeting. There are 5 principal operators in France: Orange, SFR, Bouygues Telecom, Free and the MVNOs (Mobile Virtual Network Operator). Each one of them has its particular technology to understand their audiences. If traditional Media, particularly TV and Radio, want to make Programmatic at the national scale, on the Digital signal of Internet boxes, it is necessary to harmonize French telecommunication operators technologies. A unique technology to gather data from those companies would permit the development of Programmatic on traditional Media. However, Media has also to face other problems linked to technology. b- The case of Adblock: a threat or an opportunity? Created on December 2009, Adblock Plus is a software which permits to obstruct advertisements on Digital. Adblock is the most popular Google Chrome extension with over 40 million users and Safari extension32 . It is free to download and to use. Adblock has been critiqued due to its white list, which permits to publish advertisements judged “non-intrusive”. In June 2013, Google advertisements have been added to the white list thanks to a financial agreement between the two sides (around 20 million dollars could be deposited by Google every year to Adblock33 ). A Media Consultant considers in fact that: 32 Google Chrome Webstore 33 Gilles Tanguy, Les logiciels bloqueurs de pub vont-ils tuer le Web ?, Capital, no 276, October 2014, page 48
  51. 51. 50 “They do not talk about it a lot. But when we see how much is lost, it is a consequent budget which flies away. It is 8 billion34 . It is huge. As for me, Adblock is an extortion”. However, other people think, reflected by another Media Consultant: “We are able to know lots of things thanks to Internet boxes. My data is furnished. I want a ROI if they sell my data. […] It does not disturb myself. It is a « win-win situation ». Digital is a canal. […] ». She adds, about Adblock: “if there is a democratization, this can becomes dangerous. It is necessary to develop lobbies. However, it requalifies the audience. The most refractory ones have their needs. They do not need advertisements. We question ourselves too. Doctissimo for example. The website is better and with less advertisements. We have to gamble on creation, to create dreams”. In fact, if a people really do not want to see any advertisements, even if it is published, he will not care about it. So it could, in a way, refine the audience. It is necessary for websites and Havas Media, for the future, to make understand that advertising can be interesting for people and to choose for them advertisements link with their centre of interests. Websites could also make understand that they need advertising to live but also make understand that it advertisements can be a win-win situation. Those limits have to be overtaken in order to help in the development of Programmatic. The next recommendations can help in overcoming challenges presented. 34 Olivia Solon, Google spins ad fraud-busting web with spider.io, Wired, 24th February 2014
  52. 52. 51 IV/ Havas Media has the possibility to develop Audience planning, by accompanying the evolution of the Media landscape 1°) A need to help in change Programmatic issues are numerous and Havas Media can take advantage of it. Havas Media has the tools to adapt but it needs principally a mentality change. a- How to restrict data and technical limits? Media and Media agencies take seriously into account the issue of data safety. Integration of DMP inside Media agencies allows to centralize their data and those of announcers. However, a Media Agency Director explains: “I am going to be a little weird about this. If we want to have an efficient DMP, we have to put Media data with CRM data […]. I do not think it is positive for our announcer to give its CRM data. Because it is a very sensitive data. I am comfortable with hosting DMP in the announcer’s company, to guarantee data safety, to guarantee to my announcer that I am not going to use its compartmental data for others announcers, who are not necessarily its competitors. A potential car buyer can be used for my insurer customer”. Data safety is an issue and if Media agencies as Havas Media want to keep DMP inside their companies, they have to be aware of its security. About technical limits, it is necessary to develop a unique technology to be shared with the ensemble of actors, Media and telecommunication operators. “Canal+ has announced, a month and a half ago, that it wanted to take the leadership in programmatic buying in TV. Why? Because they have 11 million subscribers. They have rich information. They want to make advertisement personalization through their boxes Canal+/Canal Sat with other telecommunication operators as Free, Orange, Bouygues and adopt the same technology to make Ad-serving through every boxes of French homes. Obviously, if they do not convince others, they will do it alone” explains an Audio Director.
  53. 53. 52 People interviewed in general want the development of a “lobby” to unify the technology. Telecommunication operators have to pool their inventories. Canal+ for example and Havas Media should develop their systems and gather a maximum of actors to show the advantages of Programmatic on traditional Media. “It can be positive, not for the biggest TV announcers, but for those who cannot afford to be on TV” adds a Video Director. If Canal+ wants to develop a unique technology, it has to show in what ways Programmatic can be positive to the ensemble of actors, and Havas Media could help in that change. Another technical issue for the development of Programmatic to traditional Media, is the “fluidity” of the watch or listening. An Audio Director asks: “It is a question to be studied: who do you replace? If we switch a film by another inside the same announcer, there is no problem, it is inside the same group…” It is necessary to develop the technology to unify the advertisements (advertisement duration, number of screens…). To fight against robots, rules can be found. Using safety brand tools as Spider.io, bought by Google are a solution. Havas Media organizes itself to make pay the advertisement that is really seen by humans. In the United States, the IAB has published 3 principles that they recommend to adopt: - To settle technologic tools that permit to fight against the fraud, - The duty to precise to the announcer the source of the website on which advertisement is published, - To have transparency principles in the process of buying. Another way to fight against online advertising fraud is to modify ways Havas Media can measure advertising campaigns. KPIs as CPT (Cost Per Thousand) or CPC (Cost Per Click) are very sensitive to fraud. The logic would be to compare the turnover generated by those advertising campaigns. Robots can imitate more and more precisely human comportments but they cannot reproduce real conversions (when an Internet user make an action to have more information on a product or to buy it) or to generate turnover. Analysing turnover permits to
  54. 54. 53 have a clear evaluation of the success of a campaign. By measuring turnover, Media Consultant can understand the consumer engagement and advertising efficiency. Stephane Hauser, general director of IAB in France explains that they “are not police officers […]. It is essential to settle safeguards”. As explained before, Law has to be changed and it is the gathering of every actors (Media, announcers, Media agencies) which could change the French principles. b- How to consider the Adblock software? Except a legal restriction, Adblock is going to spread more. From 21 million users in January 2010, we have reached the 181 million in January 201535 . It is a mainstream phenomenon and it cannot be ignored. Native advertising, seems to be a good answer, because native advertising content is impossible to identify and to remove. Native advertising is a form of online advertising that furnish contents in the context of user experience. The Internet user will have a content linked to its centre of interests and is included inside other contents. Sponsored links of LinkedIn, Google or Twitter are examples. Another solutions is not using third party data, which are detected by Adblock. Websites can also react by creating subscription offerings. Subscribers are willing to pay for quality digital content. It is also a solution to monetize their content. But this solution is not possible for every publishers. Some of them ask Internet users to deactivate their Adblock to see the content and make them understand that advertisement is necessary to their Business Model. It is also possible to “monetize” an Internet user who has Adblock by making him complete a short survey for example. Getting data is a way to compensate the loss of the advertisement. Finally, blocking Adblockers can be a solution for Havas Media but it implies a decrease of the website traffic. Adblock has to be seen as a way to refine the audience. Adblock could be considered as a form of trading desk. If people do not want to see any advertisement, it will be hard to prevent it, except if a law is voted. Publishers have to use Adblock to have an audience more disposed 35 Patricio Robles (Tech reporter at Econsultancy), Seven ways publishers are addressing ad blocking, Econsultancy.com, 2nd November 2015

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