Context is Queen: The value of media environment
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The report compares agency and brand owner views relating to automated advertising, and looks at the value of media environment.
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Context is Queen: The value of media environment
- 1. Context is Queen The value of media environment 24th February 2015
- 2. Context is Queen: Newsworks Shift, February 2015 2
- 3. Context is Queen: Newsworks Shift, February 2015 Context is Queen The value of media environment This presentation was delivered at Newsworks’ Shift conference on 24th February at the British Library
- 4. What we have done Context is Queen: Newsworks Shift, 24th February 2015 • Newsworks commissioned Millward Brown and Enders Analysis to compare agency and brand owner views relating to automated advertising and the marketplace generally • Millward Brown interviewed a number of senior people from various agencies and brands • This is a summary of some of the themes and tensions from these interviews, and our overview of the challenges in the marketplace
- 5. Who we have spoken to Context is Queen: Newsworks Shift, February 2015 Agencies Brands Sue Unerman, MediaCom Dominic Grounsell, (MoreThan) RSA Insurance Rob Norman,GroupM DavidWheldon, Barclays MartinVinter, iProspect Matthew Holmes,William Hill Simeon Adams,Goodstuff Andy Duncan,Camelot OwainWilson, MediaCom Keith Hendry,ATS Euromaster Craig Mawdsley,AMV BBDO Tony Preedy, Lakeland Jean Isvarphorncha, Liberty Tim Male, Lloyds BankingGroup
- 6. (and Albert) Context is Queen: Newsworks Shift, February 2015 “Not everything that can be counted counts, and not everything that counts can be counted.” – Albert Einstein
- 7. “One of those unfortunate bits of jargon where words don’t do what they’re meant to do – and that’s to tell you what it is” - Craig Mawdsley AMV BBDO “Programmatic is a sign of the times. But it’s blind buying which I don’t like” - Matthew Holmes William Hill “I’m not keen on leaving stuff to the chance of programmatic” Agency Brand owners Context is Queen: Newsworks Shift, February 2015
- 8. Disparate views on the current marketing marketplace Context is Queen: Newsworks Shift, February 2015 Agencies Brand owners Market functioning Good Poor Market maturity Optimisation phase Development phase Viewability and fraud Teething problems Fundamental obstacles Gap between ‘promise’ and ‘practice’ of audience targeting Good progress Some teething problems Fundamental obstacles “Black box” of agency data Nature of the model Not trusted Lack of financial transparency Great value for money Fear that they are overpaying Key goals and measures Targeted consumers Volumes Context Targeted consumers Volumes Context is key [Source: Enders Analysis based on Millward Brown interviews
- 9. Context is Queen: Newsworks Shift, February 2015 “There are some yawning gaps in the processes and the understanding of how programmatic actually works – not just within clients, but also the agencies and media owners we are working with” - DominicGrounsell (MoreThan) RSA Insurance “If we don’t work it out [bots and ads on inappropriate sites] over the next to or or two or three years, there is a significant danger of a backlash from society, politicians and certainly in Brussels” - Brand owner
- 10. Marketing landscape is being restructured Total advertising revenue (£m) Context is Queen: Newsworks Shift, February 2015 [Source: Enders Analysis forecasts based on AA/WARC and other industry data] 0 2000 4000 6000 8000 10000 12000 14000 2000 2005 2010 2015f 2020f Analogue media Digital media
- 11. Digital growth has been driven by direct response Context is Queen: Newsworks Shift, February 2015 0 2000 4000 6000 8000 10000 12000 2000 2015 Display ad expenditure (£m) Analogue Digital 0 2000 4000 6000 8000 10000 12000 2000 2015 Classified ad expenditure (£m) Analogue Digital
- 12. Internet display growth is the next wave 0 250 500 750 1,000 1,250 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e US UK DR FR Index 2004 = 100 Nominal internet display ad spend [Source: GroupM, IABUK/PwC, IABE/IHS, OVK, SRI/PwC, Enders Analysis] Context is Queen: Newsworks Shift, February 2015
- 13. CMOs are under immense pressure Context is Queen: Newsworks Shift, February 2015 Spend less Shrinking budget Deliver more Improve Return on Investment Prove it Demonstrate greater ROI to non-marketeers 62% of CFOs believe marketing is “critical”, but 61% are not confident CMOs make good commercial decisions [Source: WARC, Econsultancy, November 2014]
- 14. Pressure from the marketplace Context is Queen: Newsworks Shift, February 2015 Marketing objectives (examples) • Fame and stature • Positioning • Build trust • Education and understanding • Prompt action • Sales Marketing outputs
- 15. Automated is moving up the value chain Context is Queen: Newsworks Shift, February 2015 Unsold inventory Automated sells the ‘bottom of the market’ Central buying efficiency Automated moves up the value chain Analytics becomes more central Inventory mgmt Audience is central Brands, agencies and media utilise a wider range of parameters and values
- 16. Marketing and media Context is Queen: Newsworks Shift, February 2015 Awareness: display, video Interest: social Consideration: email Conversion: search Marketing objective [Source: based on blinkx, illustrative only] Media Retail
- 17. Automated values conversion and ignores “out-of-market” Context is Queen: Newsworks Shift, February 2015 Visits: $0.01/visit Audience: $0.05/profile Signups: $0.25/lead Purchase: $1.00/click Awareness: display, video Interest: social Consideration: email Conversion: search Marketing objective Ad unit [Source: based on blinkx, illustrative only] Media Retail Digital Marketing Economy
- 18. Context is Queen: Newsworks Shift, February 2015 “We have stringent guidelines in place which keep us away from porn, and any illegal sites where possible. But some do slip through the net” - Matthew Holmes William Hill “It is more about where you don’t want to appear than where you do” - Brand owner
- 19. Automated and unintended consequences? Automated measures become more important Long term and reputational measures diminish and media becomes commoditised Automated grows in scale and influence Context is Queen: Newsworks Shift, February 2015
- 20. Rise of third-party data; decline of media real estate value Context is Queen: Newsworks Shift, February 2015 Consumer Marketing Mechanics Media Visits to a website typically generate many tracking scripts, enabling publishers and 3rd party networks to track devices These help power interest and behaviour based advertising The browser's cookie is analysed and advertisers bid for, and serve, impressions in a fraction of second Is the incentive to invest in content in order to create an attractive advertising platform being undermined? Businesses that curate and aggregate are more efficient at creating traffic
- 21. Context is Queen: Newsworks Shift, February 2015 “As far as online display advertising is concerned, it always works best when there is a relevance between the creative that is being used and the environment” - Tony Preedy Lakeland
- 22. Actions taken after seeing display ads Context is Queen: Newsworks Shift, February 2015 19% 22% 40% 9% 15% 26% 7% 10% 23% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Communication/advocacy Active engagement Direct contact Original content sites Portals Social networks Research product online or in store, competition, watched video Clicked link, searched online, bought product Talk about a brand or visit/follow [Source:AOP,TheValue ofTrust, 2012]
- 23. Quantifying context – video example Context is Queen: Newsworks Shift, February 2015 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 TV YouTube Revenue per hour ($ estimates) [Enders Analysis estimates]
- 24. FT “Halo effect” research underlines the value of context Context is Queen: Newsworks Shift, February 2015 Content provider assessment 5 established (FT) and 5 emerging (HuffPo) content brands Key values – trust, quality Product attribute evaluation 6 purchase categories (tech, airlines) Key values – trust, quality Implicit test Respondents shown website and brand pairings, and some words they could associate with the brands Only 2 seconds allowed – so “automatic” Established brands gathered many more positive responses, and many more rapid positive responses[Source: FT ‘Halo Effect study, 2014 conducted by InSites Consulting] Brand matching 6 brands shown in rotation and asked to match which of the content sites most suitable for advertising in 51% more placements in established media compared with emerging media
- 25. The UK’s demographics – gender, age, wealth 0-5 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+ Male Female 27% 40% 31% [Source: Enders Analysis based on ONS] Context is Queen: Newsworks Shift, February 2015 Media transition
- 26. Or to put it another way…. Context is Queen: Newsworks Shift, February 2015 I’d rather be dead than sing Satisfaction when I’m 45 – Mick Jagger (aged 31)
- 27. 45-65s are less brand loyal than younger age groups Average brand loyalty by age of principle buyer (% share of requirements) 26% 17% 13% 16% 38% 34% 32% 38% 41% 33% 33% 38% 0% 10% 20% 30% 40% 50% Under 28 28-44 45-64 65+ Alcohol Household goods Toiletries Consumer survey, year ending January 2014 [Source: Kantar Worldpanel] Context is Queen: Newsworks Shift, February 2015
- 28. Viewability and non-human traffic Context is Queen: Newsworks Shift, February 2015 Viewability • 56% of adverts are not seen (Google study, November 2014) • 57% of video adverts are not seen (Vindico survey of 2 billion ads, 2014) • “Seen” is defined as “half of its pixels visible for one second” Non-human traffic • Kraft believes 75% to 85% of its digital advertising (real-time ad marketplaces) is “fraudulent, unsafe or non-viewable or unknown” • There is $9.5 billion on “non-human” traffic – according to Solve Media estimates
- 29. Human Traffic, 38.5% Search engines + Other good bots, 31% Scrapers, 5% Hacking Tools, 4.5% Spammers, 0.5% Other impersonators, 20.5% [Source: Incapsula] Human traffic, 38.5%Non human traffic 61.5% Web traffic breakdown Context is Queen: Newsworks Shift, February 2015
- 30. Three questions Context is Queen: Newsworks Shift, February 2015 1. Are brands and agencies’ views on automated trading truly aligned? 2. Does the reality of automated trading live up to the promise? 3. Is there a limit to what can be traded automatically – and if so, how do we define it?
- 31. Context is Queen: Newsworks Shift, February 2015 31
Editor's Notes
- We also had a chat with Albert, who summed up what some of our interviewees seemed to be saying Data is the new currency and marketing has become more scientific Measurement is king in the digitally-centred marketing marketplace Digital generally and automated specifically remove wastage in the process – we enter a world where all expenditure is working effectively, not just half of it We have moved from communicating to many, with varying degrees of direction and targeting, to communicating with precisely targeted groups, even individuals That is the promise, and no one we spoke to really questioned this at any fundamental level But one of the things our interviews have highlighted is a gap between the promise and the practice, at least for now Not a disagreement on the principles per se, but some questions regarding the quality of execution This is what we explore in this presentation We consider the unintended consequences – for brands and for media – at this critical junction as automated moves up the value chain So – what is automated trading?
- Not surprisingly views on digital advertising vary, and those on automated buying and trading vary widly Rob Norman describes it very clearly: machine-to-machine trading with a set of buy–side rules on one side of the equation and a set of sell-side rules on the other side of the equation Expertise and confidence in this infinitely flexible methodology are not precisely shared, however Across media, agencies, adtech firms and brands we are not all speaking the same language, or coming to issues with the same assumptions, or look for the same outcomes and have shared objectives At one level, it was ever thus, but this project has led us to believe that the gap between the key players in the value chain has grown, and this worries us when there is so much rapid change in the market affecting all parts of the system We did not ask our interviewees to score advertising, and we spoke to a handful of people, not thousands This is not quantitative research But here is the spirit of some of the gaps between agencies and brands
- To be clear from the front, our findings don’t highlight insuperable issues with machine-to-machine trading or with algorithmic marketing Everyone thinks automated trading will grow and everyone thinks it will improve But I think we do highlight some gaps in perception regarding how the marketplace is performing today, and how close it is to the “promise” Additionally, brands want to know how much of their spend is going to publishers, they want more transparency – I will return to this question Automated evangelists will sensibly and correctly argue that automated can address every one of these issues Our point is different: as automated moves up the value chain, not everyone seems to believe the tools in the marketplace are fully optimised, or that they are even fully understood And among some general concerns, one specific fear rattled around these discussions: that context -- the value of quality media for motivating consumer brand engagement -- is being under-rated as a measure, as an objective, as a relevant marketing indicator – for a growing amount of marketing expenditure If this is right, or even a bit right, then we believe the timing of this discussion is critical Let’s get some perspective on digital marketing spend
- Digital advertising spend was zero in 2000, but will shortly overtake all analogue expenditure – which includes newspapers, TV, magazines, radio, outdoor In addition marketing expenditure, a simple enough budget to estimate you would think, is actually becoming increasingly complicated to measure. Disparate expenditure budgets are overlapping. When one looks at a range of outputs, activities and resources, it can be confusing. Advertising. Content. Social media. PR. Technology. Nevertheless, it is worth putting this UK performance into context. No other nation on the planet is embracing digital display spend the way the UK is
- In overall display terms, digital is still a small %age of the total market, but digital is a huge and dominant % of classified / direct response advertising – that market has grown enormously, driven entirely by digital In global terms, it has been estimated that Google is 46% of total digital adspend and Facebook is about 10%. Furthermore, our own estimates would be that, with China excluded, nearly three quarters of digital advertising rests with Google and Facebook This is why automated questions need to be asked and addressed now – in the future, much of the growth could be coming in the left chart
- The UK is more of an outlier than is commonly assumed We are probably not surprised that UK digital display advertising has grown disproportionately compared to Europe But it has also grown by much more than the US, where TV is still a hugely dominant medium UK display growth has exploded in a short period of time It is worth considering the world from the perspective of CMOs
- CMOs are the most under-pressure role on many boards Marketing has become a budget managed through procurement processes just like any other, and CMOs have to deliver more for less each year, squeezing both creative and media agencies at the front end Furthermore, they not only have to demonstrate they have delivered more, but that they have to do so to non-marketeers, principally the CFO and the CEO They have to be more scientific, or at least appear to be so CFO’s need hard evidence, and evidence – some data - comes easily and immediately from digital, while other media do not supply all the data the brands need Marketing is more measurable and more data-driven than ever before, and print media is hardly where you go if data is what you need Putting money into automated selling is in other words the path of least resistance…while The much more difficult route is reputation and long-term brand marketing
- Clearly, all brands are on a spectrum from brand building through to optimising sales Few brands are entirely at either end of that spectrum Agencies help brands translate their various objectives into marketing outputs To a large degree they control the marketing dial Much has changed over the last 2-3 years, and brands acknowledge that they have relied, often enormously, on the expertise and knowledge of agencies But some brands also fear that their outputs are being pushed into automated solutions before the quality thresholds of these solutions have fully been realised, in other words before the methodology could unequivocally deliver against the full range of objectives required CMOs are acutely aware that they often put agencies under intense pressure at the front end through tough procurement procedures, but they worry that agencies are not transparent about spend and margin at the back end
- Automated dealt with the ‘bottom of the market’ in its early days – a way of generating something from unsold inventory But automated trading has since moved through the value chain This is why the timing of this presentation and discussion are so important – we are on the cusp of a major shift in the way marketing is traded and measured Automated can do anything. The algorithims can be configured to achieve anything. What we are highlighting is simple: CMOs are not as confident in the levers in the marketplace as the agencies who are pulling the levers for them
- In digital, and through automated, marketing structure has been turned on its head Media marketing has always been about reaching quality, targeted audiences in an attractive environment TV, newspapers, magazines – in whatever format they are consumed - are brilliant at raising awareness and stimulating interest among consumers who are potential buyers
- In digital, and perhaps emphatically through automated, that marketing structure has been turned on its head The strengths of TV, of newspapers, of magazine, of MEDIA now seem to be the least valued part of the marketing ecosystem In digital, we are all focused on the click-through, on the conversion But is this a case of the tail wagging the dog? Are we letting an available and immediate way of measuring marketing performance transform an industry?
- As automated moves through the value chain, its practices more greatly affect the marketing landscape But our question is: is this happening at the expense of more strategic, softer, nuanced, less easily measurable marketing judgments? Or to put it another way, could the limitations of measurement help push marketing towards a transaction tool, and away from the strengths and advantages of media context that CMOs seek? The evidence still points to the critical importance of context and brand association – factors that great media brands – news brands, TV brands, magazine brands – all deliver While the measurement focuses on reach and targeting and conversion, it does not consider the implications of poor experiences, such as the brand damage relating to poor targeting or offers that are passed their sell-by date
- There are a number of critical data questions Many brands and media companies have first-party data, but many campaigns rely on cookies for behavioural segmentation In this context, businesses that connect and aggregate content can be as well placed to generate ad revenue as those that invest heavily in content And yet, all the evidence shows that consumers are much more aware of - and responsive to - advertising on branded content sites Clearly, it depends: as both agencies and brands told us, if the objective is immediate sales volumes, then some of these subtle observations can be ignored But many brands themselves are rapidly moving into content, hence the massive growth in services such as Guardian Labs - generating the growth of premium, bespoke, cross-media campaigns alongside automated For such campaigns, the potency of the media brands is evidently paramount
- Context is clearly key Content sites are driving much more valuable behaviour than other types of site Arguably it is because of more valuable demographics But the reality is many of these sites have massive audiences, and so they have shared users And the same users are immersed and engaged in a different way on content sites, and the effects of a trusted branded environment for the advertising means that the adverts are noticed, they are remembered, they are acted upon Let’s step away from press entirely a moment and think about TV and video
- TV evidently generates a lot more revenue per hour than services such as YouTube Very broad estimates suggest US TV generates circa 40 cents per hour; YouTube is about 3 cents But shouldn’t YouTube spend per hour be greater? Aren’t the audiences arguably MORE engaged? They have all actively selected the content, there is no passive watching going on The audience is also young – apparently the great coveted demographic, the hard to reach people Therefore, any ‘gap’ must be due to the quality of content, the quality of the surroundings for advertisers, the quality of the media brand Clearly, Google and YouTube are on a mission to move up the value chain by creating professional channels and content But that is precisely the point: it is the context of the advertising that has value, not merely the traffic Newsworks is currently commissioning a study on the importance of context, and in the meantime the FT has recently published a very informative study
- This was a quantitative online survey in which respondents were asked to identify attributes they associated with five established news brands (such as the FT, Bloomberg and the New York Times) and five emerging news brands (such as Huffington Post, Buzzfeed and Twitter) Respondents were also asked to identify attributes they associated with various products and services, including airline brands, tech brands and so on They were asked to select which media websites were the most suitable to advertise in Finally, respondents were shown website and brand combinations and asked which words they would associate with the brand if it was seen on the media website Key here is that respondents had 2 seconds for each word, and in this way the study highlighted which attributes were truly spontaneous, automatic – the implicit value of association, of adjacency Suffice to say the FT specifically - and the established media generally - did substantially better at creating a “halo effect” for the various product and service brands Context and environment are key – and perhaps even more so for older demographics, a critical theme given economic changes in the UK generally
- The UK is getting older, and wealth is moving older still The average age in the UK has now passed 40 years for the first time 71% of the nation’s wealth belongs to people who are 45 years and older And what is more, these older people are much more selfish than in previous generations They have more disposable income and they spend more of it on themselves Lifestyles are fundamentally different from where they were in previous generations Or, to put it another way, think how things have changed since this
- 45 was considered old in 1974 when Mick Jagger couldn’t imagine singing Satisfaction in 1988 - never mind when he is 71 The world has changed Older demographics are not old as they were 30 years ago They are children of the 60s – they grew up with advertising, they grew into a world of expanding horizons, with upward mobility They are selfish, they do not save money, they spend money, they spend on themselves, on technology and luxuries And they are the generation that are the most responsive to marketing – perhaps because they themselves grew up alongside the industry
- There’s this idea that consumers sort out their brand preferences when they’re young, and these preferences become more and more entrenched as they age. Like the Catholic Church capturing hearts and minds by age 7, you might think that by 30, you have them for life. But it turns out that’s exactly wrong As we see here, young families are the most entrenched In more or less every FMCG category, middle aged people are the least brand loyal And what’s more…it is not 16-24 year olds who are multimedia…on the contrary It is middle aged people who are multimedia Older consumers look at Facebook on their smartphones to track their grandchildren but still buy newspapers and magazines and watch TV on a TV and videos on their ipad CMOs know this, they know how promiscuous older demographics are, how experimental and curious they are about the world
- More than half of adverts are not seen at all - and “seen” is very loosely defined – half of its pixels for one second Kraft believed that at least three quarters of its digital advertising is either not being viewed or being counted fraudulently Non-human traffic is enormous
- Just over a third of traffic is generated by real consumers