Simple premise - if it incurs cost, you must be able to rationalise its inclusion. There's some basic fundamentals in here that have served me well.

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ONE STEP AHEAD

2. A P R I L 2 0 2 0C H E P R O X I M I T Y
M E D I A P R O D UC T F U N D A M E N T A L S

3. 7 weeks in, 2 weeks to go.

4. Media Product Fundamentals
Week 7 – Maximising Working Media
June - 2020

5. Vitamins

6. Source: Roy Morgan 2019

7. Lots of people buy them
despite debate on whether
they actually work.

8. So, why do they buy them?

9. 1. They believe they work
despite no evidence from
scientific community of their
doctor.
Source: Psychology Today, 2018

10. 2. Most made a personal
decision based on their own
bias.
Source: Psychology Today, 2018

11. Vitamins in Australia are a
$1.8b industry, which has
grown 70% since 2013.
Source: IBIS World 2020

12. What am I getting at here?

13. Media has a lot of ancillary
elements that feel to me to
be a lot like vitamins.

14. Maybe they work. Maybe
they don’t. But right now
there’s not much evidence,
or appetite for evidence,
that they do.

15. The big question: If you took
the $150 a year someone
spent on vitamins and spent
it on exercise, fresh produce
or other activities … would
there be a larger increase in
positive health effects?

16. So, what is this session all about?

17. Maximising effective activity /
Removing Waste.

18. The money, stack it up.

19. Value – the fee is an investment
Spend – the fee is a cost.

20. 1. Removing, or challenging,
elements of a campaign that can’t
demonstrate a material
contribution.

21. 2. Informing your client about
costs incurred across the chain.

22. 3. Removal of blanket rules that
have no basis in effectiveness.

23. Remember last week we spoke
about the absurdity of people
demanding to know share?

24. This is an example of something
that goes unchallenged for so long
it becomes normalised.

25. There are loads of examples of
media norms that are the same –
useless and accepted. But
ultimately more annoying than
costly.

26. For a service business sometimes
we forget that our job is to
empower the client.

27. Client: “You know what … I really
want to reduce my working media
this year.”

28. Source: B&T 2020

29. Client: “In 2020, a big priority for
me is to ensure my media partner
is collecting rebates.”

30. Source: WARC, 2018

31. Client: “It’s definitely in my best
interests for my programmatic
activity to be completely
complicated with numerous
middlemen, and for me to have no
way to access any data from it.”

32. Source: McKinsey 2018

33. For the record, no client has ever
said any of those comments or
asked for any of those things.

34. But they’re all areas which you
could question the value of – and
who they are adding value to/for.

35. #1: Removing, or challenging,
elements of a campaign that
can’t demonstrate a material
contribution.

36. Contribution components
Cost of the inventory +
Cost of production +
Cost of implementation
= Real Cost

37. Contrbution components
Cost of the inventory - $45,000
Cost of production - $25,000
Cost of implementation - $30,000
= Real Cost ($100,000)

38. Real cost in context
Let’s say the real cost is $100,000
This doesn’t mean if the activity generates
$100,001 in sales it’s cash positive.
It needs to generate more than $100,000 in
revenue after costs.

39. It’s up to us to understand
likely contribution.
1/ Is it reasonable to assume this investment will
yield a return?
2/ Is there a better way to invest this money

40. Cost of the inventory - $45,000
1+ reach = 200,000 (all people)
1+ reach = 150,000 (25-39 target)
Cost of production - $25,000
Concept + 5 units + custom elements
Cost of implementation - $30,000
Strategy, planning, negotiations, commercials,
optimization, finance, invoicing, payment
= Real Cost ($100,000)

41. Ecom retailer
Data suggests 1% of people in TA go to website
within 2 day window
Of those, 4% purchase, on average basket size of
$80.00
Margin = 20%. Revenue after cost = $16
$16 x 80 = $1,280

42. Ecom retailer – scenario 2
Data suggests 1% of people in TA go to website
within 2 day window
Of those, 35% sign up to loyalty list.
The value assigned to a loyalty list sign up is
$100.00
$100 x 700 = $70,000

43. Data is another area to look
closer at:
Data can be valuable but it requires significant
scrutiny, due to:
- Intangible
- Source quality
- Lack of scarcity

44. Data scenario
Assume you’ve run activity targeting audience
M25-39 income 100k+ and it costs $8 CPM.
Along comes vendor X and says ‘we have a great
in-market segment, it costs $4.
Now the inventory has gone from $8 to $12.
This means the performance needs to increase
by a min. of 50% to justify the investment

45. Things that seem the same but
cost a lot more.

46. When mobile advertising first
emerged in 2007 – a tiny 30px by
100px banner on a 3G phone
often cost $80CPM

47. The idea was that it was ‘mobile’,
therefore deserved a 4-5x
premium.

48. There was no backing to this …
and this mentality meant mobile
took 6-8 years longer than it
should have to emerge.

49. Same unit, same audience, different method of
distribution
TV advertising has been consistently priced for a
long time.
However, TV via connected devices always
seems to cost 2-3x what the same ad costs via a
linear connection.
What changes due to the way the signal is
distributed that adds 100-200% more value?

50. Am I paying a $35 premium because it’s
transmitted via IP?

51. These are three examples but this
occurs every day.

52. What would happen if I didn’t do
this?

53. #2: Informing your client
about costs incurred across
the chain.

54. Provenance.

55. Where did it come from?

56. Costs Inventory Data&Platforms

57. Company Consumer

58. Company Consumer
Direct
Indirect
Hybrid

59. Company Consumer
Direct
Netflix

60. Company Consumer
Direct
Email

61. Company Consumer
Indirect
Sony
Pictures

62. Company Consumer
Indirect
Advertising

63. Company Consumer
Indirect

64. These cumulatively add up to significant cost.
Advertiser Agency DSP + Data Verification SSP Channel
20%
9%
10%
2% 6% ~53%

65. Costs across the waterfall
Advertiser Agency DSP Verification Ad Server Channel
$100 $$ $$ $$ $$ $$
SSP
$$

66. The more you spend here – the less you have
to reach the ultimate customer
Advertiser Agency DSP Verification Ad Server Channel
$100 $$ $$ $$ $$ $$
SSP
$$

67. Remember, every new layer of intermediary
either a/ increases the end cost; or b/ reduces
the amount that can be spent on exposure to
customers.

68. Can you, simply and concisely, explain what all
of these layers do and do you always outline
the costs incurred with each as well as other
options you’ve explored?

69. For instance – third party data.
When you’re buying ‘new car intenders’ from
vendor XYZ, do you have any concept of how
they arrived at that assertion. What qualifies
as a new car intender? Who else they’re selling
it to? How frequently the data is refreshed?
Where it is sourced from?

70. Let’s ensure clients understand each layer, as
well as the benefits of each layer, at the
campaign level. An informed client is a more
engaged, more trusting one.

71. The complexity of the indirect method of
distribution is getting more and more intricate
and harder to understand.
Make sure if you add significant resource, cost
and complication to your activity it is worth it
for the advertiser.

72. #3: Removal of blanket rules
that have no basis in
effectiveness.

73. Norms are always worth
challenging.
If you don’t know why something is done, it’s
reasonable to want to know.

74. Online video should be 10/20%
of the TV buy
No context, makes no sense.

75. We need xyz TARPS per week
Why?

76. 10% agency commission
We’re procuring media, not selling houses.

77. You have to use our trading
desk
Why? Isn’t the client paying for advice, not for
your media channel?

78. 12 week lead times
A lot can happen in 3 months …

79. Campaigns must be multi-
channel
Not true. Only if they add incremental reach and
value per channel.

80. Can’t reach young people on
TV.
Not true. There’s Hundreds of Thousands of
people under 30 on TV.

81. Digital is retail, not brand
building.
No comment.

82. Premium content is better than
platforms.
There’s not much science behind this blanket
statement … context is important but it’s
contributor to ROI is low.

83. The greatest
contributor to
effectiveness is
the marriage of
message and medium.
Creative
47%
Context 2%
Targeting 9%
Recency 5%
Reach
22%
Brand
15%
Source: Nielsen Catalina, 2018

84. Collectively, these can swallow
up the majority of a campaign
budget and leave it destined to
fail.

85. Our job is all about getting the
right outcome for the client.
There’s no better focus point to
build a career on.

86. Contact me anytime
ben.shepherd@cheproximity.com.au

87. Materials
PDF will be sent to you
Webex recording will be available to
view via link
Dispatch 24-48 hours post session

88. Please join us next
Wednesday 10 June for
Working with creative.

89. See you next Wednesday
12:30pm AEST

90. Thank you.