Friday, October 26, 2007

Who wins when Google sells airtime?

In case you’ve missed it, Google have officially announced a tie up with Nielsen to provide demographic ratings data for their new TV advertising service (similar to Google Adwords) - This deal will enable Google to collect immediate demographic data from Nielsen to estimate who was watching the commercials that they had placed on advertisers behalf. The most interesting thing about this for me is the immediate benefit for advertisers in being able to effectively buy media space more efficiently and effectively.

Although Google are starting small (limited release for the US market only), it’s only a matter of time before they branch out into other geographies and media channels. They already offer a similar limited service for Print and Radio advertising in the US and don’t expect to see Cinema, Outdoor and other channels too far behind. The cat is already out of the bad and it’s not looking good for some.

So who wins from this deal?

  1. Large Advertisers – Maybe not – although the beta testers for such a service, I doubt that they will be getting as great a discount on media buying once small and mid size advertisers find it easier to compete with them for airtime. Under the current system, large advertisers are effectively offered preferential treatment by media agencies and should (although do not always) pay lower rates for media brought
  2. Small and Mid Sized Advertisers – With Adwords, any business could dabble in advertising at almost no incremental cost. Whilst TV advertising is more expensive in creative terms (and expect to see many more home movie style commercials) small and mid-sized businesses will now be able to dabble in a medium with its notorious entry costs slashed. That’s got to be good news for them.
  3. Media Agencies – Unlikely to be good news. Arguably Adwords has made online agencies a ton of money in the past five or so years. However my feeling is that Google have been taking a long term view of this and subsidising this market to build acceptance to advertisers of the medium. Google are continuously improving their campaign management tools for aAdwords and at some point, the incremental benefit of using an online agency to manage this portion of spend will diminish. Furthermore, we can fully expect Google Analytics to get a major update for their premium customers who advertise across channels. Advertisers and agencies alike will have unprecedented access to data about their commercials and the ability to purchase spot by spot against testable targets. In other words, Google permit advertisers to sidestep agencies if they choose to do so. Expect to see many media buyers go client side once they’ve mastered the Google system!
  4. Creative Agencies – A likely win – there’s going to be more work available for those that can turn around work quickly and effectively. They can even start in-market creative testing very early on.
  5. Nielsen – On the face of it, Nielsen have signed a great deal. They’ve associated themselves with a top organisation and positioned themselves as the premier supplier of demographic data on the US TV audience. In reality they had no choice but to do this deal if Google came their way. However in the long term, I can see other ways appearing of getting the same data at far lower cost (mobile phones with RFID chips anyone) so the incremental benefit to Nielsen is likely to reduce over time. Maybe they can sell themselves to Google...
  6. Consultancies – consultants (independent up to the big boys) have an opportunity to draw on the superior analytical skills they possess “en mass” vs. media agencies. When media buying comes down to the numbers, the agencies only have a handful of specialist analysts who can analyse data effectively. Many consultants feel more comfortable with the numbers and I can see them licking their lips at “outsourcing” another section of their clients businesses.
  7. Media Auditors – a big loss. No need for auditing if there’s no debate over the price you pay.
  8. Google – the big winner. Online advertising is still a fraction of the size of the TV and Print channels and Google’s technology addresses the key weaknesses in the media buying systems of these industries. Google have effectively decided gone from having a massive share of a mid-sized market to a smaller one in a far bigger ocean. Assuming that they can maintain service levels, continue to offer low entry costs, build the “test and learn” ability that online provides into other media channels, it’s inconceivable that they will lose out isn’t it?
  9. Microsoft – the potential fly in the ointment for Google? Do they have deep enough pockets to offer an alternative quickly? Undoubtedly. However they don’t have the same track record in developing online advertising so it’s going to be a big challenge.

The Caveat - There is of course one big assumption with all of the above. There’s not going to be a feedback channel as there is with online advertising. How can you measure effectiveness when all you know is who saw the adverts? The answer is that Google is going to have to sign up retail partners as data providers in order to create the perfect “mash up” across channels. Once Walmart, Best Buy or even organisations such as Visa on board, the proposition will look unbeatable.

Monday, October 15, 2007

Can Marketing Analysis help the Planet?

Today is "Blog action day" - a day when thousands of bloggers are going to cover one topic from a variety of viewpoints. So what has this got to do with marketing analytics? Marketing is often seen as the big bad wolf by many so called "tree huggers". We don't care that our junk mail gets thrown into waste fill, we "blight" the streets with billboards for stuff people don't need and we help damage the third world.

Basically marketing (and especially advertising) has a bad name when it comes to the environment...but it's time to stop and put this right isn't it? Whether or not you believe in "global warming" (and for the record I do), it is clear for all to see that we're living in an age when it's a key theme for a massive portion of the Western population and an increasing part elsewhere.

How marketers tackle this theme is crucial and I believe that one thing that people have really started to dislike is waste and inefficiency. Cutting these out is a start but in order to make marketing that works, we need to talk to people on a fair level. This means communicating as equals - not talking down to people. (side note - really interesting study on why humans are the only animals who have a concept of "fairness to be found here ->

This is actually a remarkably difficult thing for many businesses to get - or at least that's what it seems. How often do you see an ad which you know is stretching the truth to its limits. All those adverts for face creams which will "roll back the years", beer that makes you a more fun person, banks who are your best friend for live and animals playing drums!

Seriously, waste and getting the messages wrong are obviously bad. Getting the messages right and catching the mood is valuable. Environmental issues are something that many in the west now feel strongly about. If you can honestly incorporate these issues into your proposition (not just advertising material but what you actually do as an organisation) then aren't you more likely to catch the mood of a broad part of the public? Just don't go making false or exaggerated claims....

The marketing industry prides itself on taking a lead in consumer trends but for my part, I don't think it's done what it can as yet in this area. For many, the realisation that green issues are not just morally important but financially also appears to be taking some time to sink in.
For more on marketing and environmental issues, see an article by Nigel Hollis at Milward Brown ->
P.S. All ad revenues from this site today go to an environmental charity. Since a typical days ad revenues are normally pennies (I have canny readers who can't be influenced you see), you may wish to reconsider you usual browsing behaviour.

Analysts are looking even more valuable

Just seen this titbit over on Mediapost ->

"Creative comes out on top with analytics close behind when the room was asked In the future, which agency will be worth most to marketing?
  1. Creative agency - 33%
  2. Marketing analytics consultant - 30%
  3. Media agency - 20%
  4. Direct/CRM agency - 17%

I'm not sure of the reason for the question, the science or even the audience but it's an interesting bit of thinking. Where does this put the creative analyst? Maybe the guys who have been valuing Mobile media, Enron stock and Facebook bids are more valuable that we thought.

Monday, October 08, 2007

Who should run marketing analytics

Last week, I attended a conference call / webcast called "Philip Kotler on Turning Marketing Analytics into Strategic Value" during which I asked Prof Kotler "How do you balance internal vs. external analytical providers?”.

The reason that I asked this question was both one of personal interest and professional. My belief is that the importance of strong data analysis skills will increase as data proliferation and skills resident within an organisation increase. Put simply, grad schools and the like are churning out many more grads who get analytics. In the past, consultancies managed to capture the analytical grads because their clients didn't really have a full time requirement for these skill sets. However my reading of the situation is that this is changing as organisations build better analytics into their business model (see Amazon etc).

Kotler appeared to agree with this view which was a relief for me. However as always there's a but and it's this. Whilst a great deal of analytics will move in-house, there will always been the need for think tanks and consultants to invent new and better methodologies.

(p.s. for regular readers, let me apologise for the gap between this post and my last one - the good news is that my wife just had our second child. The bad news is that my time is vanishing!)