Google and Publicis in Love

According to Adage, Publicis and Google are launching an exchange programme (see http://adage.com/digital/article?article_id=123263).

The article states that:
"Publicis Chairman-CEO Maurice Levy invited a small group of journalists to lunch today at his Paris headquarters on the Champs-Elysees and surprised them with the appearance of Google CEO Eric Schmidt. He and Mr. Schmidt also sent an e-mail to the staffs of both companies today that describes plans for joint 'initiatives related to accelerating the ability of technology to make advertising more effective.'"

This is interesting because it's not WPP or Omnicom that Google are teaming with. The fact that Google need more advertising savy knowledge is not news but the fact that they teamed with Publicis is coup for the Paris based organisation.

Getting into bed with Google is a double edged sword but one agency group had to do it and it's publicis. Let's see what happens next.

A Nod to Gaping Void

OK - I've been really bad in updating the blog over the past month. I wish I could say that my new years resolution was to update the blog more frequently but let's be honest, I'll get it done when time permits.

I wanted to draw your attention to an article over on Gaping Void called "why the "social object" is the future of marketing". I suggest you read it if you're in any doubt as to why the face of media is changing. As always, Hugh is on the ball with his comments - i love the quote "The bad news is, most products are boring. The good news is, most word-of-mouth is boring".

The one thing that I think Hugh has missed is the economics of advertising - in other words, one thread of the argument is that media became too expensive to execute whereas the opposite should be (and probably is) happening. Media costs are falling - especially in real terms. Furthermore production costs (the real barrier to entry) can be almost negligible. With Google on the horizon for mass media, the barriers to entry are falling further and further so that "mom and pop" shops aren't that far away from being able to advertise on TV or in National Press titles (but only the local edition).

What I forgot about Google's targeted media

I listed 9 interested parties who will stand to win or loose if Google controls media placement across more than just the internet. However I forgot the general public – you and I in our real lives.Will we benefit from more targeted advertising?

The answer to this question depends on your viewpoint on the benefits of advertising I guess. I used to take a snotty attitude to advertising wondering what social benefits advertising offers. Now that I’m a little older and wiser, I understand that it’s advertising that pays for interesting content, it’s advertising (marketing) that drives innovation and it’s advertising that let’s me know that there are alternative opportunities out there. Whether the adverts be for jobx, bank accounts or cars, ultimately we all benefit – even if we don’t appreciate it. On the assumption that Google will improve the relevant of adverts I see, I can only suggest that it’s going to be a good thing if they take over more and more media placement.

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) - http://www.nytimes.com/2007/10/24/business/media/24adco.html?ex=1350964800&en=e65d0a27003a1153&ei=5124&partner=permalink&exprod=permalink). 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.

Youtube and their "wraparound" adverts

There is an amazing amount of time and money being invested in User Generated Content (UGC) by both tech companies such as Google and advertisers and yet the value of this content is still up for debate. Both Google and News International clearly believe that UCG is the future and all those friends of mine out there on Facebook clearly agree (sorry but I just don’t get it as yet). However to justify the values placed on these businesses, advertising and PR on these sites is going to have to be worth its weight in gold. I’m just not convinced it is – at least not yet.

Google has apparently decided that they need to put adbreaks around video clips (see http://www.youtube.com/advertise#invideoads) to start clawing back some of the $1.65bn they spent on buying YouTube. My concern for them is that will users of youtube simply avoid this ads (as users of PVRs do – see some research from IBM on this here) or even more worrying, they go elsewhere with their 30 second MMS clips? The price that Google paid for YouTube equates to something like $29 for each unique user per month at current rates ($1.6bn / 55m). Assuming payback over five years, discount rates and strong growth in unique users – say 25% - I think they need to get each user to click through on about 4 ads a month to break even. If growth stalls then the price Google paid for YouTube will look painfully high. However since they paid in stock and not cash, maybe things aren’t that bad.

Anyway, where does that leave the advertisers themselves. Well UGC has some well documented issues and advertisers need to be careful about how they embrace it. There are some great examples out there of advertisers turning UGC to their advantage (e.g. Coke eventually) whilst some big brands have really struggled. UGC enables brands to join in converstaions with customers but ultimately the power stays with the consumer and not the brand. Advertisers and site owners need to remember this. Look at how quickly the “community” abandoned MySpace. Is there any reason why something else won’t come along and replace the current raft of network sites? Wasn’t Netscape replaced quite quickly. Didn’t Lycos and Yahoo look like the early winners of the Internet search engine crown.

Time to experiment a little

The beauty of digital marketing is in the data - not the popups.

To the right of this site, you will see some adverts "from our sponsors" - Amazon and Google. Without giving too much away, the data i've got from these services suggests the following:

1. Nobody can see that i have an Amazon bookshop or nobody is interested. To test this, i'm going to make it more obvious for readers to find it. If nobody goes there again then time to get rid of it
2. My other Amazon adverts for Ogilvy books are also not getting any hits - they are going
3. The Google ads got some decent traffic early on but now that's dried up. I guess this was people "clicking for interest" but it would be better if it was more click through events occur ed - therefore i'm moving the Google ads up the page - again if nothing happens then time to review the presence of these ads

Let's see if there is any value in this online real estate....

Marketing happens when? How seasonal should the analysis be?

I was looking at the very interesting “google trends” tool today to try and work out a couple of marketing related points for my new business and I came across a couple of really fascinating trends which said an awful lot to me about something which is wrong with marketing folk.

Google trends allows users to track the usage over time of a search term in order to see when and where the search term was being used most. I ran a couple of different searches to try and understand how usage of google is changing and how interested marketing folk (or others) are in some key marketing terms. Although Google don’t let users see overall volumes of search (i.e. how many searches from their sample they are showing), they do show overall trends in search activity across 2004-2006 and the level of seasonal variation.

A couple of typical searches look like this:

Vodafone – general upward trend – seasonal peak late in the year but probably following major news articles and market growth

Tax Returns – the ultimate in seasonal business? Little interest outside peak times although some smoothing in 2006 which may be consistent with the activates of some governments in trying to smooth this pattern out

So now, let’s look at the results which relate to this blog – i.e. marketing analysis and the marketing mix.

Marketing Mix – What strikes me first about our search for marketing mix is the level of seasonal variation in the use of the search term. There is a wild variation across the year in the search suggesting that this is only an issue for many at two periods of the year – 1) around April (when budgets get released?) and 2) just before Christmas (and all the parties) when budget requests have to be submitted.

Marketing Analysis – search against the term marketing analysis shows an almost identical pattern – lack of interest for most of the year then some seasonal swings in order to get the budget sorted / spent. There's even a potentially worrying trend downwards but this appears in lots of searches so this may just reflect a move away from google to other search engines or a trend towards non-search activity.

So fair enough – optimisation of the mix is only a part time job isn’t it? Don’t we only need to optimise the mix once a year – aren’t all the plans annual?

Not really no. Modern thinking suggests to me that analysis is a continual undertaking in the marketing process - how many flowcharts exist within organisations showing the "plan> execuite > review > learn" cycle in one form or another. If this is the case, the mix needs optimising over and over again – the feedback loops should exist so that marketers can review their overall performance (at least on the short term KPI’s) in a matter of weeks rather than once a year. Companies which are optimising once a year are likely to only be looking at the big picture once a year. This strikes me as too infrequent for most organisations in our new more dynamic marketing environment. Annual plans certainly have their place but from the look of the data above, it seems that we’re twice as likely to review the marketing mix once a year at Christmas than during late May.

Reasons why the annual marketing analysis cycle is a good thing

• Everyone is standing back and taking a look at the same time
• An annual review is like servicing your car – it’s a once a year task to check and verify safely
• We’re busy for the rest of the year actually selling stuff – no time to make decisions on marketing mix or check it’s right
• The agency do this for us – we just verify their work at our annual review
• We review our direct activities all the time – they are continually optimised

Reasons why the annual marketing cycle may limit your business opportunities

• If everyone else is reviewing their mix once a year, this leads to strategic opportunities to steal a march on competition by changing when you conduct reviews – can other organisations respond to your actions in June if they are locked in an annual cycle
• A high performance race car has a full service after each race – new engines after every couple of races and the telemetry is reviewed during the race and analysed both in real time but also afterwards – isn’t your business worth the same care and attention rather than subjecting it to a review only when you have to.
• Marketing is selling – if you are busy selling stuff and don’t consider ensuring that customers have oversight of your goods and services, you’ve probably made a mistake
• If you rely on an agency to conduct your mix reviews, what are the chances that you will get the best people at their busiest time of year? If you do get the best people to work for you, will they really be able to give you their undivided attention?
• OK so direct marketing is continuously optimised? Well that’s a start but to use the car analogy this means the steering is optimised but the engine may be running short on oil and about to seize up any day!

Marketing teams can’t turn off for most of the year and come out of hibernation when budgets are being decided or plans need submitting for another calendar year. The best marketing organisations I’ve seen work campaign by campaign with a strong emphasis on continuous learning and re-planning. The attention they pay to the mix has created strong teams who know how to keep marketing relevant to their customers year round. With consumer trends moving so quickly I believe that annual mix optimisation will give way to quicker and quicker cycles of optimisation.

Just back from the Technology for Marketing and Advertising conference in London

I'm just back from the snappily titled Technology for Marketing and Advertising conference here in London and I have to say that I was very disappointed at the range of exhibitors who were present at the event. My overall impression was that the range of visitors ranged from "e-mail optimisers" to "direct mail optimisers" and little in between. From my point of view, i had hoped that some of the broader technologies would be on show - where were Clearchannel, DDS and others who appreciate that "marketing" is a broader church than just anything containing 0's and 1's?

Having said this, there were some highlights which made attendance worthwhile for me:

1. the Google University - a good introduction to Google Adwords which was well received by all present. The funny aspect of the presentation was watching tech specialists struggling to get a projector and laptop to work together which shows it happens to all sorts of organisations.
2. the keynote speech on web 2.0 - i couldn't actually get into this so am taking a punt but the fact that almost everyone wanted to see this speech showed how important this new trend is for the industry.
3. a company new to me called Apteco and their FastStats product which had some interesting graphics to help cut through data clutter and what looks to be a solid offering with a good graphical interface.

Whilst i was initially disappointed that no exhibitor that i could find took a broader approach to what marketing means, i was also heartened to see how many people attended the event. Assuming all goes well with our new business, we shall endeavour to attend this event and show people another side of marketing.