Thursday, April 24, 2008

Buzz, giving marketers ears

A version of this piece was published in Marketing in 2008

There is a research group out there that’s so large, you can’t get it in to the biggest viewing room. And it isn’t bothered about what you think, so it doesn’t flatter you or attempt to double guess you. And you don’t need to feed it crisps and coke, or travel to Watford to watch it.

Digital media are mostly regarded in terms of their capacity for carrying our messages – the £2.8bn that’s spent on online media, and the thousands of websites that this funds are a direct product of this.

But for all the effort that goes in to advertising on the internet, a tiny fraction goes in to using it as a research tool - perhaps a reflection of the fact that as marketers we’re often better at talking than we are at listening.

In the last two years we’ve understood something new about the internet. That it’s true power comes not from the ability it gives brands and companies to speak directly to consumers, but from the power it gives consumers (or people, as they like to regard themselves) to connect to each other.

And as these billions of conversations have unfolded, marketers have started to understand that there is value in listening in.

Social networks, blogs, forums, twitter (a mobile social tool) and review sites are bulging with conversations that people are having about brands – often referred to as buzz. Sometimes they’re saying nice things about you, often they’re brutally slagging you off. But the challenge for marketers is to make sense of what’s being said – to understand who’s talking, and the significance of those conversations.

There are lots of tools available – paid-for ones like Onalytica and Buzzmetrics that give us breadth of coverage, but also dozens of free tools including Blogpulse, Technorati, Icerocket and Tweetscan.

Between them, these systems allow us to build up a picture of what people are saying, who’s saying it and how much. But knowing what to look for isn’t enough. The sheer volume of data out there means we have to know what to ignore too – someone criticising a brand in a blog that only two people read is probably not a priority.

So typically, a researcher is looking at three dimensions of buzz – Influence, Popularity and Sentiment. Flemming Madsen from Onalytica explains the difference between Influence and popularity well – in the area of childhood obesity, Jamie Oliver is popular. But if you want him to reflect your views, you’ll find it hard to get to him. He gets his information from the National Obesity Forum – in this context, it’s the forum that are influential – get to them, and you might get to Oliver.

Sentiment is harder. Although there are tools that measure this, their results can be unreliable, because at the heart of it, they’re measuring humans – and humans aren’t consistent. A teenager describing something as ‘bad’ can mean the exact opposite, and when you get a post like this (genuine one):


Any machine is going to struggle to make sense of it. So you also need humans to comb the data, and distill the sentiment from it.

Put this in place, and you’ve got a thermometer of great sensitivity, which you can use for long-term projects like NPD and brand tracking. But the real power of this technology comes from its immediacy – the almost real-time feedback you can get from the world.

Gauging the impact of new TV campaign, an early-warning system for PR outbreaks, a customer service listening post – these are uses that buzz marketing techniques are already being put to.

So despite the £2.8bn we spent last year on talking to consumers online, we may yet discover that the real value of the internet to marketers is not in the voice it gives us, but the ears.

Thursday, April 17, 2008

Media auctions are taking off

A version of this piece was published in Marketing in 2008

Time was, if you wanted to buy space in a particular national newspaper and it was after lunch, you needed the number of the pub in which the sales director did business.  You needed to know him, of course, he wouldn’t have taken your call otherwise, and your rates depended on the strength of your relationship with him – a factor not unconnected with your handicap.

Golf’s perhaps a little less important nowadays (that’s probably going to cause more upset than anything else) but what’s changed almost beyond measure is the buying environment, which has become more professional but has perhaps lost some of its vigorous trader culture.

Better research, international competition and increased shareholder and client scrutiny have pulled media’s socks up – but despite all this, it’s still a business that runs on relationships.

It’s not surprising then, that people brought up in this environment struggled with the bare logic of the Google auction.  Google challenged the industry because it required a fundamentally different approach - a real-time process that needed continuous input – not the ‘set it and forget it’ approach of traditional media.  Pricing is governed not by leveraging scale, but by skill at managing the auction and by quality of technical input through SEO.  And the outcome is measured in terms of sales, not discounts.

But if some investors are right, these skills aren’t going to remain the province of search – they’re coming to media itself, as media auctions start to gain traction.

Google’s acquisition of Doubleclick was partly driven by the belief that they could drive their successful auction model out into display advertising, a belief that lay behind their earlier deal to buy Dmarc, a radio trading platform, and agreements to sell newspaper advertising.

They’re not alone.  Last year, Yahoo took control of RightMedia, paying $680m for a business that’s expanding out across Europe.

But buying media at auction isn’t for the faint-hearted.  Predicting volume is often unreliable, and there are no guaranteed deliveries.  The web interfaces of some auction businesses are fiercely complex – revealing the level of sophistication available in targeting, but at the same time providing a training and skills challenge for customers.

For auctions of online media, every individual impression is sold separately, meaning that publishers can set rules within their own adservers to prioritise customers based on yield – the system will serve a high-yielding direct-sold ad if one is available, followed by a lower-yield run of site ad, a network ad and finally an ad from the auction if none of the above is available or the auction yields a better return for that ad impression.

Adding behavioural targeting into the mix makes auctions more effective still for online media – improving yields for publishers and performance for advertisers.

So the auction is an efficient way of trading remaindered inventory – sellers get what the market will bear for their surplus advertising, buyers get cheap media with no guarantees, and market liquidity improves for both.

The system is attractive, and is likely to make headway in media markets – but it’s not going to take over the world.

Auctions work best when the value of a commodity can’t readily be established, and whilst this is true of remaindered inventory, the majority of value will continue to be traded where planners want to specify the location, timing and delivery of advertising.

And far from reducing transaction costs, auctions are likely to increase agency overheads, as greater monitoring, complexity and new skills are required.  These were the very factors that held many agencies back from investing in online media in the first place, and they’re significant obstacles for success here too.

To thrive in these new marketplaces, advertisers and agencies will need to fuse competencies from search (auction markets), data (behavioural targeting and predictive modelling) and financial markets (real-time dealing). It’s going to make media more complex – but it could be a revitalising force for the sector.

Thursday, April 10, 2008

Coveting your neighbour's brand terms...

A version of this piece was published in Marketing in 2008

Thou shalt not covet thy neighbour’s ox.

Any Israelite who happenened to have a neighbour with an attractive ox was probably beginning to think he’d got away with it, until Moses said “and tenthly”. Still, everybody was probably relieved to have that whole ox-coveting thing cleared up as it probably caused more than a little strife, what with the lack of non-bovine consumer durables which might have provided alternatives to covet at the time.

Whatever else we might have got up to, coveting was definitely off.

And so it was until this month with Google too.

There we were all eying up our competitors’ brand names, but not allowed to do anything about it by the search engine. For some years now, Google enabled companies to protect their trademarks by preventing bidding by competitors – so Tesco couldn’t bid for Sainsbury’s.

Last week though, the search giant announced a change of plan. From May, the UK will follow the US, in allowing a free-for-all. Now, advertisers can get on with some serious coveting.

All this attention from your competitors could significantly impact on your search programme’s effectiveness, so you need to start work now to make sure you don’t lose out. Fortunately, there are three key things you can do to come out on top under the new commandment – and even better, I’m going to tell you what they are.

Content. Boosting the quality score of your landing page can directly impact on the amount you might have to bid for your brand term, because the Google algorithm rewards relevance. An effective SEO programme will boost your ‘natural immunity’ from competitors, meaning that you can retain top position in the paid-for rankings even with a lower bid for your brand term than your opponent.

Integration. Most affiliates generate traffic to their sites by using paid search, and unchecked they can drive up your bids on Google. Many advertisers fail properly to manage affiliates’ search activity, and some ban affiliates from bidding on their brand terms in the mistaken belief that this will control costs. In fact, properly controlled, affiliates can help a brand to block out the competition – outperforming competitors and pushing them down the rankings. Integrated search and affiliate management is the only way to achieve this – managing these in silos is only going to benefit your competition.

Data. Most advertisers attribute 100% of the sale to the last step in the process - more often than not, search. But most consumers make more than one search, mixing generic searches (“dresses”) with brand searches (“Next”) and branded product (“Next dresses”), and data-smart advertisers have responded by investing in clickstream analysis – understanding the value of keywords not just in creating a sale, but in pushing the consumer down the acquisition path towards a later sale.

Without this data-based model, both volume and cost-effectiveness are limited – and since bidding on competitors’ brand terms may be costly at face value, a more sophisticated model is necessary to justify the value of activity beyond simply annoying rivals (although this is fun too).

Google might be poor at relationships, but they’re very good at sums. They’ve got a huge test market for this approach in the US and Canada, where they’ve been allowing competitive bidding for four years – so I think we can be certain it’s going to generate increased revenues for Google, which means of course it’s going to cost marketers more.

The problem for most search advertisers is they don’t have a strategy.

A detailed focus on bid management, keyword groups and optimisation is important, but at a time of fundamental shift it’s those who have a big picture who will thrive. As Google moves the goalposts once again, the three core strategic pillars of content, integration and data will be essential components of that picture – and the critical success factors that will distinguish those who prosper, from those who merely covet.

Thursday, April 3, 2008

We haven't yet scratched the surface of digital

A version of this piece was published in Marketing in 2008

About this time of year, it’s traditional to gasp in amazement as online continues to absorb a still greater share of the UK’s advertising spend. The Internet Advertising Bureau announce another notch on their bedpost, analysts start trying to identify the winners and losers, and the advertising community continues to polarise into those who are seizing the opportunity with both hands, and those who are sticking their fingers in their ears, closing their eyes and humming loudly to themselves.

In the US, where internet advertising grew 18.9% in 2007 (the overall ad market grew 0.6%), publishers are looking to the UK to understand our experience here. Share of total advertising spend here is double what it is in the US, and relative to population, the UK online advertising market is the biggest in the world.

So given the strong base built over the past five years, it’s all the more remarkable that the new figures published this week by the IAB have shown yet another substantial rise in online budgets.

The market grew by 38% in 2007, only slightly behind its 2006 growth of 41%. But this hides the fact that in volume terms the market actually expanded faster – by £797m in 2007 compared to £649m in 2006.

Search held its share of online, increasing 38%, and the IAB’s numbers show that market to have reached £1.6bn. Google makes up 79% of that, their growth surging ahead of the market and continuing to consolidate the lead that they’ve successfully established in Europe.

The big success story is display advertising, which grew 31% in the year – boosted by the continued boom in ecommerce.

The online market has continued to confound the ability of the industry’s Nostradamus wannabees – with both the major media agencies and the big analysts once again significantly underestimating the real rate of growth.

So what’s driving this unparalleled expansion?

It’s easy to look at the micro here. Automotive up, recruitment up, FMCG up. But these are symptoms rather than causes of this extraordinary growth – there are two, more fundamental, factors at play.

First, internet advertising is a global market.

Whereas technologies (HDTV, DAB radio, colour newsprint) in traditional media tend to emerge in single geographies and expand on a territory by territory basis, internet technologies can emerge in any place in the world, and spread overnight across the planet.

This applies as much to applications (skype, BitTorrent) as it does to media properties (YouTube, Craigslist) and hybrids of the two (Facebook) – and it means that the internet market has a global mindset.

It’s often assumed that internet companies regard traditional media businesses as old-fashioned. In fact, they often regard them as parochial – slower, strategically cumbersome and competitively less challenged.

And this is the second factor. This openness, this bigger worldview has led to a hypercompetitive environment, where evolution and revolution happen before our eyes. It’s a business that’s attracted ambitious, creative and driven people whose interest is sparked by the disruptive effect of their businesses – finding new ways to do things, often in ways that firstly undermine and then frontally assault the status quo.

eBay didn’t copy Sothebys, Google didn’t copy Yellow Pages, Craigslist didn’t copy Loot.

So we shouldn’t expect incremental change.

The internet media market has challenged the status quo not least because it is more than just an advertising market. It’s a distribution medium, a channel between people and a consumer research lab, and those who model its revenue potential on the basis of simple advertising end up looking merely parochial.

UK marketers are leading the world in their adoption of digital, both as a marketing channel and as a channel to market. But online advertising reaching £2.8bn in 2007 is a symptom of something much bigger – an indication that perhaps we still haven’t yet really scratched the surface.