ANA Marketing Musings

Media Buying Metamorphosis

My fifth “top ten trend” for 2007 is that media buying and selling will be transformed. The old, antiquated ways of doing business will give way to new, automated, highly efficient processes, as demonstrated by the growth of online media buying exchanges.

This prediction is hardly a wild and crazy idea.  In 2007, the eMedia exchange – an initiative of several large ANA member companies, including Lexus, Microsoft, Wal-Mart and Hewlett Packard – will conduct a pilot test for television (details will be forthcoming).  It will provide the entire industry an invaluable opportunity to assess the viability, scope and potential benefits of an online system.  It’s my belief that this test will trigger an explosion of new, more efficient ways of purchasing media.

In the October 2006 issue of The Advertiser, Josh Martin, author of the article entitled, “Time for a Sea Change?” succinctly expressed the concerns of many in the industry.  In his story, he says,  “The current system, created in the 1940s, is fragmented by region and by media.  To acquire ad time, companies must go through a costly and cumbersome process using ad agencies and media brokers.”

The expected transformation in 2007 actually has its roots in the ANA March 2005 TV Advertising Forum.  It was there that advertisers announced new ideas for buying and selling media, and for updating and fixing the Upfront.  The process which started at that gathering then began to come to fruition at the ANA’s May 2006 Advertising Financial Management Conference.  At this event, 72 percent of attendees thought the idea of an eMedia exchange was worth exploring.  It has since generated a great deal of healthy dialogue and serious scrutiny about media buying and selling.

Methods of online buying and selling of media have already been beta tested.  Last year, Google created a program for online purchase of newspaper advertising.  The January 15, 2007 issue of B to B magazine covered it this way:  “Although it is still in the test phase, newspaper and advertising executives are responding favorably to Google's newspaper ad program that allows advertisers to go online to bid on ad inventory in daily newspapers.”  The article goes on to explain that the program, “which currently includes more than 100 advertisers and 66 newspapers, is designed to help newspapers sell print advertising to smaller advertisers that buy Internet ads from Google and have generally been priced out of the newspaper advertising market. Advertisers bid on when and in which newspaper sections they want to run their ads. Newspapers can accept or reject the proposals.”

Looking at the broader needs of national advertisers today, it is widely acknowledged that the manner in which media is bought and sold is inefficient, opaque and in many cases out of sync with the strategic planning, budgeting and executional requirements of many marketers. Modernizing it will not only address these core issues but, in my opinion, will unleash a flood of new, creative ways of shaping media packages that help marketers more effectively reach consumers and build their brands.

Unconventional Outreach “is Conventional”

My fourth “top ten trend” for 2007 addresses the movement to Unconventional Outreach. My expectation (not so surprising): marketing will become increasingly unconventional – tapping into social networking, word-of-mouth, local events and more – to break through media clutter, consumer multi-tasking and the growing cacophony of marketplace noise. By employing the Internet, mobile and other new media forms – combined with innovative use of traditional media – marketers can find ways to reach and engage reluctant consumers and customers.

Although some liken the burgeoning blogosphere and exploding social networking phenomenon to the “Wild West,” today’s reality is that marketers must scrap their traditional command-and-control business model, and go where the action is. We heard so much of that at ANA’s Annual Conference – particularly from keynoter and P&G Chairman & CEO AG Laffley.

For sure, when it comes to reaching the younger demographic, the place where “it’s happening” is online. Music, entertainment and fashion companies recognized this fact early, quickly creating a presence on social networking sites like MySpace and Facebook. They were rapidly followed by fast-moving consumer products marketers like P&G, Wendy’s, Coca-Cola and GM, as well as savvy B-to-B companies like GE, Sun and HP. Yes, even gray-haired executives can be found networking on LinkedIn, reading/engaging with blogs or even visiting Second Life!

While there is still caution – even fear – regarding the uncontrolled and some would say “dangerous” nature of unconventional outreach, I believe the movement towards this remarkable new way of interacting with consumers will exponentially grow in 2007. It will be driven by multiple factors:

Hail to the Chiefs!

On my top 10 list of “Ways Marketing will be Transformed in 2007,” I predicted that the Chief Marketing Officer will rise in stature as a C-suite player.

To date, the CMO has not lived up to the expectations and needs of the CEO. Too often, the marketing department’s focus has been poorly aligned with the CEO’s agenda. Weak information flow, functional ambiguity and leadership second-guessing have crippled the influence of the CMO. The result? Failure to optimize the complex array of responsibilities needed to fulfill the CEO’s agenda including:

• Balancing traditional and new media investments

• Brand positioning

• Marketing accountability

• Organization management and development

• Business system streamlining

• Agency relations

• Cross functional integration

Is there any wonder why the CMO’s average tenure is only 23 months? Squandered opportunities – don’t you think?

Well times are changing. CEO’s and CMO’s are getting on the same page. CEO’s understand that the pathway to higher shareholder value is through the marketing department’s door. CMO’s have become more aggressive and more innovative. They’ve begun acting with greater certainty to deliver the goods, to build brand equity and to drive near-term business performance. Strong, powerful, dynamic brands equal outstanding business performance. And that only happens through great marketing. Finally, CMO’s are delivering really great marketing!

In today’s environment, the outstanding marketers know how to grow a business. With unlimited opportunities – but constrained resources – the only marketing metric that really matters is growth. And to drive growth, marketers have learned to stretch the traditional boundaries of their discipline to encompass activities many companies don’t even think of as marketing. We call these people “Growth Champions” – people with traits and experiences that generate superior results. And, in my opinion, many CMO’s have learned through past failures and challenges – and are now fast becoming “Growth Champions.”

Future Shock

Today, I gave the opening remarks at the ANA’s 3rd annual Advertising Law and Business Affairs Conference.

This event has become more relevant … more timely … and more urgent than ever before. Indeed Future Shock: Here and Now – our conference theme – is an apt description of the immensely challenging environment that marketers face today.

Not only is our industry undergoing a reinvention driven by the convergence of advertising, technology and new media platforms … but it’s on a collision course with powerful public affairs issues in the marketplace that must be addressed.

The mounting impact of consumerism … the rising decibel-level of issue advocacy groups … and the growing intervention of activist policymakers are collectively threatening the free speech and open market conditions that are the hallmark of the advertising industry and our society.

The advertising community is under attack on multiple fronts:

1. Food marketing – in fact all marketing – to children

2. Direct-to-consumer pharmaceutical advertising

3. Online privacy

4. Global warming

For sure, there are legitimate concerns regarding each of these issues. But a growing ‘hysteria’ – fueled by special interests and fanned by the media – is threatening our ability to efficiently and effectively conduct business. And it’s overshadowing the responsible business practices and many public service initiatives we undertake on a daily basis.

New Agenda for Agencies

It’s my belief that in 2007, agencies will be turned on their heads. How so? Agency efforts must be interwoven with client brand performance. And agencies must do whatever is necessary to satisfy their “customers” --- The Client.

Not reach. Not frequency. Not “generating awareness.” Not “stimulating interest.” The soft, fuzzy “accomplishments” that agencies have long lived by – and clients have long accepted – are out, caput, sayonara.

The challenges in 2007 and beyond is that agencies must push their clients – in high impact, measurable ways – to build brand excitement, brand momentum, brand loyalty, brand equity and, most importantly, brand business. Accomplishing this will require agencies to devise brilliant brand management strategies; conceive big, game-changing ideas; and execute with superior creativity and innovative media plans.

Moreover, as I stressed in last week’s blog, they will need to engage the consumer and put her at the epicenter of their efforts. Advertising Age confirmed this idea by naming “The Consumer” their advertising agency of the year.

For many agencies, this approach will necessitate a reinvention of their business model. It will require their people to find new, more effective ways to connect with consumers. They’ll need to go way beyond the traditional modes of “understanding the client’s consumers” and actually become the client’s consumers – consuming their media, participating in their social networks and living their lifestyles. True, deep, passionate consumer engagement.

At a recent ANA Senior Marketers Think Tank meeting, Bob Greenberg, Chairman and CEO of R/GA, described the new agency well. It may, he said, have some traditional titles, such as planners and buyers. But there will increasingly be new ones like “interaction designers” who deeply understand the user experience – how people interact with the brand in both the online and offline realms.

In addition, the new model needs to be grounded by “data driven insights.” Agencies must “retool” their organizations to generate the analytical insights to foster new fact driven campaigns.

Two agencies that have put a new relations model into practice with their clients are McKinney with Sony Bravia and Arnold with Ocean Spray.

Sony missed the early entrance to flat panel screens in the USA and had to play catch up with market leader Sharp by developing a “big idea” for the launch of the Sony Bravia. The initial focus was on “The Conversation” - all the ways to craft a meaningful relationship with the consumer. With research indicating that many consumers are confused by electronics and return their products due to this fact and the divide between the sexes over electronics, Sony focused on sending consumers to the store already knowing what to buy. By positioning the Sony Bravia as “The World’s First TV for Men & Women,” Sony was able to start a real conversation with their consumers and engage them personally.

Sony also decided to try something new with McKinney relative to their TV ads - creating commercials with separate endings. Some based on what men like. Some based on what women like. Sony partnered with Tivo and actually let consumers choose which ending they wanted to watch. Rather than worry about ad skipping on Tivo, Sony used the technology to help people go deeper into a rich, informative personalized experience.

Ocean Spray and Arnold Worldwide experienced genuine brand transformation collaboration in the creation of “The Breakaway Brand.” With a mixture of traditional media, and some much needed innovation, Ocean Spray and their agency brought new life to a mature brand – Ocean Spray cranberry juice. By truly understanding the brand and its consumers, the agency and client integrated the new message, going back to cranberries’ roots, throughout all media platforms and internally throughout the company. The ROI shows $1.57 return for ever dollar spent on advertising despite a category average of $.61. I

n a nutshell, the new agency must deeply understand the brands for which it creates campaigns … must be deeply invested in the success of those brands … and must be deeply engaged with the consumers it targets.

So how will compensation be handled in this new environment? That’s the $64,000 question – and one that the ANA’s Advertising Financial Management and Agency Relations Committees have been seriously addressing, with the goal of achieving a mutually beneficial agreement where both client and agency genuinely root for the other’s success.

Traditional compensation models are increasingly passé. At this point, commissions are nearly extinct, and there is growing frustration with the labor-based fees that replaced them, as they are based on input (hours worked) rather than output (value delivered). Furthermore, the once heralded performance incentives don’t appear to work, according to many agencies. All of which points to the new frontier of value-based compensation, the core principles of which are these:

• Never sell time, ever.

• There can be no financial incentive to recommend one channel solution over another.

• Agency must embrace any financial mechanism that rewards the quality of the idea.

• Tailor compensation to the needs, circumstances and culture of each individual client.

In line with these principles is the immensely important need for agencies to break down their internal silos – silos that obstruct the seamless integration of advertising, direct, public relations online and other marketing disciplines. We’ve had 20+ years of high-minded blather about the importance of integrated marketing, yet today most agencies still treat each core marketing discipline as a separate profit center, an inherently un-client-friendly model that creates inappropriate incentives to horde client billings, rather than serve client needs.

We all recognize that the marketing landscape is rapidly evolving --- and the agencies are an important component of that evolution. I want to remind you that last week I blogged about how marketers had to undertake a similarly gut-wrenching 180-dgree transformation. Agencies should be no different in how they view their business models. 2007 is the year these transformations will really take hold. I’m convinced of it!

The Consumer Will Be in Control in 2007

I said in my original top 10 list that, "Marketers will abandon their historic ‘command and control’ model of brand building in favor of a truly interactive dialogue with consumers.  Recognizing that consumers now have the power to control how, when and where they interact with advertisers, brand marketers will continue to reinvent their approaches, putting the consumer in the driver’s seat and unleashing a tsunami of interactive campaigns across all media forms."

This was, without a doubt, the resounding theme emanating from our ANA Annual Conference in October 2006.   In speeches by many of our presenters we heard that the power has shifted into the hands of those to whom we market our brands.   

• Our keynote speaker, AG Lafley, Chairman of the Board, President and Chief Executive, The Procter & Gamble Company, told us that “The consumer has been, is and always will be at the center of what we do. We have greater opportunity to move beyond transactions to relationships than ever before.”
• Russ Klein, President, Global Marketing, Strategy and Innovation, Burger King Corporation, spoke of “turning your brand over to the hands of consumers,” with their slogan, Have it Your Way, being their “global brand promise of empowerment.”
• Cammie Dunaway, CMO, Yahoo! described “Consumer 2.0” as someone who “has infinite choices always available on-demand.”  She urged us to “flip the funnel, identifying and embracing core influencers with targeted messages to help you as you seek to acquire the masses.”
• Jim McDowell, Managing Director, MINI USA, BMW North America, showcased the lengths that their consumers have gone to in order to make MINIs their own.  The car owners can design the paint jobs for their cars, the special features that can be added to their vehicles, and put together events designed specifically to showcase the uniqueness of their automobiles.   Being a MINI owner has become a sort of cult-like club, which engenders incredible brand loyalty.  Giving them the control to make their MINI as unique as they are has become a challenge to their consumers- and one of which they are taking full advantage. 

Consumers are telling marketers, in droves, when, where and how they want to be targeted.  They are creating their own ads, unprompted, and putting them on YouTube.  They are creating false MySpace and Friendster profiles pretending to be your products, characters and celebrities.  Heck, the consumer- or “you”- was even hailed as TIME’s Person of the Year for 2006.  They have the power to be both brands’ loudest cheerleaders and evangelists, but also their most fierce critic. 

In the April 2006 issue of ANA’s publication, The Advertiser, Stevie Benjamin, Media Director, Coors Brewing Company, wrote a case study entitled, “Connecting to the Consumer: Remembering Fundamentals But Embracing Change.”  This is exceptional advice, as we don’t need to turn our backs on the tried and true methods of marketing, rather our role as advertisers in this new environment is clear: embrace change.  Engage your consumers in as many different ways as possible, at as many different touch points as possible.  In the article, Benjamin confesses to owning four portable content devices herself – two cellphones, one Blackberry and a video iPod.  How many do you own? How many do you think your consumer does?  How can you use these many, varied devices to reach out to them?

The final step is probably the hardest.  Let the consumer respond, take their feedback and be ready, willing and able to tweak your plans accordingly.  You will see quite quickly just how open today’s consumer is to being marketed to - as long as they are a part of it.  No one “wants to be spoken to” any longer, they “want to be spoken with.”