Category Archives: RTB

Using multiple DSPs

Unless they’ve had their head under a stone for the last 2 years, anyone in digital advertising will be aware of the current huge growth in programmatic media buying. In the US it currently makes up around 20% of digital budgets, with many marketeers planning for this to grow to 40% or more. In the UK the H2 2014 estimates are around 15% with predictions ranging up to 25% which would represent a huge 83% of all display advertising.

This presents a variety of issues for the agency and client media buyer, as new DSPs, exchanges, and technologies are launched seemingly every day. They are all (if you took each media representatives word for it) based on the most *amazing* technology, staffed with the cleverest PHD data boffins, and are therefore guaranteed to be the single best way to approach programmatic buying.

I have sat through so many powerpoint presentations in the last year with different coloured and shaped variations of diagrams aiming to represent the stack of technology and the billions of bidding decisions and data points being utilised, that I must admit to now being a bit powerpoint-blind.

In most media buying scenarios, you have an easy way of testing such a competitive market, which is to test them all over a set period of time and see whose technology wins according to the KPIs – volumes, CPAs, new business, what have you.

Sadly, testing multiple DSPs at the same time is at best impractical, and at worst, a way to invalidate results, waste a whole pile of cash – and annoy your customers all at the same time.

Here’s why:

1) Cookie bombing

In an all out competitive bun-fight, it’s not infeasible that one or more of the media partners will simply buy the cheapest mass inventory they can find, in the hope that having their cookies on as many devices as possible will mean that they’ll get (view) credit for more conversions, without actually having an impact on the user. This is especially risky in mass market scenarios, where many users will be buying/interacting anyway, and serving ads willy-nilly (especially if over half of them aren’t even seen) is basically a bit like cheating. Think of it as the shotgun approach – something will get hit, if you spray wildly enough.

2) Frequency & Bidding against yourself

With multiple buyers aiming at the same goal, and especially so where the market is smaller and necessitates re-targeting based on 1st party website data, there is a risk of this smaller target market seeing multiple ads from multiple providers, all in the same day. Not only is this wasteful, but risks annoying the very people who are or should be your best customers. Of course you can cap frequency at a campaign level but will it be real-time enough to capture all impressions in-flight and prevent the risk totally?

To make matters worse, if more than one DSP is bidding for the same user simultaneously, then they could be bidding against each other, and inflating the price which will, of course, be passed on the the advertiser.

3) Attribution & Fair testing

In such a DR driven sector like digital, display advertising naturally struggles for justification against such monsters as the SERP. Justifying impression-based sales, showcasing brand building and early-funnel strategies through clever use of first-touch and assist data are critical to ensure it gets the credit it deserves.

Adding complexity to the campaigns, competition for each customer touch point and making the true impact harder to see amongst the vast weeds of data is not going to result in a clearer view. The risk is that the widest/more scatter-gun approach will pay off, potentially leaving clever targeting & higher impact placements losing out.

If you can’t see the true result of your test, then it becomes pointless. This is where the amazing data capabilities of digital become a handicap rather than a help, as it becomes impossible to make business decisions based on the results, and hence they add nothing except data for data’s sake.

It doesn’t mean that you have stick with what you have – far from it, but there are measured ways to test more than one programmatic provider, which I’ll be covering in my next post.

In house or agency?

This week one of my old clients, Direct Line, announced that it was setting up an in house agency. Apart from wincing on behalf of the incumbent MediaCom (and the amazing team I worked with who ran their paid search) this is a reflection of a lot of soul searching in the marketplace – and the question that I’ve been asked a lot in the last few months, namely “Would you recommend running digital marketing in house or through an agency?” – to which I don’t think there is a perfect answer.

Agency Pros.

The biggest benefit of using an agency is the flexibility and scalability to get things done. A dedicated team of experts, learning from a larger pool who work across various markets and hence can apply learnings quickly and easily, and hopefully avoid repeating the same mistakes or re-inventing the wheel for each individual client.

In addition to this there is a reduced staff overhead and capital expenditure to service marketing campaigns and plans that may not be always on, or to the same level – and therefore would entail a constantly fluctuating need for staff and possibly office space.

Traditionally the buying power of agencies has been seen as a major benefit but this is increasingly irrelevant in a growing digital world. Yes I’m sure the clout of the big agency networks still carries weight with TV and large print publishers, but there is only so much volume an agency can guarantee to secure the best rates without locking their clients into inappropriate media choices.

Digital media runs overwhelmingly on performance based buying models, either as a CPC/CPA. Even a low CPM buy only remains justified as long as the “effective CPA” formula works out at the back end. This means that the perceived value of the media is out of the hands of the media owner, and the old sales negotiation model is defunct.

The increasing combinations of media, client and social interaction data that enables Real Time Bidding mean that in theory any agency, technology or platform partner can and does engage in arbitrage through buying cheap network and exchange inventory, adding value with layers of data and selling on to the advertiser at whatever they can get away with.

As long as the client gets the customers they want at a rate that makes sense for their profit margins, this may seem fair, but when part of the cost they pay is driven by their own data, one could very rightly say that they should not be paying this premium, except maybe for the usage of the technology that enables it.

The elephant in the room

The agency world is a scary place to be right now. Recession has brought increasing pressure on client margins, meaning marketers and procurement departments are constantly picking away at agency fees – demanding more for the same fees, or indeed lower; with the constant threat of pitches used to keep the agency in line.

Agency fees are being pushed lower through supply and demand, and they race to economise and automate to make the figures add up. Meanwhile, (like the proverbial swan on the water with madly flapping legs) operational staff are running just to keep still, keeping abreast of all the changes in digital that mean entire tracking and attribution models are rewritten each year; new media, channels and delivery mechanisms are added monthly and still the ROI machine says:

MORE MORE MORE!

CHEAPER CHEAPER CHEAPER!

The nature of a market reducing fees and profitability even while it becomes more complicated and labour intensive is guaranteed to create pain for the people on the front line. It undermines agencies’ ability to invest in systems and procedures that would enable efficiencies, and inevitably means that mistakes are made, clients don’t get what they need and eventually the dreaded pitch becomes reality after all.

So the account goes to another agency, and the process begins again.

It’s painful, it’s bad business for both parties but it’s almost impossible to stop. Without a wholesale re-think of agency fees, values and expectations the impact of digital has been to make it harder to service clients profitably, just at a time when they need the most expertise. Not surprising then that they’re thinking about setting up their own talent pool.

In House Pros.

Outsourcing, silos and business change: The marketing world has always had to adapt as the consumer changes, and now that process is faster than ever. The ways that the consumer has changed now impacts more than just how you market to them. It’s how you sell, how you transact, your channel to market and how you follow up, it’s customer service, complaints, reviews and approval and advocacy and sharing. Every touchpoint is now possible across a variety of devices – and worse – bad experiences can be shared to the point of going viral worldwide in minutes, potentially destroying years of product development and business planning (Dasani in the UK, anyone?) 

What this means is that the entire business often needs to change, sometimes radically, to adapt to consumer preferences. How fundamental this change needs to be can be masked if your comms are handled by external partners, plus also de-skilling your own internal staff.

Multiple teams within an agency, multiple agencies dealing with multiple product, marketing and discipline teams within a client means that the helicopter view that says “Whoa, we really need to change this!” gets missed, and each part of the machine keeps working to its own disparate aims without a central unifying mission or understanding.

Of course this can happen within an organisation too, it is not restricted to services that are outsourced, but you can guarantee that more disparate entities involved in something, the more difficult it is to integrate.

Data, data and more data: In a perfect world all marketers would have robust MI data that truly reflects the impact of their activities. By this I mean more than just to initial sale, but attrition and lifetime value metrics that can hugely impact the ROI of marketing. Too often it isn’t shared either internally or with stakeholders such as agencies – sometimes through politics or negotiation tactics; and often just because it’s a headache to export and see in any meaningful way even internally. My point is that the more actionable data we all have, internal or external the better job we can all do.

So the answer seems to be that whether internal or external, the most important issue is about integration and data, and having a digital leader that understands the nitty gritty, but is also able to capture the big picture and translate it into business actions.

Good agency staff care as much about your business success as you do; good marketers know that a customers’ interactions are a function of more than just the media plan.

It turns out that good business people are good business people wherever they work, so if you find the right person – keep that person – wherever they are.

Top 5 tips for selling media to agencies (digital and otherwise)

It is a universal belief in media negotiation that the other participant is, frankly, a bit stupid. The  adversarial nature of so many negotiations leads to sales people assuming that agencies are blind to the true (brilliant) nature of the media they’re buying; and agencies’ assuming that sales people are all money grabbing liars who would sell their own mother for a few quid and a free jolly.

Having sat on both sides of the fence I now believe that most misunderstandings are due to context; exacerbated by the poor agency sod never having the time to truly get to know the media marketplace and enjoy the negotiation process. I’ve seen many buyers make bad choices and salespeople lose out because one or other of them doesn’t understand where the other, or the client is coming from, so I’ve attempted to dispel a few myths.

All this of course may be academic in a few years when all media is digitised and bought through Real Time Bidding, but in the meantime let’s all enjoy the process a bit more.

1) Don’t pile on the pressure.

I have heard media sales training sessions where the trainer has said, without irony, “If the client/agency is still saying no, they obviously still don’t have enough information.”. Quite apart from the potential damage that could result from harassing the media buyer until they are backed into a corner, the arrogance of this view appals me. There are definitely varying levels of knowledge amongst sales, agency and client staff; but there is always the possibility that these people have access to more/different information than you have, which may not be shareable and may in fact make their decision a stroke of genius. Either way, pressure sales techniques almost always backfire in business relationships where you hope or expect to speak to them again. I have seen media buyers refuse to pick up the phone to certain sales people as they’re actually quite scared of them, or advise their colleagues not to do business with them either due to their approach. Be gentle, and if necessary sacrifice the one sale for the longer term view.

2) Be generous with information

Having said all of the above, there will definitely be pieces of information to which you have access, that the media planner/buyer may not have seen or had the time to hunt out. Sharing things that make them understand your market/product better regularly – not just when you’re in the midst of a negotiation, is a great way to both be appreciated and to be seen as an expert. This applies even more to competitor information that their client may love to see. Any interesting snippets about other clients in the same sector where they’ve tried something and had a great success is always worth sharing (with as much proof of results as you can legally share), as this will almost always be shared directly with the client and get you further to the top of mind.

3) Answer the brief

I cannot name the number of times when I have shared a detailed brief with a short-list of media owners, with quite specific needs, only to be disappointed. In my experience the vast majority do not answer the actual brief, instead either sending a re-purposed sales PowerPoint with the client’s logo pasted in (and sometimes not editing the text to ensure that the rest of it doesn’t mention the previous client it was sent to); or maybe sending over a proposal which clearly misses the cost or performance criteria with a weak “Well if you pay peanuts, you get monkeys.” pitch, with no clear evidence of why the agency should risk their reputation on recommending this buy.

I cannot state too clearly – read the brief and answer the question, with just one sentence if necessary. If it is impossible to make the metrics/target work – say so, and say so early. This will save you both time and mean you get another crack at another campaign that may have different criteria, and a reputation for being honest, which is always a good thing in an incestuous industry.

4) Put your best foot forward – immediately.

Many times I have spoken to media buyers to tell them that they have not been chosen for a particular campaign, only for them to say “Oh, well if you’d told me, we could have matched those rates.” This is negotiation suicide. Basically the days of agencies having plenty of time to ring you back, negotiate rates gradually down and then eventually settle on something are well past. If you don’t put your “walk away” rates down at the very beginning (which other people will) you risk immediately being excluded, and by the time you speak to the buyer again the decision will already have been made and it’ll be too late for you to pull something out of the bag. Clearly going back with a very low rate every time isn’t healthy for your business, so the important part is packaging your rates correctly. By all means respond with a menu of options – one of which is rock bottom, but in offering these rates you are clear that the sacrifice will be in terms of the quality/data/visibility, and always have other options for the buyer to choose from. If they don’t see it, they can’t sell it to their client either. Tell them which is your favoured option, and why it is so much better for the client. Give it wings so that it’s hard for them to refuse. Even if the first client doesn’t like it or simply doesn’t have the budget, it may just get re-sent to their next client as an option.

5) Save the expenses for people you’re already doing business with

If you’re busy and stressed, the thought of having to make small talk with a random 23 year old who’ll try to sell to you for an hour and a half is not appealing. Even if it is at the poshest restaurant in town. Building business relationships absolutely makes sense, but save the jollies for after you’ve built a working relationship. The only time you should invite someone you don’t yet know is to something that’s useful to them and will make them better at their job – normally an educational seminar or large networking event with multiple people. One to one jollies are for the people who you are thanking or building something with, not a way in.