Is it better to conform to the way that billions of dollars are currently transacted or do we need to create a new paradigm?

Which is more important: the right audience or the right content?

To GRP, or not to GRP?

These questions and others were discussed at the recent gathering in NYC dubbed the “IAB Digital Video Agency Day.”  We managed to pull together over 100 agency and media professionals to discuss the growing online video marketplace.  It was a great discussion for a number of reasons, but primarily because we had a few “traditional” buyers (I know, you hate that) in the audience which added a healthy dynamic to the discussion.

As an industry, we have many data points that should translate into explosive online video advertising growth.  While we have seen some movement, it is still a mere fraction of other sight, sound and motion marketplaces (read: television).  It is interesting to look at this from a few perspectives…

In Corner #1:

Online video delivers the same rich, emotive experience as television, can be infinitely targeted and allows for full interactivity.

Online video comprises nearly a third of all time spent online.

No clutter!  For all online video, there is 99% content and 1% ads (Comscore) compared to TV which is about 75% content and 25% ads.  If you take out all user-generated content and focus on long-form online video it is still 92% content and 8% ads.  Your ads will be noticed.

It performs!  According to a Nielsen IAG study which has been making its rounds for a while now, online video is more likely than television to deliver brand recall (50% vs. 28%), message recall (39% vs. 21%), and likeability (26% vs. 14%).

In Corner #2:

Online video is WAY overpriced.  On a CPM basis, television delivers audiences at approximately $8-15 CPMs, while online video is more along the lines of $20-40.  When you add demographic CPMs on top of that online video gets even more expensive.  Is online video worth a 3-4x premium?  The television buying community doesn’t think so.

It’s far too complicated.  Different ad units/formats, VAST 1.x/2.x, pixels, traffic sheets, data partners, audience verification, content verification, oh my.

No scale.  If we were to significantly increase the amount of ad spend in high quality long form content, we would simply run out of inventory.

Where do we go from here?

There is no doubt that there is an extraordinary opportunity for growth in the online video ad marketplace.  For us to progress we need to do a few things.  For starters, the conversation must evolve from one of COST to one of VALUE.  Today we are far too preoccupied with the perceived high cost of online video relative to television.  What we don’t know is how much it is worth in terms of driving business results.

There is a significant research project moving ahead around overall online measurement that brings the industry (AAAA, IAB, ANA) aligned around a common measurement standard.  While this won’t be a quick fix, it does have the potential to allow us to create a more uniform apple to apples comparison across media types.

In addition, as we all learned in ECON 101 – the marketplace revolves around supply and demand.  Clearly we need more supply.  Not (insert furry animal here) on skateboards, but high quality engaging storytelling that captivates consumers.

Questions still remain around who should be buying online video today and how we should organize ourselves structurally for success as agencies, clients and media partners.  As soon as we figure that out we will need to figure out video delivered via mobile devices, video via Xbox/Playstation, video delivered via digital OOH, and on and on.

That’s what makes this business so darn exhilarating, right?

Please let me know your opinion.  Would love some new perspectives.

Rather, I wanted to talk about what we can do about it, and how we need to be thinking about developing talent during the analog to digital migration that we are all living through.

It is worth stating for the record that there is no doubt that we live in a world of grey.  It’s messy, dynamic, and exciting.  The lines of demarcation between digital and analog are rapidly eroding, planners are becoming buyers, media companies are becoming agencies and agencies are becoming ad networks.

Craziness.

Over the past year, we have been fortunate to win several pieces of business.  Naturally, these wins necessitated the need for staffing up our digital team.  Make no mistake – digital recruiting is not for the faint of heart.  A healthy dose of humor is required.  The terms “entitled, bold, audacious and aggressive” come to mind.  We have navigated the marketplace and have found many diamonds in the rough, but it is a very challenging recruiting environment.  The depth of talent at the middle to senior level is very limited.  There are a lot of the same folks circulating from one agency to another.  We simply don’t have enough practitioners in the market to handle the growth we are experiencing.

The industry has a number of efforts to bring fresh talent in.  Job fairs, aggressive education, and recruiting on college campuses have been going on in earnest for the past few years.  Hopefully the college graduates of today will be the digital marketing leadership of tomorrow, but what do we do to solve our talent shortage today?  How do we cross-train our teams and ensure that all employees are conversant in digital technologies?

The answer is multi-dimensional.  First and foremost, the solution requires a serious training effort which familiarizes all agency personnel to the basics of digital marketing – the nomenclature and basic principles.  There will be some that will show an interest and aptitude for digital and those should be nurtured into specialists if so inclined.  For us, the training includes both an e-learning component as well as in-person instruction.  We just rolled out a whole new training effort this year, called “CuriosityU” – and we are really excited about it.

Secondly, a codified rotation program for junior and mid-level staff should be instituted so that employees can experience many different facets of the business and become better overall media practitioners.  Finally, we are experimenting with “battle buddies” or mentors that can provide more personalized education and knowledge sharing on an ongoing basis.

From a structural standpoint there are many agencies that are trying to solve the digital brain drain through experimenting with new organizational structures.  Some are eliminating digital specialists all together and others are combining their analog and digital teams into an overall client focused team.  There is no simple answer and it is still early days to be able to determine what is the best practice is as we evolve into a more comprehensive digital ecosystem.

One thing however is certain.  This is not the time to sit idly by.  It requires effort, a plan, dedication and the determination to devote to this issue despite the daily tasks and initiatives that keep us all so busy.

What are you doing to solve the digital brain drain?  How are you organizing yourself for success in the future?  Let me know!

We live in an age where the privacy policy of Facebook (at 5,830 words) is longer than the U.S. Constitution (4,543 words excluding amendments).

A world where Facebooks’ 400 million users navigate privacy options which include more than 50 settings and more than 170 options (NY Times).

A time when privacy is discussed each and every day on Capitol Hill and throughout the halls of Washington DC.

Privacy is a red hot topic and one that shows no signs of abating.

The desire to create sweeping federal legislation that governs consumer privacy is something that has been simmering in Washington for years.  Recently, Rep. Rick Bouchier from Virginia (Chairman of the House Subcommittee on Communications, Technology and the Internet) and Rep. Cliff Stearns from Florida released draft legislation on the subject.

Under the heading of “you can’t please everybody all the time”, consumer groups are up in arms that the legislation does not go far enough to protect consumers.  Others are saying that the draft is a solid step forward for the industry, and will provide greater consumer controls and transparency into data usage.  There is no doubt that the debate will rage for some time before being introduced to Congress as formal legislation.

I think it is a reasonable starting point to elevate the discussion.

Specifically, the bill would require a company that collects PII (personally identifiable information) to display an understandable privacy policy that explains how the company uses the data.

Under the proposed legislation, companies can collect information about individuals unless they opt-out of those services. Information that is collected could be stored for up to 18 months, after which it would have to be anonymized or deleted.

Behavioral targeting (serving ads based on exhibited online characteristics) is a tremendous asset for marketers, and has become a meaningful piece of the online advertising equation.  The new legislation states that a third-party ad network would need to provide opt-out options via a “clear, easy-to-find link to a webpage for the ad network that allows a person to edit his or her profile and, if he chooses, to opt out of having a profile, provided that the ad network does not share the individual’s information with anyone else.”

There are probably some shades of grey here as sharing of information across partners is fairly routine assuming the appropriate disclosures and commercial relationships exist.  We spent an extraordinary amount of time speaking about data usage and privacy as we worked on the recently announced Terms & Conditions 3.0 for the online advertising industry.  It is a complex and highly charged issue, to say the least.

The even darker underbelly of privacy revolves around data security.  There have been several well publicized events that made valuable consumer data more public than intended.  A few notable examples of this recently occurred with two of the most prominent social networks, Twitter and Facebook.  Twitters’ stumble allowed users to “force” others to follow them on Twitter and naturally, celebrities were the target of many overzealous fans.  On Facebook, the flaw revolved around a privacy setting (go figure!) that allowed users to preview how their profile would appear to their friends. For a brief period of time, the flaw allowed users to actually see what their friends were doing and saying on Facebook.

It should go without saying that consumer data is sacrosanct and should be treated as such.  Companies must be held accountable for breaches, and we all need to get more sensitized to the data that is shuttling around cyberspace.  As the world becomes increasingly comprised of zeros and ones (i.e. digital), the proliferation of data will continue.  With that data comes great responsibility.  What do you think?

I am certain that many of you have opinions on this subject, and I’d love to hear them!

Ouch.

Before we embark on this journey together, I will tell you that I am conflicted.   I am conflicted because on one hand, I believe that our industry desperately needs a “single source of truth” (yes, Jack – we can handle the truth) in media measurement.  Our version of the “Nielsen television rating” or “Arbitron radio rating”.  A de-facto, agreed-upon dataset which enables us to make informed media decisions, transact commerce, and steward our clients’ investments.

On the other hand, a single source provider controlling the currency that determines how a media type is transacted could lead to complacency and the status quo.  Dominant companies rarely deliver the kind of rapid iteration and innovation that competition delivers.

Don’t get me wrong.  I am under no illusion that Nielsen and/or Arbitron are perfect.  I fully understand the limitations of the data, especially as the world continues to fracture into smaller and smaller slices of audiences and content.  But, there is something awfully seductive about a number that isn’t questioned: a number that is accepted as fact.

The challenges in the digital media business are numerous.  For starters, the two well-established research companies that provide industry data are so wildly disparate that it is comical. In March 2010, did “Viacom Digital” have 32 million unique visitors (Nielsen) or did it have 64.9 million (Comscore)?   Did cnn.com have 20.6 million or 42.9 million?  How about CNET.com – 32.1 million or 17.2 million?  Take your pick.

These numbers are not even in the same country, let alone the same ballpark

Now I know that some will say that the problem is with the nomenclature and the “custom entities” that publishers set up with the research companies (more on nomenclature another time).  These custom rollups allow publishers to aggregate traffic from a number of different properties under an overall umbrella (like Viacom digital), and there can be different rollups from one service to another.

I liken this phenomenon to buying a mattress.  If you have ever gone mattress shopping, you will know that retailers do a masterful job of creating different names for the same product.   It soon becomes impossible to compare prices from one retailer to another, so you are forced to go with a retailer that you trust and hope to get a quality product for your investment.

We should only be that lucky.  After choosing about a dozen different properties – large and small, the sizable variances between Comscore and Nielsen were the norm rather than the exception.  This is before we even look beyond overall traffic to more pertinent information like age, sex, income, geography, etc.

Should we care?

The world is moving rapidly towards buying audiences so custom and discrete that they will make syndicated research companies like Comscore and Nielsen Netratings nearly obsolete.  In the meantime, however, I do believe that our inability to convince large, traditional marketers that we have a currency as solid as the Nielsen television rating only serves to retard our growth as an industry.

What is the solution?  Will we ever get to a place where we are able to have such concrete “ratings” information that we can make the biggest of traditional marketers comfortable?

I would love to hear your perspective.

 I recently had one of those meetings and wanted to share it.

 I have spent a good bit of time over the last few years working in an industry capacity, trying to make the “business of doing business” in the digital space more efficient.  As Chair of the AAAA Interactive Marketing Committee and co-chair of “Project Reinvention” we have been working to identify the greatest areas of friction in the business and tackling the greatest areas of contention (revising the industry Terms & Conditions as an example).

 After 15 years in the digital media business I can safely say that our industry is overly complicated.  In order for us to truly scale our business it is critical that we make it easier to plan, buy and steward digital campaigns.

 We certainly don’t need any more Wall Street Journal articles on “Invisible Ads” or trade publications exposing the dangers of ad networks, click fraud, below the fold placements, etc.  So, you can understand my dilemma after I met with RealVu last week.  Part of me wanted to forget that the meeting ever happened.  The other part of me thought that this little known Salt Lake City startup could change everything.

 It would appear that (among other things) RealVu has developed a technology that allows them to identify when an online ad is “within the viewable area” of a users screen, and for what duration.  So, for ads that are run on a particular website that require a user to scroll “below the fold”, their ad never gets requested until the user has scrolled to that part of the page.  Makes sense, right?  Pretty innocuous you say?

 On average, across all placements that they have tracked – fully 50% of online ads are never viewed because they are outside of the user’s viewable area.  Say what?

 Now, keep in mind this is a combination of all properties.  Some long tail sites are poorly constructed and they may indeed have questionable motives, but this does include Top 100 properties as well.  The number of ads that we are paying for that go unseen floored me.

 In addition to making sure that an advertiser is only charged for an ad that is viewed by a user, they are able to see how long the ad is viewed before it leaves the viewable area (another tab is opened in the browser, user scrolls down the page, etc.). 

 It is not inconceivable that this kind of data will drive the industry towards an entirely new buying mechanic.  Only paying for the amount of time that an ad is viewed, and obviously not paying for ads that are not viewed at all.  This may very well translate into a decrease in efficiency (or an increase in CPM), but it will be a far more accurate representation of true ad delivery.  We are supposed to be the most measurable and accountable medium, right?

 RealVu has reportedly signed a deal with MSNBC.com to start working with them to provide their service to advertisers.  They also have been working with some of the leading industry bodies like the IAB and the Media Rating Council (MRC) to revisit some of the very foundations of our industry, like what qualifies as an ad impression.

 I have no doubt that this will not be the last time we hear about this company nor the last time we discuss the potential to revise the currency of Internet display advertising.  Might this be the catalyst the industry needs to galvanize around a new standard metric?  Engagement, iGRPs, Brand minutes, involvement score – take your pick.  The possibilities are as varied as they are exciting.

 At the end of the day, if this new potential standard makes the business of doing business easier and more transparent, I believe it will be a giant step forward for the industry.  It will set a new bar for accountability – one that will influence all communications channels, including the 800 lb. gorilla in your living room.

 Remember folks, you heard it here first.

 This could change everything.

There is light at the end of the tunnel.

Across a number of dimensions, we are working towards a greater understanding of exactly which elements of our marketing mix are delivering value and which aren’t.  For starters, we have the granddaddy answer to Wanamaker, which takes the form of an econometric model.  Econometric models look backwards in time and factor in a wide array of variables, which are then used to determine cause and effect (with all other things constant, when I run online advertising, my sales go up).  With a tight historical model, one can begin to predict future behavior.  The problem arises when the future landscape looks markedly different from the past, and it becomes hard to predict with accuracy.  Nevertheless, this is strike one for Wanamaker.

Next up, we have a number of remarkable developments in the measurement of digital marketing’s effect on brick and mortar sales.  We have been reasonably good at gauging impact on online sales, but when the channel is offline we have been left scratching our heads.  In the consumer packaged goods space, we have Nielsen Homescan data that can get tied back to online users and can prove online advertising translates into offline sales.  All the major online publishers have a product offering in this regard.  Good stuff, but only if you are selling toothpaste or laundry detergent (or any products that are primarily sold in the supermarket channel).

Comscore has also developed a few exciting measurement services that allow marketers to measure other retail channels.  By cross-referencing online behavior with third party databases and/or scraping online credit card statements (with permission of course) they can create the same linkage between online ad exposure and offline sales.  Strike two for Mr. Wanamaker.

The final area is a particularly exciting one these days.  Unlike television, which is transacted on a demographic basis (Adults 25-49 impressions), online advertising is transacted on a total impressions basis.  That sure is curious, isn’t it?  It doesn’t make much sense, especially as digital marketing is purported to be the most accountable, targeted communications channel ever created.

My guess is that eventually we will evolve into an entirely new currency with which to transact business in the digital space.  A currency that acknowledges attentiveness and engagement.  In the interim, we are pushing the industry to get far more accountable.  This accountability takes two forms: running campaigns as ordered (go figure!) and ensuring that we only pay for impressions that reach our target.  This is the ultimate Wanamaker solution.  No waste, just verified meaningful impressions against a particular target group.

There are a few companies that have sprouted up in the past year or so that are designed to provide an automated solution for validating campaigns.  They make sure that if we are looking to reach a US audience only, that is what we get.  If we are paying for a 100% share of voice in a section, we are getting it.  And, they are ensuring that our Brands are not appearing in content that is unsavory or unsuitable.  It would make Wanamaker proud.  Three companies dominate this space: Double Verify (which we are working closely with), The Media Trust and Ad Safe Media.

Finally we have tools that are arming us with the intelligence to hold partners accountable for explicitly delivering our target audience.  Cookie and third party database solutions from Comscore, Nielsen, Quantcast, and Datran media to name a few, are invaluable in allowing us to conduct commerce on a demographic basis.   No longer will we buy total impressions.  Video inventory online will be transacted much the same way that traditional video (i.e. television commercials) is transacted.  Most importantly, there will be no waste.

We are still in the early days of having high quality third party demographic data that can be projected against the total web population, but we are rapidly getting there.

Take that Wanamaker.

Strike three.  You’re out.

I think back to the time when Time Warner launched their Full Service Network in Orlando, FL.  It was back in 1994 when the Full Service Network was described as “the first in the world to integrate emerging cable, computer, and telephone technologies over a fiber-optic and coaxial cable network.” The service offered traditional cable, interactive television, telephone services, and high-speed PC access to on-line services.  It offered movies on demand, home shopping, and video games to 3,000 to 4,000 homes.  There was a hint of addressable advertising in the offering, but it never got traction, and the service was shuttered in 1997.

Twelve years later, we have made a tremendous amount of progress in some areas, and frustratingly little in others.

Technologies in the 2-foot (PC) world have advanced significantly.  Advanced targeting capabilities are plentiful with behavioral targeting options from companies like Tacoda, Audience Science, Bluekai, Exelate or proprietary solutions like Cadreon.  Quantcast is another company that is squarely moving into the “addressability” space.    They have recently launched the Quantcast Media Program which allows marketers to create a behavioral segment and execute that segment across multiple properties.  We are testing this proposition with a few clients, so be sure to check back and see if the reality lives up to the promise.

In the 10-foot world (TV), progress has not been nearly as substantive.  Companies like Visible World, Navic, Invidi and Spot Runner are all flirting with the idea of delivering customized messages to increasingly discrete populations.  The most tangible evidence that addressability is real is an effort that Visible World has been conducting with Cablevision in the NY DMA (Bronx and Brooklyn specifically) to conduct a true addressability trial by household.  We have had one client engaged in the trial and it has delivered what was promised – the challenge now is to scale the offering to a far larger geography.

Addressability forces us to think about messaging in a radically new way and will undoubtedly have as much effect on communications planning as it does on creative development.  The skill of developing creative efficiently that resonates with discrete segments is something that we don’t do that well as an industry.  It is an area that will be developing tools/processes and systems in earnest over the next 12-24 months.

Needless to say, the true magic will happen when we are able to connect the dots across all touchpoints and deliver a series of customized messages to individual consumers.  Whether online or on television, using a mobile device or playing on a gaming console – we will be able to deliver a highly coordinated and relevant message.  That road promises to be a windy one, but well within our reach and an awfully exciting proposition for us as marketers.

–David Cohen, evp, us director of digital communications