Response 24 - social
Response Issue 24 - International marcomms insights from Ebiquity
International marcomms insights from Ebiquity
Issue 24 - Q3 2016
Media transparency: how should we move forward?
The steps advertisers are taking to move forward with agency partners
Earlier this month, a study published by the U.S. Association of National Advertisers (ANA) found that rebates and other non-transparent practices may be pervasive in the U.S. media advertising buying ecosystem. Michael Karg, Group CEO of Ebiquity, reflects on these findings and on the first steps advertisers are taking as they look to move forward with their media agency partners.
In June 2016, the ANA published a study conducted by K2 Intelligence titled An Independent Study of Media Transparency in the U.S. Advertising Industry. The K2 Study found compelling evidence of non-transparent, incentive-led media trading practices in U.S. media agencies which may be pervasive across the industry, including the big media agency networks.
These practices include cash rebates, rebates in the form of free media inventory credits, and rebates structured as so-called service agreements. They also include media sold to advertisers by media agencies acting in a principal capacity where material aspects of the transaction were not disclosed to the advertiser.
The K2 Study revealed a disconnect between how many U.S. advertisers see their relationship with media agencies and how many media agencies see their relationship with their clients. Many advertisers assume their media agencies act as agents and therefore effectively as their fiduciaries. The K2 Study describes many situations where this is not the case; where media agencies in fact act as principals and sell media to advertisers, and not as agents buying media on advertisers’ behalf.
What’s more, the K2 Study showed many media agencies may often see their relationship with advertisers as being essentially determined by contracts. Contracts have not, generally speaking, kept pace with the dynamic and rapidly changing nature of the increasingly digital media ecosystem. The K2 Study also identified that the contracts many advertisers have in place with their media agencies are inadequately enforced by advertisers. Some aren’t enforced at all, while others yet remain unsigned and may therefore be unenforceable.
The K2 Study suggested the factors believed by those working in the industry to have contributed most directly to these non-transparent business practices in the U.S. media industry include client pricing pressure, the increasing complexity of the media-buying landscape, and media agencies’ contractual limitation on audit rights.
To support the K2 Study, the ANA asked Ebiquity and FirmDecisions to develop guidelines and recommendations for advertisers. The full report, containing a list of detailed recommendations advertisers should consider for the short term and long term, will be released by the ANA in the coming weeks.
In the near term, that ANA has recommended that marketers should take the following steps:
• Re-examine all existing media agency contracts and review terms and conditions
• Implement media management training, particularly in the areas of contract development and management of the digital media supply chain
• Confirm the basis on which media agencies transact media on their behalf. Advertisers should be clear and comfortable with the agency's role as agent and principal
• Assess whether contract terms permit advertisers to "follow the money" by having full accountability for every dollar that is invested through a media agency
"The K2 Study revealed a disconnect between how many U.S. advertisers see their relationship with media agencies and how many media agencies see their relationship with their clients"
Advertisers’ initial reactions
Since the K2 Study was published, we have spoken to a significant number of our advertiser clients keen to know how they should move forward in response to the findings. They have reacted in three ways. Bill Bruno, Ebiquity CEO for North America, explains.
First we have the Concerned. These are typically advertisers who have conducted financial compliance audits historically and are keen to ensure that they are continuing to evolve in a way that will protect their interests moving forward. They have read the K2 Study and are looking to take action to ensure that, if their relationships with their media agencies are not compliant with contracts or they are inequitable, changes are made – and fast. They recognize that not all issues will apply to all advertisers or contracts equally, and they are keen to be in the vanguard of improving agency/advertiser relationships.
Next come the Ready-for-Action. They recognize the practices identified by the K2 Study and are keen to address the nature of their relationships with their agencies or put them under increased scrutiny and analysis. The response from the media agencies (see below) has made these advertisers more inclined to take action than they had been before. Typically, these advertisers have not conducted financial compliance audits historically.
And finally, we have the Wait-and-See. They realize and appreciate there may be an issue, but they are yet to decide what to do next. This group of advertisers have not spent time reviewing their media agency relationships in past years, nor have they placed a high priority on internal governance historically. Advertisers in this category looking to take action will have the longest journey to travel in order to secure the transparency some of them are now looking for.
Some advertisers, of course, will decide that the level of transparency they currently have is acceptable. However, all of those we have spoken to since publication have said that the K2 Study and its findings are relevant or important to them. All of them realize that they need to take positive steps to foster different kinds of relationships with their media agencies. And some have already reflected that their actions and oversight of their media agencies has, in part, contributed to the status quo characterized in the K2 Study. Many are therefore also keen to develop stronger relationships – partnerships indeed – with their media agencies moving forward.
Quoted in AdAge as the K2 Study was published, the world’s two leading FMCG advertisers, Unilever and Procter & Gamble, made the following comments.
"Trust and transparency are critical to any relationship, so we take the ANA's findings very seriously," Luis Di Como, senior VP-global media, Unilever, said in a statement. "We support its work to ensure that as the media industry evolves these values remain a top priority. At Unilever, we are actively engaged with our agencies and the industry at large to exert greater control and responsibility around media transparency. We go to great lengths to make certain that our proprietary procedures and policies maximize our investments and fulfill contracts, in both the letter and spirit. We're confident the right steps will be taken to strengthen our industry."
Procter & Gamble said it appreciated the ANA's diligence in studying media transparency practices, "particularly as technology is bringing a significant transformation in the industry".
"As a result of the study, it's important that advertisers and agencies work together appropriately to deal with the changing media ecosystem," a P&G spokeswoman said in a statement. "We appreciate the ANA's diligence to study media transparency practices. At P&G, we want and expect strong agency partnerships based on mutual trust, transparency, and teamwork. We have a 'trust but verify' approach that includes having clear and thorough stipulations in our contracts, regular audits on performance, and third party verification that ensures transparency. If we find irregularities, we will take remedial action."
Media agencies’ initial reactions
Since the report was published, several of the major agency holding groups have openly challenged the validity of the findings of the K2 Study and rejected its claims in relation to their business. Dentsu Aegis said: “Today’s ANA report is an insubstantive report with subjective methodologies and anonymous input.” WPP CEO Sir Martin Sorrell commented: "It is no way independent. It is one-sided. It does not include any input from any of the six major holding companies.”
Meantime, Publicis CEO Maurice Levy labeled the K2 Study as “an unwarranted attack on the entire industry”, while Interpublic said that “the picture the report describes is not consistent with our actual business practices”.
The U.S. media agency industry association the 4As argued: “A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry-wide approach … the K2 report … anonymous, inconclusive, and one-sided – undercut the integrity of its findings.”
Responding to agency criticism, Tony Pace, the ANA’s Chairman wrote an open-letter to members saying: “K2's report is an excellent piece of business fact-finding that is beyond reproach. The first step in solving a problem is identifying that one exists. When the agency community concludes that there are issues involving non-transparent business practices, and that a fundamental disconnect exists in the advertiser/agency relationship, the ANA and the Board of Directors would be pleased to collaborate with them to develop specific, well-defined solutions.”
The full transcript of the K2 Study titled An Independent Study of Media Transparency in the U.S. Advertising Industry can be downloaded from the ANA’s website, here.
MICHAEL KARG, Ebiquity CEO
Michael Karg became Ebiquity’s Group CEO on January 1st, 2016. He was previously CEO International for Razorfish, the digital business transformation agency of Publicis Groupe, and held senior international leadership positions with both Razorfish and Digitas over a 15-year career. A native of Austria, he has been based in Boston, Paris, and London and was responsible for Razorfish’s and Digitas’ growth and strategic development in Europe (UK, Germany, France, Italy, and Spain), India, China, South East Asia, Australia, and Brazil. He advised clients globally across industries on marketing and digital strategies, worked closely with technology partners, and led the integration of acquired businesses. Michael holds a degree in Finance and Accounting and a doctorate in Management from the University in St. Gallen, Switzerland, and was a visiting Fellow at Harvard University from 1999 to 2000. He is a member of the Board and Chair of the Compensation Committee of Travelzoo Inc. (NASDAQ: TZOO).
Why ad blocking matters
Here today, here tomorrow
Ebiquity UK’s Head of Digital, Tim Hussain, shows why advertisers need to pay just as much attention to ad blocking as publishers and media agencies.
Ad blocking is growing in usage as consumers install apps on smartphones and tablets and plug-ins to browsers. A quarter of web users have installed ad blocking software, a figure which is expected to continue growing. With such significant changes in consumer behavior, the infographic in this story from Joanna Chan and Daniel Martin in our Digital team is timely.
But why should advertisers worry about ad blocking? On one level, it doesn’t affect them. If ad blockers prevent ads from being served, advertisers don’t pay for those failed impressions, so they don’t lose out by paying for impressions that don’t make it through. But we believe there are wider industry consequences for advertisers which could be caused by ad blocking.
First, the technology doesn’t block all ads equally. Big, multinational digital companies are less affected. As the Financial Times and UK Business Insider have reported, companies like Google pay to have ads unblocked. And the way ads are served in the walled gardens of Facebook, Twitter, Amazon, and elsewhere means ad blockers are ineffective on these platforms. As a result, they increase their influence disproportionately over smaller publishers of premium content who can’t pay or build their way out of the issue.
This is because – and here’s the second reason advertisers should be concerned – the publishers that are impacted by ad blocking are medium-sized independents that make digital such a powerful, targeted environment for advertisers. Think Bounty, reaching pregnant women and new mums; netmums serving mothers; or gaming and extreme sports websites targeting millennial men. These kinds of sites provide quality, engaging, relevant editorial – and advertising – to clearly defined, tailored audiences.
Publishing is a value exchange. Consumers engage in compelling content. As a quid pro quo, they see advertising whose fees help publishers pay journalists and vloggers to create the editorial. Outside of state (BBC) or subscription (Netflix) broadcasters, this value exchange has existed for decades. Unfortunately, many consumers aren’t aware of it and awareness-raising is needed here, while ad blocking companies continue to benefit from the situation. It’s why John Whittingdale, UK Culture Secretary, described the payment to ad blocking companies for unblocking of a site’s ads as a “modern-day protection racket.”
INFOGRAPHIC - AD BLOCKING PROBLEMS AND SOLUTIONS
View the infographic in a new browser window by clicking here.
If the ad blocking trend continues, the value exchange becomes lopsided. Publishers generating 30 percent less revenue from advertising because of ad blockers might sack half their journalists, making content less compelling, fresh, and relevant – and also less appealing and diverse for advertisers. Many publishers may close. And that’s lose-lose-lose.
Consumers block ads because they find them intrusive and unappealing, and the publishing industry should do more here. Advertisers also have a responsibility to work with creatives to develop thoughtful, engaging, relevant ads that consumers don’t choose to block.
They must also work with media agencies to ensure the right ads are delivered in the right formats and with the right frequency, so that they’re neither overexposed nor shown in the wrong environment. And that’s why clients need to ensure their media agencies provide full transparency about where and how their ads are placed.
To what extent do you believe ad blocking will harm the digital advertising market? (Not at all, somewhat, significantly)
- Not at all
TIM HUSSAIN, Head of Digital, UK
Tim Hussain in Head of Digital, UK. Tim was previously Director of Digital Strategy at Collective, a leading programmatic multiscreen advertising company. In his 15-year career in digital media, he has held roles in business and product development at Sky and AOL while lending his expertise to the trade bodies Thinkbox and IAB.
Tim joined Ebiquity’s Media Value Measurement practice in 2016. The division specializes in providing brands with tools and consultancy services to improve media performance while ensuring transparency. Tim is helping to develop the digital measurement tools and techniques necessary to address the challenges facing advertisers today.
JOANNA CHAN, Digital Team
Joanna is a Digital Account Manager at Ebiquity. Jo has been with Ebiquity since February 2016. Jo's background is within digital media planning and buying - starting at MEC UK as a media executive and most recently at Goodstuff an independent UK media agency, working across a variety of sectors.
DANIEL MARTIN, Digital Team
Daniel is a Senior Executive within the UK Digital Team. He has been here for 2+ years focusing on helping Ebiquity clients drive greater value from their Digital media activity. Daniel comes from an Analytical background, previously working in MECs global Analytical and Insights team.
Media best practice for FMCG brands
Building and sustaining brands
Head of Ebiquity’s International Effectiveness Group, Mike Campbell, highlights the enduring role of TV advertising in building and sustaining FMCG brands.
Media agency advice to shift investment from TV to digital and social media in order to reach today’s audiences – particularly younger, so called millennial consumers – is putting the long term health and media performance of many FMCG brands at risk. Econometric evidence suggests that, while digital and social can be important components of media plans – particularly those targeting younger consumers – to use these channels as the main route to promote FMCG products threatens to undo years of brand building and brand equity development. TV is much more effective, and it also continues to attract older, often economically powerful demographics, too.
TV builds brands
Traditionally, FMCG brands have built and sustained their success using TV led strategies. But FMCG clients spending time with media agencies in recent years could be forgiven for thinking the rules of brand building have changed fundamentally, particularly since the advent of digital and social media channels. Many media agencies routinely recommend that brands switch out of TV and into digital, often with suspiciously round and large percentages of their budgets moving across. And for those managing brands whose target audience includes the apparently elusive millennial audience, the call to replace increasing swathes of TV with digital is even louder.
Chasing the millennial dollar, Euro, and pound
The argument put forward by media agencies is that millennials’ consumption of TV – particularly linear TV, watched at time of broadcast – is shrinking to the extent that it’s hardly worth brands using TV at all to address this audience. They’re spending all their time online, so the agencies say, and budgets should follow – and to some extent anticipate – consumer behavior in and around media. And while it is true that half of 16-24s total daily viewing time of 4h14m is not live TV and includes streamed content such as YouTube, nearly three quarters of their viewing IS TV, either live (50 percent), recorded on PVR (16 percent), or on demand (7 percent).
So younger consumers are still watching TV, including live TV. Media agencies’ motivations for hastening the rush into digital are at least twofold. First, they don’t want their clients to be miss out on the opportunity to interact with younger consumers in the media they use. They want their clients – and their media buys – to be modern and up with the times and technology. Second, they can and do obtain significantly higher commission and margins on digital media, where the transaction chains are more opaque and unregulated than traditional channels such as TV.
What drives brand performance on TV
At Ebiquity, our econometric benchmarks show that brands that outperform the market are those that use creative executions on TV that help to reinforce memory structures.
Brands like KitKat with continuity of slogan on TV – “Have a break, have a KitKat”. Time and again, campaigns for KitKat that use the slogan outperform those that don’t.
Brands like Frito-Lays’ Walkers with continuity of celebrity endorsement on TV – Gary Lineker. This example shows how well masterbranding can work across a family of sub-brands. Instant recognition drives sales on sub-brands – new flavors or variants – and the house style ensures that the effect will be seen across associated brands. The ROI of the launch of Walkers’ Sensations was far from break-even on the new product line. The vast majority of the sales impact was on the masterbrand.
Brands like Elvive, with long term continuity of look and feel and formula.
And brands like Intel with continuity of sonic elements.
High recognition – driven by continuity of slogans, celebrities, look and feel, and sonic elements – in pre-test advertising scores links subsequently to higher ROI. Continuity of style links to strong TV performance. But where creative is incoherent or incompatible with established creative devices, the ROI can be ten times lower than highly effective creative on leading brands.
The temptation, when taking an established FMCG brand in a new direction on a new channel and with a new campaign, is to reinvent the wheel, to develop a creative route which either puts forward new brand assets for digital only, or adapts them to such an extent that they’re neither recognizable nor visible to the target market. Our recent experience has shown us that, if you use established brand assets and/or house ad styling on digital and social platforms, they work harder for brands.
"The shift from TV to digital to reach millennials is putting the long term health of FMCG brands at risk"
TV brings certainty to a world of flux
The media environment is currently so volatile that many advertisers find it difficult to know whom to believe about where they should invest hard fought media budgets. Because digital and social channels are new, because younger, millennial consumers use them more than older consumers, and because they’re consuming less linear TV live, many media agencies are recommending advertisers shift out of TV and into digital.
All the evidence we have seen suggests that the rate of change in recent years has been far too quick. Those FMCG brands that have switched too much money too fast are failing to address their total available audience and are experiencing leaky bucket syndrome, with customers falling away quicker than they can be replaced. They acted first rather than opting to test and learn.
We’re not advocating brands don’t invest in digital and social. But we are suggesting that advertisers use the tools and techniques of econometrics to build the best media plans which deliver optimal ROI. Putting all – or too many – of your eggs in the digital basket too quickly, coupled with abandoning TV too fast, erodes what all of your consumers know and think about your brands. And it will make them vulnerable to the appeals made by competitive brands who have taken a more considered, evidence based approach to their media planning.
Mike Campbell has written a comprehensive Viewpoint paper on this topic, including case studies from diverse FMCG products. The paper is available to download - click here.
How do you think your media spend will be split in five years’ time?
- No change
- An even greater shift from traditional to digital
- A move back to traditional from digital
- I can’t say
- The traditional vs digital split will be meaningless
Mike Campbell, Head of International Effectiveness
Mike leads Ebiquity’s International Effectiveness Group, which undertakes multi territory modelling, testing and consultancy to help brands optimize their ROI across markets. Prior to joining, Mike spent 12 years at Ninah Consulting as Managing Director of its London office and Global Head of its FMCG Centre of Excellence, working with companies such as Nestlé, Diageo and General Mills.
Prior to Ninah, Mike commercially headed up IRI’s modelling practice in Europe.
Digital continues to drive innovation in Australian ad market
A deep dive into 2015
Ebiquity Australia has just published its third annual review of the Australian advertising market. Director of Client Services, Aaron Rigby, highlights its dominant themes.
2015 was another year of major change and transformation in the media and marketing world in Australia. It was, again, the year of digital – both in advertising and media.
We saw the introduction of ad blocking as an effective way for consumers to filter out ‘noise,’ the rise of Subscription Video On Demand (SVOD) with the arrival of Netflix, and we experienced a turbulent year as questions around transparency and accountability became more important than ever – a topic that resonates into 2016 and beyond.
Advertisers continued to invest heavily into digital advertising, bringing with that more and more questions around the real ROI of their investment.
Our new ‘2015 Year in Review’ timeline visualization highlights these topics and more, including the lead campaigns each month across the main media.
Looking at the advertising, the switch from long-term brand-led activity to short-term retail activity continued in 2015 and is again reflected by the lead sector which, for the third year in a row, is the Automotive (dealer) category. Automotive led overall category spend with a year-on-year increase of 9 percent. Toyota, again, invested most, with its budget accounting for just over 14 percent of total category spend. The company’s 2015 ‘Plate Clearance’ campaign had the highest share across all Toyota campaigns.
INFOGRAPHIC - A YEAR IN ADVERTISING
View the infographic in a new browser window by clicking here.
At an advertiser level, Reckitt Benckiser led total spend, increasing its 2014 reported spend by 14 percent; remaining at the top of its long list of brands was Dettol, representing the largest share of that activity. Second on the list was Woolworths, edging ahead of News Limited. They were followed by Harvey Norman, Toyota, and then Coles.
When looking at TV specifically, Reckitt Benckiser had the highest spend on TV, although that did represent a 5 percent drop compared with the company’s 2014 TV spend. In newspapers, Toyota had the highest share of voice, with Reckitt Benckiser leading magazines, Coles leading radio, and ANZ Bank recording the largest share for online banners.
From a campaign perspective, the ‘It Matters’ campaign from Allianz [IMAGE] had the largest spend across all campaigns, edging out two McDonald’s campaigns: the first ‘More bank for your buck’ and the second ‘Create your taste.’
In the special reports section of the 2015 report, we reveal which categories have grown and shrunk in media spend against the previous year, and we found a few surprises. 2015 saw the fragrances category surge in spend with a 161 percent increase year on year, while the telecommunications hardware category increased by 49 percent after a big, innovative year for the wearable and mobile technology sector.
We have also investigated the impact and future of ad blocking in the Australian market and what it might mean for advertisers (see the article from Tim Hussain in this issue). A report also covers how to create successful video content and features an introduction to econometric modeling and why it’s important for brands in 2016.
To request a copy of Ebiquity Australia’s 2015 Advertisers’ Report, please click here.
AARON RIGBY, Director of Client Services - Advertising, Australia
Aaron Rigby is Director of Client Services – Advertising – at Ebiquity Australia. Prior to joining the Sydney office in 2010, Aaron was a senior member of the Insight team at Ebiquity’s head office in London where he managed clients from the Automobile, Mobile, Technology, Banking, and Gaming sectors. Before his stint overseas, he worked as a Planner at Ogilvy Sydney. The building blocks of campaign creation are where Aaron’s passion exists. He believes understanding, dissecting, and adding value to clients’ competitive intelligence is undervalued and scrutinized in the Australian market and, through the new Insight service, plans to reinvent that.
Better agency relationships
Succeeding in the new polymedia environment
In April 2016, Ebiquity France’s Nathalie Taboch and Laurence Delaye addressed a seminar on media efficiency run by the French Institute for Research and Study of Advertising (L’Institut de Recherches et d’Études Publicitaires, IREP). The talk was designed to illustrate how to build effective advertiser/agency relationships in a changing media environment.
Advertiser/agency relationships demand simplicity and clarity in all aspects and for both parties. But today’s multimedia, multichannel media environment is increasingly complicated: a situation driven in part by growing complexity in advertisers’ organizational structures. This means that, both internally and when interacting with their agencies, there are barriers to be overcome if relationships are to be harmonious. Here are four.
DEFINITION: Polytechnical – poly + technical: ‘many skilled; possessing many skills’
1. Advertisers’ organizations have become Polytechnical
The ever-changing digital landscape, and the need to innovate to keep pace with peers, is driving advertisers to develop in a wide range of different skills and techniques. New expertise client side is not always matched agency side, and this is disrupting relationships like never before.
DEFINITION: Polygamous – poly + gamous: ‘having more than one mate; with many partners’
2. Advertisers are becoming Polygamous
Before the digital revolution, a media agency was typically an advertiser’s principal agency of record (AOR). Leaving behind the simplicity of a single global partner, advertisers are increasingly fragmenting agency rosters. Many do not hesitate to engage specialists in particular channels or platforms to secure more control or transparency. Multiple relationships are harder for an advertiser to control than a single partnership with an AOR.
"While advertisers share relationships with multiple partners, big agency groups are consolidating"
DEFINITION: Polydirectional – poly + directional: ‘facing in many directions at the same time’
3. Advertisers become Polydirectional, agencies consolidate
Paradoxically, while advertisers share their relationships with multiple partners, the big agency groups are integrating and consolidating service offerings to serve their clients’ needs. This is further motivated by big agencies’ desire to expand internationally. Agency consolidation helps to integrate diverse skillsets into complex networks – from data analytics to data management platforms (DMPs), from consulting to content creation and curation. While advertisers diversify, agencies consolidate, and these opposing trends are creating disharmony between advertisers and their agencies. It’s what we call ‘the Polydirectional Paradox.’
DEFINITION: Polycephalous – poly + cephalous: ‘having many heads or brains; capable of thinking in many different ways at the same time’
4. Internally, advertisers must become Polycephalous
Because of the increased complexity of client organizations – organizations that have become Polytechnical, holding Polygamous relationships with multiple agency partners – and the accelerating consolidation of the big agency groups, decision making within organizations has become necessarily more complex and conflicted. So the principal challenge is how divergent ways of thinking can accommodate shared advertiser/agency objectives when targets are not aligned.
Here we outline our recommendations for addressing the challenges of the emerging media ecosystem in three critical areas: procurement, silos, and global/local execution.
Marketing procurement teams are growing in frequency and importance in advertiser organizations, although the objectives of marketing and procurement are not necessarily aligned.
Procurement’s watchwords of enhanced productivity, agency remuneration, and transparency are not always marketing’s first priorities. Marketing frequently focuses on brand strategy, impact, and visibility. Experience suggests five golden rules that can reconcile this apparent incompatibility.
1. Business and media objectives should be shared, discussed, and agreed.
2. Marketing and procurement must both commit to upskilling and enhancing their digital understanding.
3. Project management and a clear demarcation of responsibilities should be enshrined using Responsibility Assignment Matrices. Everyone needs to know who’s doing what.
4. Mutually acceptable monitoring tools and methodological rules must be put in place to avoid loss of control and misunderstanding.
5. Advertiser/agency contracts need to accommodate the latest trends and developments in media – particularly digital – and set clear objectives, scopes of work, remuneration, and incentives.
Marketing and procurement come from different worlds and frequently exhibit misunderstandings and incompatibilities. They have different – sometimes conflicting – business objectives and separate expertise. They often fail to communicate and there is little pressure from management for the departments to work together.
We suggest not that silos must be broken, but that we need to connect departments and foster a culture of collaboration. Respective expertise is valuable and needs to be both consolidated and valued by both sides. What’s more, by integrating the departments which have shared responsibility for marketing’s success, we stand a better chance of delivering better business results.
Siloed departments must communicate and be able to understand one another, but to do this they must share common business objectives in addition to their specific objectives. This is our prescription for integrating silos:
1. The CEO should set and drive governance rules.
2. Operationally, it is necessary to establish a function which brings together diverse yet complementary data sets to enable relevant inputs from both sides and seamless decision making based on rounded, blended analytics.
3. For advertiser/agency relationships to work, client organizations must take control of each relationship and to define – clearly – the parameters and scope of each agency. What’s more, agencies should share intelligence and data.
C. Global and local
This internal global vs local battle in advertiser organizations is often not mirrored agency side, and this impacts ways of working negatively. As a result, all parties work less effectively in partnerships. Also, different advertisers operate different organizational models – driven centrally, locally, or even glo-cally – and this creates confusion as agencies attempt to second-guess client structure.
To reduce friction here, our golden rules are:
1. Global agency partnerships mustn’t ignore the fact that implementation and execution are often delivered locally.
2. Clear monitoring and reporting processes must be set up in the same way as best practice in brand strategy is shared across advertisers’ organizations.
3. The scope and roles of global and local must be clearly defined in advertiser/agency contracts.
4. The right roles and responsibilities must be allocated at central and local team levels.
Advertisers and agencies are moving in different structural and organizational directions – advertisers more diverse, agencies increasingly consolidated. The motivations for advertisers are to take the opportunities the new, ever-more digital media ecosystem offers and to drive efficiency and effectiveness; the motivations for agencies are to address and meet perceived clients’ desires and needs. For advertiser/agency relationships to flourish, both sides need to understand these changes and the reasons for them. Our golden rules offer both sides the chance to flourish and grow.
What single change do you believe would make relationships between advertisers and their agencies more harmonious?
- Better communication
- Clearer contracts
- Removing silos in client organizations
NATHALIE TABOCH Managing Director of Ebiquity France
Nathalie Taboch is Managing Director of Ebiquity France. She started her career in the 1990s at Henkel, as Marketing Director – Laundry Care, before creating and driving their media and CRM direction. Leveraging on these 15 years of expertise, Nathalie then joined Starcom as Managing Director, on customers like P&G, Samsung, Honda, Cadbury, and Blackberry. In 2010, she accompanied her husband to Morocco for professional reasons and started her own consulting company there.
Back to France in 2012, Nathalie joined Carat as deputy MD with a focus on the agency transformation; as well as building the basis for the team’s evolution, she led key clients (Beiersdorf, BPI, Nokia, Lego) in integrated approaches with the different agencies of the Group. She joined Ebiquity in 2014.
From tiny acorns…
Client case study: Calidad Pascual
Ebiquity Spain’s Director of Marketing Performance Optimization, Javier Illana, shows why it pays dividends to start client relationships in a considered fashion.
Conventional wisdom says the best clients are those with the biggest budgets. With clients who offer an RFP worth hundreds of thousands of euros, you win big, and you’re well remunerated from day one. That’s the theory.
Experience suggests conventional wisdom is wrong. Business that is big ticket from the get-go heads in one direction only – and that’s down, salami-sliced by procurement and mistrusted by the CMO because it feels like an out-of-control investment that needs reining in.
Our direct experience of working with family-owned, family-run businesses – where small-scale projects demonstrate value – shows that an incremental approach can generate equally big but much more sustainable client relationships. Trust is built gradually, and we demonstrate value piecemeal across more brands and categories than if we asked for everything at once. By showing initial restraint, we’re more likely to be rewarded better in the future. We know it’s true in personal relationships, and it’s true of business too.
A case in point is Calidad Pascual, the family-owned dairy foods and drinks business, founded in Madrid in 1969, and today in more than 60 markets.
We started our partnership with them in 2011. At that time, their marketing performance optimization (MPO) consultants provided more heat than light. They didn’t understand the dynamics of the business, their recommendations weren’t transferable from one brand or category to another, and the client team found the approach hard to understand. As a result, recommendations were unused in marketing decision making.
"Big ticket business can often head one-way – salami-sliced by procurement, mistrusted by CMO"
With the client team uncertain and bruised from this unsatisfactory relationship, we took it gently and slowly. We suggested the Marketing team should run a pilot with us for just one brand, helping them understand the impact of marketing activities on sales. This first project helped both Calidad Pascual and the Ebiquity Spain team understand the dynamics of the brand and the category.
Calidad Pascual asked us to model this first brand for a further six months, to measure the impact of the decisions taken in real time and over an extended period. After that, we extended modeling to all portfolio brands.
This project had a significant impact in five areas.
1. We identified different roles for different types of products in the portfolio. First, we optimized the price competitiveness of Calidad Pascual’s mainstream stock-keeping units (SKUs). Then we determined the right price points for innovative new products, enabling us to grow the market with more accurate volume forecasting. And finally we found the right role for niche SKUs, to increase category penetration with new customers.
2. We optimized media messages across the portfolio. By determining which combinations of messaging, media, and channels were right for individual SKUs, we delivered significantly enhanced return on investment. And we determined the predominant role of TV in the media mix.
3. We found the right balance between pricing and promotional strategy for both mainstream SKUs and for product innovations.
4. We were able to focus on wider product benefits in advertising messaging, helping to extend the reach of existing products into new markets.
5. And we ran simulations around product launches, calculating the incremental sales new products would bring. These simulations accurately forecasted sales.
Every month since 2012, we have monitored, measured, benchmarked, and advised on the impact of marketing by both Calidad Pascual and its competitors. By continually updating the analytics deployed, by driving up the knowledge and capabilities of the client Marketing team, and by taking a fundamentally business-oriented approach, time and again we’ve found significant opportunities to optimize marketing investments.
"[Ideal analytics scenario]: 3 weeks each month developing plans, taking decisions, and making a difference"
Before we introduced our approach across the Calidad Pascual portfolio, Marketing was overloaded with information, found it difficult to draw definitive conclusions, and couldn’t make decisions in real time. Once our program was in place, we enabled Marketing to spend just one week each month analyzing data and three weeks developing plans, taking decisions, and making demonstrable differences.
…helping the Executive team optimize budget allocation and so maximize sales, increasing profit margin by 5 percent.
…identifying early warnings of unexpected decreases in base sales due to changes in product formulation, enabling rapid response.
…tracking the impact of campaigns with exceptional ROI, enabling brand teams to bid for increased investment.
…helping the Media team choose the best new agency based on projected ROI of their media plan.
…calculating that changing product units from 6 to 4 packs would boost sales by 16 percent.
What’s more, by gradually spreading MPO at SKU, brand, and portfolio levels, in 2013 we expanded our remit to cover trade promotions optimization for Sales and Trade, reducing promotional investments while maintaining incremental sales. From 2015, we built an integrated system for Marketing and Trade to change pricing and promotions dynamically and so increase sales by nearly 20 percent across different brands. And we have developed a formal forecasting and simulation tool to enable Marketing to have a better understanding of performance at any point in the year and where – if anywhere – there is a significant gap between performance and results.
…mighty oak trees grow
Maria Rayo, Market Intelligence Expert at Calidad Pascual, commented: “Before Ebiquity started to work with us, we found it difficult and incredibly time-consuming to analyze all the relevant information that surrounds our business. But they’ve helped to change how Marketing, Sales, and Trade use data to optimize marketing and promotional performance – to empower them all to make better decisions. Crucially, they have done this gradually, brand by brand, category by category, discipline by discipline.
“If they’d rushed into the company and said, ‘We can do all of this for all your departments all at once!’ we would have politely shown them the door. Promising the best relationship ever from a standing start is literally incredible. But by gradually demonstrating value, they have built an incredibly fruitful and mutually beneficial relationship based on trust and respect.”
As we keep saying, like in life and love. And it’s how individuals grow to become a family.
JAVIER ILLANA, Director of Marketing Performance Optimization at Ebiquity Spain.
Javier Illana is Director of Marketing Performance Optimization at Ebiquity Spain. Javier has 19 years’ ROI experience working on investment optimization projects both online and offline. He started his career at ACNielsen as a statistician, followed by IRI as Analytic Insights Director working on many CPG and Retail optimization projects.
He then moved to Accenture as AMS Manager, spreading his experience to other sectors such as Automotive, Telcomms, and Banking. He joined Ebiquity in 2008, managing the ROI team for Spain & Portugal. Javier has deep experience and skills to adapt the ROI process to each organization, with a main focus on results and business decision making, and a good balance between technical details and business language. He develops Ebiquity’s proprietary modeling system, specially focused on most of its clients, for Spain & Portugal.
Media contracts in the digital age
The steps advertisers need to take to ensure media agency contracts deliver in the digital age
FirmDecisions’ Managing Director, Digital, Federica Aperio, outlines the steps advertisers should take to ensure their contracts with media agencies deliver for the digital age.
Over the last five years, digital advertising has become increasingly complex. The introduction of programmatic trading has complicated the market further, meaning the deals available today are more varied than ever. And the growth in technology platforms has changed the supply chain out of all recognition.
During this period, media agencies have developed their digital service offerings – blurring the line between buyer and seller – and so have created a complex matrix of relationships between media, data, and technology suppliers. At the same time, agencies have largely failed to educate clients about these changes and their implications.
So, as the digital ecosystem has developed, advertisers have increasingly handed over responsibility to agencies to manage this complexity. In today’s environment, this has now made advertisers feel their investment is at risk from opportunistic approaches and techniques that reduce the proportion of their digital investment being spent on ‘working media’ and go straight into agency revenue streams.
However, it is believed that these practices may be pervasive elsewhere in the world, and particularly in digital. Even if advertisers in Europe knew these issues were happening in their local markets, they perhaps haven’t fully understood the extent of the situation across the globe.
"Contracts need to balance opportunities and risks and maximize transparency in digital trading"
As a result, today’s procurement and legal teams often have a low-level of understanding of the intricacies and complexity of the digital market. Therefore contracts, Master Service Agreements (MSAs) and Statements Of Work (SOWs) are often not written in an advertiser’s favor, leaving room for misinterpretation and misunderstanding over which services the agency should provide and what monies they should bill and pass back to advertisers.
In fact, recent research from FirmDecisions suggests that 27 percent of all active advertiser/agency contracts include terms that prevent advertisers from obtaining full access to digital data for the purposes of auditing contract compliance.
We believe that advertisers need to take three critical steps to reduce their risk and give them more transparency over digital investment.
The right steps...
1. Procurement and legal need to brush up on their understanding of the changes in digital trading so that contract negotiations can take place on more equal terms. This learning should come from an independent source, so that stakeholders get an unbiased view of the risks and benefits associated with the digital media trading ecosystem.
2. Advertisers (not agencies) should tender the first draft of the advertiser/agency contract. They should make sure all their needs are spelled out explicitly in this first draft, using it as a starting point for discussions. They should be clear about what is and what isn’t negotiable.
3. Contracts need to adapt in lock-step with changes in digital investment. Contracts should be reviewed at least annually, accommodating changing agency practices to ensure they’re up-to-date and reflect prevailing best practice.
Advertisers have a responsibility to keep informed of changing market dynamics, and contracts need to balance opportunities and risks and so maximise transparency in digital trading.
FEDERICA APERIO, FirmDecisions’ Managing Director, Digital
Federica Aperio is Managing Director – Digital at FirmDecisions. She joined FirmDecisions from sister company Ebiquity where she held positions as Head of Digital – International and Head of Digital – North America, over a period of 5½ years.
She started her digital media career in 2000 working at EHS Brann, and then moved to digital specialist agencies iLevel and Agency Republic before spending a number of years in the ad network business. Federica was the Head of International Supply for Advertising.com and subsequently became Managing Director of Fox Networks in the UK, growing the business from start-up to integration into the broader Fox International Channels business.
Making mobile advertising better
A prescription for more impactful and useful mobile advertising
Olly Worley, Senior Digital Executive at Ebiquity, gives his prescription for more impactful and more useful mobile advertising – the kind of commercial content that won’t get blocked by consumers.
In-app and mobile web ads that pop up can be irritating, irrelevant, or slow to render – and frequently all three. What’s more, attempting to close an ad often leads, accidentally, to clicking on it and getting taken out of a chosen app to another, unasked-for location. Frustration with mobile ads is pretty much universal, and this was the focus of a recent conference hosted by Mullen Lowe titled ‘Making Mobile Ads Better.’
What doesn’t work and why?
There are undeniable problems and difficulties with mobile advertising. One challenge is that too much is expected of the format, even though it hasn’t had the time to develop as – say – standard digital display has. While expectations may be high with display, replicating formats and scale across mobile is, at best, much more testing and, at worst, not currently possible. In addition, programmatic technology makes mobile more complicated from a relevance and creative standpoint.
There’s also a mismatch between mobile budgets and the traffic that websites receive. Media owners report many clients spend 20–30 percent of digital budgets on mobile, while up to 70 percent of site traffic comes from mobile devices. Most mobile spend is focused on building high impact creative, though less time and attention is paid to the banners designed to attract users in the first place. Many feel traditional display formats have a limited future on mobile because small screens don’t lend themselves to ads being crammed into reduced screen size.
What works better?
While some delegates preferred big, rich media ads that are visually engaging, others considered the implications of such data heavy formats and advocated for returning to simplicity. It’s not fair, they argued, to impose this on consumers whose data allowances are often tight.
Many advertisers prefer video ads on mobile, although there currently isn’t overwhelming support for this preference. The challenge for advertisers is to have video optimized for mobile. Standard, 30-second, pre-roll formats are not as effective on mobile where attention spans are shorter, typically at 8–10 seconds.
"There’s a mismatch between mobile budgets and the traffic that websites receive".
Mobile is undoubtedly an increasingly important part of the path to purchase, and very often the first touchpoint. Advertisers must consider the complete customer journey, making it as frictionless as possible to maximize opportunities for conversion. High performing ads aren’t effective if the end site isn’t optimized for mobile purchase. Worse yet, if a user has to switch device to complete a purchase, momentum is lost.
Mobile is such a personal format that advertisers and agencies should look to new ways to reach consumers. These include helping consumers to solve problems – think free texts when credit expires, sponsored by advertisers – and catching users at critical, in-app moments. A fitness app delivering smoothie ads when a user has just finished a workout is a powerful example of relevance in action.
Although mobile has recognized challenges in scalability, creative duration, and format, there is a growing consensus that innovation is the future of mobile. Smartphones and tablets are such an integral part of consumer lives, the channel offers untapped opportunities.
OLLY WORLEY, Senior Digital Executive at Ebiquity
Olly Worley is a Senior Executive on the Digital team at Ebiquity UK. He has worked in evaluation and analytics for four years across clients in the FMCG, Telco, Tech, and Automotive sectors.