context is queen the value of media environment douglas mccabe+44 207 851...

Context is QueenThe value of media environment

Douglas McCabe +44 207 851 [email protected]

Shift North, 13th October 2015

AgenciesAegis Media, Engine, Fox One Stop Media, GroupM, Karmarama, MEC, Mediacom, Mindshare, Publicis, WPP

Film/television21st Century Fox, Arqiva , BBC, BBC Trust, BBC Worldwide, Bertelsmann, Channel 4, Digital UK, Discovery, Freesat, Freeview, IMG Media, ITV, Ludorom, Miramax, NBC Universal, ProSiebenSat.1, SevenOne Media, Sky, Sony Pictures, STV, Turner Broadcasting, UKTV, UTV Media, Virgin Media, Vivendi, Walt Disney, Warner Bros, YouView, Viacom

PublishingArchant, DC Thomson, DMGT, Dorling Kindersley, Guardian Media Group, Hachette UK, Haymarket Media Group, Hearst Magazines UK, Holtzbrinck Group, Immediate Media, IPC Media, Johnston Press, Local World, London Evening Standard & Independent, Menzies Distribution, News UK, New York Times, Telegraph Media Group, Trader Magazine, Trinity Mirror, TES Global, Which?

TelecomsBT, Emtel, Everything Everywhere, H3G, Liberty Global, Nokia, Post Office, Qualcomm, Samsung, SFR, TalkTalk Group, Telefónica, Tesco Telecoms, Virgin Media, Vodafone, Vonage UK

TechEvenbase, Google, Microsoft, NTT Data, Shazam, Trader Media, Yahoo!

Music/radioBauer Media, BMG Rights Management, Ministry of Sound, PRS for Music, Communicorp UK, Sony Music Entertainment, Spotify, Universal Music Group

Professional servicesAccenture, ATOS, Bain & Company, Boston Consulting Group, Cognizant, Deloitte Consulting, Detica, Edelman UK, Ernst & Young, Hippo Frog Consulting, KPMG, McKinsey, OC&C Strategy Consultants,PWC, Russell Reynolds

Public sectorDCMS, European Broadcasting Union, European Commission, Ofcom, Scottish Futures Trust

Funds Aberdeen Asset Managers, Baillie Gifford, Cedar Rock Capital, F&C Asset Management, Fidelity International, Highfields Capital Management, Morgan Stanley Investment Management, Odey Asset Management

Investment banksAllen & Co, Barclays Capital, BNP Paribas, Citigroup, JP Morgan, Lepe Partners LLP, Moelis & Co, NM Rothschild

PE/venture capitalApax, Bob & Co, Cinven, Dial Square 86, Doughty Hanson, KKR, Permira Advisors, Providence Equity, Usaha Tegas

Some of our subscribers

What we have done

Shift North 13 October 2015 3

• Newsworks commissioned Millward Brown and Enders Analysis to compare agency and brand owner views relating to automated advertising and the marketplace generally

• Millward Brown interviewed a number of senior people from various agencies and brands

• This is a summary of some of the themes and tensions from these interviews, and our overview of the challenges in the marketplace

Who we have spoken to


Agencies Brands

Sue Unerman, MediaCom Dominic Groundsell, (MoreThan) RSA Insurance

Rob Norman, GroupM David Wheldon, Barclays

Martin Vintner, iProspect Matt Holmes, William Hill

Simeon Adams, Good Stuff Andy Duncan, Camelot

Owain Wilson, MediaCom Keith Hendry, ATS Euromaster

Craig Mawdsley, AMV BBDO Tony Preedy, Lakeland

Jean Isvarphorncha, Liberty

Tim Male, Lloyds Banking Group

“One of those unfortunate bits of jargon where words don’t do what they’re meant to do – and that’s to tell you what it is”

- Craig Mawdsley

“Programmatic is a sign of the times. But it’s blind buying which I don’t like”

- Matthew Holmes

“I’m not keen on leaving stuff to the chance of programmatic”

Agency Brand owners


Disparate views on the current marketing marketplace


Agencies Brand owners

Market functioning Good Poor

Market maturity Optimisation phase Development phase

Viewability and fraud Teething problems Fundamental obstacles

Gap between ‘promise’ and ‘practice’ of audience targeting

Good progressSome teething problems

Fundamental obstacles

“Black box” of agency data Nature of the model Not trusted

Lack of financial transparency Great value for money Fear that they are overpaying

Key goals and measuresTargeted consumers

VolumesContext

Targeted consumersVolumes

Context is key [Source: Enders Analysis based on Millward Brown interviews


“There are some yawning gaps in the processes and the understanding of how programmatic actually

works – not just within clients, but also the agencies and media owners we are working with”

- Dominic Groundsell

“If we don’t work it out [bots and ads on inappropriate sites] over the next to or or two or three years, there

is a significant danger of a backlash from society, politicians and certainly in Brussels”

- Brand owner


Marketing landscape is being restructuredTotal advertising revenue (£m)

[Source: Enders Analysis forecasts based on AA/WARC and other industry data]

2000 2005 2010 2015f 2020f0

2000

4000

6000

8000

10000

12000

14000

Digital growth has been driven by direct response


2000 20150

2000

4000

6000

8000

10000

12000

Display ad expenditure (£m)

Analogue Digital

2000 20150

2000

4000

6000

8000

10000

12000Classified ad expenditure

(£m)

Analogue Digital

Internet display growth is the next wave

0

250

500

750

1,000

1,250

US UK DR FR

Index 2004 = 100

Nominal internet display ad spend [Source: GroupM, IABUK/PwC, IABE/IHS, OVK, SRI/PwC, Enders Analysis]


Rise of the trading machines (1)

Context is queen: the value of media environment [2015-019]

Med

ia o

wners

Advertise

rs/ag

en

cies

Ad exchanges

Ad networksDemand-side platforms

Sell-side platforms

Agency trading desks

[Source: Enders Analysis based on IAB]

11

Context is queen: the value of media environment [2015-019]

Rise of the trading machines (2)

Negotiated Programmatic Negotiated Programmatic Negotiated ProgrammaticDisplay (ex video) Mobile Video

0

200

400

600

800

1,000844

296 296174 210

40

733600

233350

285

100

2013 2014

Digital display advertising by trading model (£m)

[Source: Enders Analysis based on IABUK/PwC/MTM]

12

CMOs are under immense pressure


Spend less

Shrinking budget

Deliver more

Improve Return on Investment

Prove it

Demonstrate greater ROI to

non-marketeers62% of CFOs believe

marketing is “critical”, but 61% are not

confident CMOs make good commercial

decisions[Source: WARC, Econsultancy, November 2014]

Pressure from the marketplace


Marketing objectives (examples)

• Fame and stature• Positioning• Build trust

• Education and understanding• Prompt action

• Sales

Marketing outputs

Automated trading focuses on immediate – limited –metrics


“Not everything that can be counted counts, and not everything that counts can be counted.”

– Albert Einstein

Marketing and media


Awareness: display, video

Interest: social

Consideration:

emailConversio

n: search

Marketing objective

[Source: based on blinkx, illustrative only]

Media

Retail

Automated values conversion and ignores “out-of-market”


Visits:

$0.01/visit

Audience:

$0.05/profile

Signups:

$0.25/lead

Purchase:

$1.00/click

Awareness:

display, video

Interest:

social

Consideration:

email

Conversion:

search

Marketing objective Ad unit

[Source: based on blinkx, illustrative only]

Media

Retail

Digital Marketin

g Economy


“We have stringent guidelines in place which keep us away from porn, and any illegal sites where possible. But

some do slip through the net”- Matthew Holmes

“It is more about where you don’t want to appear than where you do”

- Brand owner

Automated and unintended consequences?

Automated measures become

more important

Automated grows in scale and

influence


Rise of third-party data; decline of media real estate value


Consumer

Marketing

Mechanics Media

Visits to a website typically generate many tracking scripts, enabling publishers and 3rd party networks to track devices

These help power interest and behaviour based advertising

The browser's cookie is analysed and advertisers bid for, and serve, impressions in a fraction of second

Is the incentive to invest in content in order to create an attractive advertising platform being undermined? Businesses that curate and aggregate are more efficient at creating traffic


“As far as online display advertising is concerned, it always works best when there is a relevance

between the creative that is being used and the environment”

- Tony Preedy

Actions taken after seeing display ads


Communication/advocacy Active engagement Direct contact0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

19%22%

40%

9%

15%

26%

7%10%

23%

Original content sitesPortalsSocial networks

Research product online or in store, competition, watched video

Clicked link, searched on-line, bought product

Talk about a brand or visit/follow

[Source: AOP, The Value of Trust, 2012]

Quantifying context – video example


TV YouTube0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

Revenue per hour ($ estimates)[Enders Analysis estimates]

Newsworks’ “The company you keep” research


Reading tasks

8,000 people sample

Readers and non-readers

Print, tablet, desktop (inc laptop) – online survey

Further 600 people sample completed reading task in

print and on tablet

Adverts in context

Classic display advertising categories

Motors, retail, finance, telecoms, TV

Adverts shown in context – with editorial constantly

changing

[Source: Newsworks study, The company you keep, 2015]

3 key metrics

Implicit questioning – moving sliders not answering explicit

questions

Brand love - composite measure of how close consumers feel to the

brands

Buzz – how much the brand is talked about

Consideration – purchase intent the next time in the

market

Print

+11%

+13%

+16%

Brand love

Tablet

+14%

+20%

+38%

Computer

+10%

+14%

+31%

Buzz

Consideration

News brand readers vs non-readers

[Source: Newsworks study, The company you keep, 2015]

Viewability and non-human traffic


Viewability

• 56% of adverts are not seen (Google study, November 2014)

• 57% of video adverts are not seen (Vindico survey of 2 billion ads, 2014)

• “Seen” is defined as “half of its pixels visible for one continuous second”

Non-human traffic

• Kraft believes 75% to 85% of its digital advertising (real-time ad marketplaces) is “fraudulent, unsafe or non-viewable or unknown”

• There is $9.5 billion on “non-human” traffic – according to Solve Media estimates

Human Traffic, 38.5%Search engines + Other good bots, 31%Scrapers, 5%Hacking Tools, 4.5%Spammers, 0.5%Other impersonators, 20.5%

[Source: Incapsula]

Human traffic, 38.5%

Non human traffic 61.5%

Web traffic breakdown


Our conclusions


1. Brand owner and agency views are highly divergent

2. Brands do not believe automated buying delivers on its promise

3. CMOs are under increasing pressure (internal / external)

4. CMOs fear performance is too focused on direct (not IPA’s “60:40 split”)

5. Automated trading favours social and aggregator sites

6. Content media risks being undermined

What next?


1. Discussions about automated trading

– transparency and measurement clarity

2. PAMco – de-duplicated single measurement for readers

3. Newsworks looking at a potential engagement study

4. Shift 2016: update on how context amplifies standard measures

Thank you


context is queen the value of media environment douglas mccabe+44 207 851...

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