Connect with us

Advertising

Brands missing out on potential $45bn in profit by failing to optimise media budgets

Published

on

Ebiquity marketing budget allocation
Source: Ebiquity

Brands are missing out on a potential $45bn in profit because they are failing to optimise media allocation, investing too much in digital display and not enough in more traditional formats, according to new research.

The study, undertaken by Ebiquity, used data from 2,500 campaigns over three years and was regionally weighted in order to build a global number. It includes only channels where Ebiquity could study profit impact at different spend levels, so search, influencer and in-app advertising are not included but any digital display and online video, including on social channels, are included.

The total media investment analysed represents $375bn in global ad spend, or roughly three-quarters (76%) of the total global ad market. It finds that had that same spend been optimised based on ROI contributions of each channel, it would have generated an extra $45bn in global profits for brands.

Plus, if brands reallocated marketing investments, overall marketing ROI could rise from 2.83x to 2.95x – an increase of 4%. And for brands that want to cut budgets, if they reallocated budgets to optimise media spend, they could spend $15bn less on media and still generate the same profit.

Ebiquity marketing drive profit growth
Source: Ebiquity

The research aims to provide marketers with a global view of how misallocation of media can impact profitable growth. While, of course, optimal allocation will vary dependent on geography, category and the target audience, it suggests there is still much work for marketers to do to ensure they are getting the best possible ROI.

READ MORE: Marketers undervalue the impact of traditional media channels

In particular, the Ebiquity data suggests brands have significantly over-invested in digital display as they follow consumers online. In part this is because digital display is a relatively expensive way to reach audiences at scale and also because consumer behaviour online is not as conducive to generating ROI, according to Ebiquity CEO Michael Karg. And it suggests there is an opportunity for brands that invest in online video.

The data comes as many major brands, including those such as Unilever and Procter & Gamble, are cutting marketing budgets and taking cost out. “We are saying be careful of that because it can actually reduce growth and profitability. Think more about reallocating,” says Karg, speaking exclusively to Marketing Week at Cannes Lions.

“Too many have gone too far in some channels and not far enough in others. In principle, there has been too much money going into display advertising, for the big advertisers. If you need to reach a large audience there are different channels to do it much more effectively. Don’t blindly invest because X% of your audience is online.”

The hope is that the research will “give a bit of confidence” to CMOs to be able to show CEOs and CFOs that marketing is an investment not just an expense. And to ensure CMOs are being channel neutral, allocating budgets based on data not just having goals such as 30% of spend being in digital.

“This study gives back a bit of confidence to say marketing spend is an investment not just expenditure. It drives growth. There are some digital formats that really work, but for many TV works really well as well. You really have to rethink what you’re doing, using analytics to drive optimisation and be channel neutral,” explains Karg.

“We hear a lot about buying where target audiences spend time; senior management comes back and says but isn’t our young audience spending 30% of time online, go buy display ads. That’s not very scientific. We want to give the confidence to say we need to figure out what works for us and optimise allocation based on that.”

While the figures are scaled up to get a global view, marketers will have to individually understand what optimal budget allocation looks for their brands in different categories and different markets.

“[Marketers] should look at how much they should spend, on which brand, allocated across which channels. That helps give a broad view, but then they have to go down into the real implementation of it: how do I get the best creative, get it testing right, get the best consumer analysis and buy it most efficiently?” says Alan Rutherford, Ebiquity’s chairman.

“But the big picture is, am I spending the right amount and what sort of return do I think I’m going to get on it? This helps justify the role of marketing and marketing budgets and going to the board and saying I need this amount of money because here’s all the modelling that shows it.”

All copyrights for this article are reserved to their respective authors.

Continue Reading
Advertisement
Comments

Advertising

Australian competition watchdog cracks down on Facebook and Google

Published

on

Google and Facebook will face greater regulation in Australia following a report by the Australian Competition and Consumer Commission (ACCC).

The preliminary report by the nation’s competition watchdog raised concerns about the market power of the two media and technology giants including the companies impact on Australian businesses, particularly, their ability to monetise content. It also outlined concerns about the extent that consumers data is collected and used by companies to target advertising.

To address these concerns the report proposes a number of recommendations including a “new or existing regulatory authority be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content”.

The report also proposes preventing Google’s Chrome browser from being installed as a default browser on mobile, tablet and computer devices. It also includes recommendations to strengthen merger laws, deal with copyright, and take-down orders, and the review of existing, disparate media regulations.

The ACCC is also considering a further recommendation for a specific code of practice for digital platforms’ data collection to better inform consumers about how platforms collect and use their information as well as changes to the Privacy Act to enable consumers to make informed decisions.

Rod Sims, chair of ACCC, said, “Digital platforms have significantly transformed our lives, the way we communicate with each other and access news and information. We appreciate that many of these changes have been positive for consumers in relation to the way they access news and information and how they interact with each other and with businesses.

“But digital platforms are also unavoidable business partners for many Australian businesses. Google and Facebook perform a critical role in enabling businesses, including online news media businesses, to reach consumers. However, the operation of these platforms’ key algorithms, in determining the order in which content appears, is not at all clear.”

Sims continued, “Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses.

“The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight.

“Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out compete’ its rivals. But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation.”

The ACCC is currently investing five incidences of breaches to competition or consumer laws by digital platforms as a result of this inquiry.

The ACCC will take submissions regarding its recommendations with the final report to be delivered to the Government by June 2019.

All copyrights for this article are reserved to their respective authors.

Continue Reading

Advertising

AppNexus and Microsoft's eight-year partnership: the story so far

Published

on

In the eight years since AppNexus and Microsoft formed a partnership, the programmatic landscape has evolved dramatically. Starting from when the industry was in a hypergrowth phase to considered advertising’s Wild West, where concerns around low-quality inventory, transparency, and scale were pervasive.

Even though there have been many changes in the industry since then, with AppNexus now acquired by AT&T and being part Xandr, many of those earlier concerns are still relevant.

To future-proof itself against ad fraud, Microsoft became one of the first premium publishers to test the programmatic waters eight years ago, when it says it committed to stringent quality and brand safety standards, working with AppNexus to apply quality control and transparency policies.

AppNexus also developed an audit process that became the template for how Microsoft evaluated every advertiser on the Microsoft Advertising Exchange (MAX), in order to set high brand safety standards. In 2017, Microsoft became the first publisher to join AppNexus’ transparent auctions initiative, which is a visible communication that tells buyers what kind of auction they are entering as the bid request is sent.

By informing advertisers on whether they are participating in a first- or second-price auction and alerting them to the price floor, this innovation allowed buyers to better understand how their bid prices influenced their win-rate and clearing price.

After AppNexus enforced ads.txt and made a commitment to proactively audits its partners to ensure that it works with clients who share its commitment to quality standards, Microsoft was also quick to implement ads.txt on MSN and part of Windows and is in the process of rolling it out globally.

Today, Microsoft delivers more than 700 billion impressions annually in the AppNexus ecosystem, across display, video, and mobile channels. By focusing on the user experience and setting up their pages to render ads in-view, Microsoft’s publisher brands has a viewable inventory rate of over 85% according to AppNexus’ viewability analysis, which is well above the industry average.

Tae Kyu Kim, the senior regional director at AppNexus, tells The Drum as programmatic continues to become a standard way of media buying, the industry has finally caught up to the vision that Microsoft and AppNexus outlined from the start, which is quality at scale no matter what method you use to buy media.

“From a technology perspective, Microsoft and AppNexus partnered early on to improve viewability and increase quality and transparency. Over the last year or so, we have really seen our vision be validated and affirmed by a demand for these qualities and capabilities across the buying landscape,” he explains.

“From an integration perspective, the complexity of the ecosystem means a lot of development work to ensure integration. The key is identifying opportunities and integrations that optimize and bring efficiency to your programmatic strategy, rather than complicate it.”

Giving an example of how MAX has worked with clients over the years, Tae shares how an airline that wanted to generate click-through rates (CTR) to their website in Taiwan and chose to run an MSN Home Page Takeover (HPTO). The result was a 0.42% CTR.

For another advertiser that wanted full control of guaranteed impressions, even delivery, time targeting, MAX proposed a large format priority deal (PMP) on MSN. “The buyer experienced a significant average CTR of 0.98% with their deal for a custom header, which resulted in them increasing their budget to the campaign,” says Tae.

Increasingly, supply chain inefficiencies have become a big topic for brands who are concern about the money they are spending and wasting. Tae acknowledges this an unfortunate by-product of programmatic’s rising popularity is that it has made the entire ecosystem more complex.

He points out that removing supply chain inefficiencies is why Microsoft chose AppNexus as its exclusive SSP and why Microsoft is supportive of initiatives that built trust with buyers by giving them visibility into their spend on the AppNexus platform.

“It’s early days, but I’m pleased to say that as of September 2018, Microsoft finalized testing around transparent fees,” explains Tae. “All Microsoft app and display publishers transparently will expose fees to buyers that are using transparency partners (like Amino Payments) to track payments through the supply chain.”

Together with Microsoft, the road ahead for AppNexus will be driving the understanding of the critical importance of transparency, openness, and quality to the programmatic industry. While it continues to innovate its technology through new formats and offerings, it wants to simultaneously partner with Microsoft on initiatives that build trust in the marketplace and supply chain.

All copyrights for this article are reserved to their respective authors.

Continue Reading

Advertising

10 questions with…. MediaLad

Published

on

In an attempt to showcase the personalities of the people behind the media and marketing sector, The Drum speaks to individuals who are bringing something a little different to the industry and talks to them about what insights and life experience they can offer the rest of us. This week's 10 Questions are put to the most anonymous of industry commentators – MediaLad

What was your first job?

Baker.

Why did you get into advertising?

I’ve always had a business or economic brain and marketing was the most attractive area for me given the psychology and quantitative aspects of it.

What’s the worst buzzword in the industry?

Transparency, leverage, gap – take your pick.

Leverage – makes it sound like you’re using someone or something to get around a problem not solve it.

Gap – basically means someone isn’t doing their job.

Transparency – no one knows what transparency actually is until they try to do it and fail miserably at it.

If you could improve Twitter – how would you go about it?

Tweetups with people near you or a gaming element to it a la HQ.

Which industry event do you have to attend every year?

The IAA Xmas ball – The biggest celebration of media in the calendar year.

What’s the most surprising thing you have learned about the ad industry since working within it?

The most surprising thing is how little the so-called knowledgeable industry experts get to grips with both sides of the buy or sell side. The fact that they don’t know that not all third-party data can be bought on premium publications (even before GDPR). The fact that some technology does not interact with others in the most fluid way, yet expect a “transparency” that just will not be there unless there is a drastic change. The fact no one even talks about that astounds me. The fact they’re so focused on the buzzwords and chasing followers or awards, and not actually fixing the problems pisses me off.

Who is the one person in advertising whose advice everyone should listen to – other than yourself?

The guys at Avocet for digital buying, namely Ezra Pierce and Simon Critchley.

Who or what did you have posters of on your wall while growing up?

Eric Cantona, and House Record Labels.

What’s the best piece of advice you’ve ever been given?

There’s a couple. From a life perspective, it’s about how much is in your control. 70% of your life is outside of your control. Stuff that happens to others in your life like your partner, parents, and loved ones. The stuff they do to annoy or delight you. 20% is what you’re in control of including life choices and what you do for fun, work, spare time etc. The rest is just pure luck and chance. For that reason only take time on the 20% as you really don’t have a lot of say on the rest.

What do you think ‘Media Lad’ means to the industry and what has being him meant to yourself?

I mean it started as a joke for the company I used to work for. I handed my notice in and had a bit of time, Twitter was new to me and I used it as a bit of a platform to promote jokes in my career that turned out to be common problems faced by everyone. It’s turned into this mad Banksy type character that (most) people enjoy, and want to unmask. I am honestly so humbled by that. Others hate it, for calling out their shit, but you know what… it’s not about who I am but it’s about what should be the “right” way to do media or your job. Bring perspective and enthusiasm to a job that really doesn’t save any lives or do anything meaningful in the world apart from raise awareness for certain companies/products. I try not to raise my own profile as (believe it or not) I’m not that type of guy that wants a headache to appear on stage. I’m busy working for my clients and that’s what motivates me.

More entries from 10 Questions With… can be found here.

All copyrights for this article are reserved to their respective authors.

Continue Reading

Trending

Copyright © 2017 Marketing Industry News