IF YOU ASK MANY REPORTERS WHERE TO GET THE REAL story, they'll say “Follow the money.”
That's what Direct did recently for its annual agency leaders roundtable. We sat down with media buyers who are affiliated with some of the country's top direct marketing agencies to get their take on what's hot in media.
This year's participants were Rob Norman of MEC Interaction; Wendy Arnon of Grey Direct; Gaye Sussman of ID Media; and Kathleen Sheridan of Digitas. The conversation centered primarily on interactive media as it applies to the Internet and the emergence of various television platforms such as TiVo. The combination of the two media has created new avenues for direct marketers as well.
“The cable networks in particular are integrating the [on-air] programming with their content online,” said Sheridan. “Take HGTV. They're great about bringing people to their Web site [to learn more].”
These new opportunities could mean that DRTV needs a makeover in some people's minds, noted Norman.
“Try as you might, when you talk about DRTV there are many clients who think you're talking about Bowflex, particularly when you get into long form. But the [new interactive] devices allow you to create data strength and consumer interaction with brands via television.”
In previous years, Direct has gathered CEOs and creative directors for its annual agency leaders roundtable. This year we opted for a “dollars and sense” approach, and rounded up four of the industry's top media buying honchos to get their views on the state of the direct marketing industry.
This year's participants and their firms — Kathleen Sheridan (Digitas), Wendy Arnon (Grey Direct), Gaye Sussman (ID Media) and Rob Norman (MEC Interaction) — cover a wide range of high-profile accounts, including Adobe, American Express, Citibank, FedEx, General Motors, The New York Times, Orbitz, Pfizer and Verizon.
Interactive media was the main topic, with everyone stressing how important things like search engine marketing had become to their client base.
“It's the base of most clients' plans, the way marketers can reach the lowest-hanging fruit,” said Sussman.
“It's exciting to see more push on the client side to support [results] with metrics, and give overall value estimations of the media mix and the relationships,” Sheridan added.
Traditional direct response print media, such as freestanding newspaper inserts, are still part of some clients' strategies thanks to favorable pricing and potentially effective targeting, Sussman said.
But many advertisers that used DR space in the traditional way — like book or music clubs — now try to attract consumers differently. “It still exists, but not at the level it once did,” Arnon noted.
The promise of interactive television platforms such as TiVo finally coming into their own was also high on our media experts' hit parade. But while U.S. companies are still dipping their toes into ITV, Norman said that across the pond it's become part of everyday general media planning.
U.K. native Norman moved over to MEC Interaction's New York offices from London in January. What does he see as the main difference between the U.S. and U.K. markets?
“Predominantly there is much more of a given specialization in DR media in the United States,” he said. “There's a differentiated market — much more than there is in Europe. But having said that, the analytics and the planning that join these things together are exactly much the same regardless. Consumers are the same.”
DIRECT: What changes have you seen in the media buying arena over the past few years?
SHERIDAN: As the adoption of not just online media but all the digital devices has taken place, we've started to look much more at the [whole] media mix rather than the performance of individual channels in an investment strategy. Consumer response and interaction channels have changed. Five or 10 years ago we would do a print buy where you'd have a BRC — or a BRC plus an 800 number — in there to lift response. People are still going to magazines to get information, but they may not respond to anything [in print] — they may just go to the Web. So it's really important to look at the relationship between media.
SUSSMAN: The emergence of paid search is one of the biggest things happening. Online advertising expenditures have doubled in the five years from 1999 to 2004, and they're expected to grow another 39% in 2005. In 2000, search represented 1% of online advertising and now it's about $4 billion, or 40% of all online advertising. Another thing is that five years ago I think we would have said e-mail was the most effective online tactic in direct marketing, but today it's search. It's the base of most clients' plans, the way marketers can reach the lowest-hanging fruit.
NORMAN: There's an interesting notion. We've had to get the general market used to the idea of how we create messaging when people are looking for us, as opposed to when we're going out looking for them. That's a slightly different mindset from where we've been before. And I think there's a negative reason for why search has grown, as well as a positive one. One is an escalation of pricing, clearly around certain keywords in competitive categories like travel. There's also the perception that some clients perceive paid search as a free lunch at some level, because they think we're not paying for anything until the click. And, of course, Google and other search engines exploit this kind of mindset by proposing client lists of 18,000 relevant keywords or phrases that are germane to the plot. We're going to be much more concerned in coming years about the quality of the clicks we're getting. Just because I can get the Mercedes Web site to the top of the rankings [for] convertibles, just how valuable I find the click of an 8-year-old boy on the Mercedes S500 Web site is open to some debate. We're going to have to refine our approaches to minimize waste. And another thing is the issue of interchannel as well as intrachannel optimization. The online channel is so data-rich and so connected that we [created] a breed of people who could obsess in that space and just focus on all that. Putting that in the context of other channels that generate response or interaction is very important. I'm fascinated to know that if I'm paying $10 a click on a keyword and I'm getting, say, 500 clicks, what happens if our DRTV rate goes up X number the following week. Would we get 500 clicks if we paid $6 a click?
SUSSMAN: It's very true. What's the effect of one medium on the other? Recently, one of our clients was upset because its organic search queries had gone down. We knew that DRTV spending had been cut during that same period and that there was a relationship, so we were able to tell the client why because we understood what was going on.
NORMAN: I think this is a focused challenge for people whose business model is online, online, online. If it's all they want to do then it's difficult, unless clients want to create a data hub in which you can read [results] across [channels].
ARNON: Another key change is the convergence of brand awareness and how it works with direct response. All of a sudden our traditional DR clients are talking to us about branding, what their reach and awareness is. Another really important thing is we're seeing a lot of consumers using the Web as a response device. How do you attribute that properly, [if they're responding] online to a DRTV spot or a print ad? Plus, consumers understand now that you don't have to type in the entire URL, even though you're trying to code it to [gauge response] to a particular site. It's all about the value of all the other media and how they relate to the Web. How do you educate your clients that other channels are contributing to Web response?
DIRECT: What does that mean in terms of metrics, measurements and analytics? It sounds like you probably have requirements you didn't have 10 years ago.
SUSSMAN: I think technology is a critical part. When I started on the direct side of the business people were tracking DRTV manually, calling the stations to find out what ran. It's incredible how technology has helped us along.
SHERIDAN: We're actually able to quantify these things rather than just infer from different sources or disparate sources of data. It's also exciting to see more push on the client side to support [results] with metrics, and give overall value estimations of the media mix and the relationships.
SUSSMAN: Also, in the last four or five years, clients have become concerned about ROI. I think, to a great degree, that's why there are so many non-traditional DR advertisers using direct.
ARNON: They may not use the same definition, but everybody's talking about ROI, whether they're general or direct.
NORMAN: That's a curiosity of this country, because of the legacy existence of the DR market. This conversation never would have taken place if you had this roundtable in London, because people [there] have been concerned with ROI in the broader sense for a long time. The fascination of this is we've got this empirically driven view of ROI in the direct space because of the richness of the data, vs. the modeled view of ROI.
SUSSMAN: In TV there's also the growth of cable viewership [to consider]. This year the broadcast networks were down about 4% and cable was up 5%. Last year, cable was up 17%. So the viewers are there, and the advertisers are following. We ran on more than 100 ad-supported cable networks [so far] this year.
SHERIDAN: The other thing that's exciting is that cable networks in particular are integrating the [on-air] programming with their content online. Take HGTV, Home & Garden Television. They're great about bringing people to their Web site [to learn more].
SUSSMAN: Even on network TV, things like ‘Big Brother.’
SHERIDAN: The lines are getting blurred and you can actually participate or get the content, or replicate what's being done on the show.
NORMAN: You see get lots of people in the online community [like] Amazon and particularly Yahoo! trying to find the Rosetta stone of online programming. My perspective is that networks like HGTV and the production company behind ‘Big Brother’ have gotten that to where it needs to be. What that tells me loud and clear is the people who are experts at making programs have got much greater transferable expertise at making those products work across platforms than platform experts have at becoming programming experts. This is why [companies] that decided ‘Yesterday I made candy, but today I'm a publisher’ have ended up with egg on their face. I wonder about things like the Seinfeld exercise with American Express, that whole idea of advertiser as programmer.
DIRECT: What's DRTV inventory like?
ARNON: This year we had a really nice year with inventory. I think part of it is because some of the cable networks do truly understand the importance and value of DR advertisers, especially since the quality of DR advertisers has shifted. Five or 10 years ago, it was book clubs and music clubs and now it's more blue-chip advertisers. That's helped us. But still, if a general advertiser comes into the market and spends a lot of money, that's going to have an impact. Hopefully you have enough clout, and you've got the rates and the relationships in place that you shouldn't suffer too much. I think it's the little guys who really get hurt in that kind of market.
SUSSMAN: On the larger cable networks, what's been somewhat problematic is general advertisers shifting their money from network to cable, so non-traditional DR advertisers are coming into cable. What's really helped is how many networks and outlets there are now — there's always satellite and new networks [debuting].
ARNON: Yes, definitely. The expansion has helped overall.
SUSSMAN: And as far as spot, we don't have the same problem. It's a softer market.
DIRECT: Have you tried interactive TV?
SUSSMAN: Yes, we've been using interactive program guides for the past four years and we've tried enhanced ads. We're currently doing a video-on-demand test and also a TiVo test. TiVo has new technology where it tags ads and drives viewers to a lead-generation screen.
NORMAN: That's the beginning of the beginning. By the start of 2004 in the United Kingdom, Sky — the dominant satellite platform — had run more than 1,000 interactive television campaigns, which is a lot for a small country. On Sky, the Press Red service gives you access to everything interactive. For example, when you watch Wimbledon, you press red and it gives you the choice of 16 courts to watch or different camera angles or data feeds being broadcasted. The same platform allows you to go off into microsites and so forth. With Sky+, which is like TiVo, you'll soon be able to press red for a download of a longer program into memory to view later. In the United Kingdom, it's now in the normal realm of media and communications planning. The core of the Press Red market has been [around] since 2000. If you [check] the general media planning and buying groups, every single one has done an interactive TV campaign by now.
ARNON: That's interesting. We're seeing lots of clients through general agencies doing TiVo and interactive TV almost more than the DR buyers, because the general advertisers are trying to gain that accountability. They're more aggressive about it because their budgets are larger, [and] they're really trying to be in the forefront.
NORMAN: Do you think the concept of DRTV needs a makeover in people's minds? Because try as you might, when you talk about DRTV there are many clients who think you're talking about Bowflex, etc., particularly when you get into long form. But the [new interactive] devices allow you to create data strength and consumer interaction with brands via television. Those of us in the DR market now should be [the ones] talking to clients about how you structure messaging, how you structure the database that comes out of that.
DIRECT: With customers having more and more media options, and the newfound respect for customer media preferences, is fragmentation becoming a bigger problem?
SUSSMAN: I don't think it's that much of a problem on the direct response side. I think it's more of an opportunity. It's a little more of a nuisance for general [marketers], because they have to combine more things to reach people than before. But for us, it's good news.
ARNON: It is good news. Since DR is more labor-intensive and detailed, I think the planning groups and buyers are very used to all these different channels. I think it does get harder in the general world, because the circle of how the consumer reacts is getting more and more fragmented. But it does provide more opportunity for direct response. You have more places to go, and hopefully the more places you have, the more pricing opportunities there are. So you can negotiate more. I think it's a good thing.
SHERIDAN: It's funny. I look at the fragmentation question from an online perspective, and it's almost irrelevant. If you go to search, they're coming to us. I'm not worried so much particularly about targeting [customers] as I am about being prepared with the appropriate text or search results or links, so I'm [directing] them to something relevant. It's interesting because it's almost the reverse of media planning. You're not looking for the target audience. They're self-selecting — I just have to be prepared and give them the right information.
NORMAN: That's a very important aspect of the whole online thing. How do we get the client's online destination fit and ready to receive traffic? They're getting us to do search on X number of keywords, and the destination [could be] a total shambles.
SUSSMAN: It's nothing like the campaign they came in from, and the customer wants to be able to access what they [were looking] for. In most cases, it can't be done.
NORMAN: The whole psychology of marrying up signposts and destinations is going to be something [to consider]. Very often, we're trying to put signposts around the mediascape of one description or another, and we're trying to use those signposts to get people in the most efficient way to our destination and working with our customers to determine what that functionality and destination needs to be. No one would advertise ‘Come buy this pair of shoes at Bloomingdale's’ knowing that Bloomingdale's doesn't stock those shoes. [Think about] whatever the equivalent of that is online. And the whole TiVo and DVR notion offers essentially a complete rebirth of long-form advertising, taking it much more into the mainstream of what we do, which I think will be super exciting. If you're talking to 20 million, 30 million people, everybody knows that if you're lucky there will be many tens or even hundreds of thousands of people who will be actively interested in that message. The great miracle of advertising was always the ability of ad people to tell compelling stories in 30 or 60 seconds. I like the notion that what we're doing is putting these little canoes down into the media sphere and saying ‘We know this is going to pass by most of you, but if you're the one who is interested, come here and consume half an hour about Range Rover or whatever.
DIRECT: How are your clients using search, and are you finding it may not be viable at some point because of pricing?
SUSSMAN: Most clients are using it as part of their base plan to complement other media. We're exploring ways of trying to manage pricing. It's definitely going up quite a bit. But if you use good management tools, offer optimization and expand your list of keywords, you can manage that fairly well. I don't think we'll get to a point where it will be more than the market can bear.
SHERIDAN: Because of the mix of positions, the ability to bid [and the fact] there's a lot of response data, we can figure out very tightly what the ROI on that is, so we can set our allowable cost per click and make decisions within the overall mix of what works. We can bid higher for the things so even if they're competitive and the price is going up we can offset it through a wider set of terms that we know will drive response. And at the end of the day, the other thing that gives us a little bit of a safety net is you can bid on 1,000 different words, but you're only paying for the clicks you get. If you're bidding on words that aren't relevant, people aren't going to respond — but you're not paying for that. At the end of the day, you don't want to allocate budget that you're not going to spend to yield a result for the client.
DIRECT: Are clicks the best — or only — kind of metrics for search?
SHERIDAN: It's what their bidding is based on but it's not how we analyze performance at all.
NORMAN: All our lives are spent trying to get that balance between quality, volume and efficiency, aren't they? Clicks are a currency because we buy and sell in clicks in the same way we buy and sell ratings and cost per thousand on television. It is what it is. But we know there are some areas that will produce more clicks and less volume than others, so we have to make it client-specific. The specificity of search will become increasingly significant, even from the [perspective] of using messaging to overtly exclude something or discourage [prospects] from clicking on things we don't want them to click on. It will become much more granular. In a way, paid search has been quite easy. I don't think this is a technology that's going to maintain its efficiency over time and that's a good thing. Creativity and messaging is going to be important, so the human interface between the client and the search engine is going to get more important as well.
DIRECT: What other media are hot online?
SUSSMAN: Not everyone has a novel in them, but there are 9 million blogs out there today. I read something that said there are about 40,000 new ones created every day. They're an emerging medium, so they're priced efficiently. We've had some success recently running on blogs.
NORMAN: We're doing it, but for us it's raised a high-order question. We think this whole area of user-created media is a separate space from the classic published media space, like television, newspapers or commercial Web sites. I wonder what the role of the advertiser is in this peer-to-peer space. We started saying to clients, ‘Look, let's think about what this might mean as an advertising buy from a metric point of view. But in terms of how we interact with these things, let's talk about participating in them, rather than imposing upon them, in the way one does with advertising in published channels. Because, one, it's a fairly high-risk strategy. There's no issue about [a blogger] saying, ‘Oh well, I won't criticize the new outfit from Chanel because they spend so much money on advertising with me.’ So you're more likely to be assassinated than lauded in that environment. You have to say to a client, ‘Are you prepared to lose control of your message? Are you prepared to put something out there with no ability to control what happens afterward? Are you prepared to put something out there that the moment it goes out, people are going to be slicing and dicing your content, taking bits of images and logos and sentences and doing things with them?’ If you're not, be super careful. It's a very different area. I shiver and shudder a bit when clients tell me that blogs are the next big medium.
ARNON: I think we can almost relate it to the world of DRTV. You have some clients that don't want to run in certain types of programming. [Originally,] DRTV ads went wherever the opportunity was in the day. Now that's really been narrowed down and people want certain advertising to run in certain shows. The same thing applies in the general market. We have certain clients that don't want to run on ‘Desperate Housewives’ and others that are dying to get on ‘Desperate Housewives.’ The online world is like the offline world used to be. Blogs are the new controversial programming. It's the same thing. Are you willing to go there? Are you willing to lose control and maybe get that one phone call from somebody who objects to something?
SHERIDAN: Blogging is becoming so much more mainstream. But how do you participate? Do you facilitate it? Do you engage in it? One of the first news releases about the London blasts came from blogs. A lot of the news organizations were including links to those on their sites. It now has a sort of legitimacy and is being referred to by reputable news organizations and other mainline media outlets.
DIRECT: And many mainline media outlets are starting blogs.
SHERIDAN: Or including the ability for interaction within that environment.
NORMAN: And some of them are getting into very deep water because of it. Yahoo! has been running blogs and message boards around sports for a while, but I don't think they've cracked the code on how to control libelous or abusive material. It's a great example to show to clients. The other problem is the corruption of messaging. Take a movie trailer, for example. If you have a trailer and it starts circulating online, it's easy [for people] to take that movie trailer, chop it up, reorder it, do whatever they want and then recirculate it in different ways. We're working on tools now to let us tag individual pieces of content, and subsets of pieces of content, to see where they turn up elsewhere on the Web and in what form.
DIRECT: At what stage of a campaign are you brought into the process?
ARNON: Five or 10 years ago, a lot of DR accounts sat at full-service DR agencies. You had media as one department at the agency, so you were very engaged in the whole process, you were involved with the account and creative all along. I think DR media has become more unbundled, as has the whole media environment. We have accounts that are media only, and we're working with creative shops, or we have accounts that are full service. I think the model depends on the account. You have clients that really want media to be inherently involved, because you end up with a much better end product that's much stronger on an ROI basis. And then you have some clients who really separate it more and are not looking for that strong interaction. I think it depends not on where we come in but if we have a lead. It's very important to be involved.
DIRECT: What about the future?
NORMAN: We are in the productivity business, and what we're doing is finding evolving models that overall are more productive. I love the idea that general market clients now are building response mechanics with the same measurability. I think the future is tremendous.
ARNON: I agree. Evolution is key. The IT model that holds the most promise for direct marketing may be something totally different from the way we see it today. It will keep evolving and we'll be at the forefront.
SUSSMAN: We're really excited about interactive TV. We've been talking about it for more than 20 years, but it's finally happening. Enhanced ads and interactive program guides represent the best opportunities. VOD and interactive virtual channels have less potential for DR advertisers.
SHERIDAN: We'll have to look more and more at the relationship for the different pieces of media. [For example,] there's a proliferation of different devices for interactive television, and more and more people are getting simple text things on their phone or their BlackBerry from the Web. As those experiences start to get better, there's going to be more of a need to understand what people want to get here, what they want to send to themselves, how viral marketing happens. Integration is going to be the key.
NORMAN: Isn't it fascinating that integrated consumption is so far ahead of integrated marketing? The consumer's ability to integrate everything from all the channels he or she can use is way ahead of our ability as an industry to respond to it. To me, one of our biggest roles as marketers today is to be channel integrators. That's a vital component.
Participants
- Wendy Arnon, senior vice president/media director, Grey Direct
- Rob Norman, worldwide CEO, MEC Interaction
- Kathleen Sheridan, senior vice president, media, Digitas New York
- Gaye Sussman, president, ID Media
