Category Archives: Advertising & Marketing

kbs+ Ventures Portfolio News: Awe.sm, Momentum, Hiring, and Tumblr

We’ve been busy in the office which has been why I’ve posted very little over the past few weeks.  However, below are some of the reasons why I’ve been radio silent.  I’m super stoked about all of this and hope that you are too.  See below.

Awe.sm
kbs+ Ventures recently announced our investment in a social analytics (plumbing) company called Awe.sm.  We are super excited about this opportunity as social is going to become increasingly more important into the fabric of everything we do and having the right infrastructure to manage and measure is of extreme importance to brand marketers and agencies.   There has been a ton of articles written up about the launch of Awe.sm so do not hesitate to check them out.

Adaptly Momentum
Today, one of our portfolio companies, Adaptly, launched a service/product called Momentum.  Nikhil Sethi, the founder/CEO of the company said it best in his blog post this morning:  If we continue to base our paid media buys on only the paid media metrics, we are only measuring 1/3 of the value generated. These results leave so much value on the table and we believe there should be a better KPI suited specifically for social. I’m super bullish on companies who cross the paid/owned/earned media landscape and Momentum is a tool in which can measure this for a brand.

Hiring
There is no shortage of hiring in our portfolio companies.  Most of the companies are hiring talent here in New York City.  If you are a product manager, developer, front end designer, or business development exec and are looking to join well funded private companies that are in the marketing technology space, do not hesitate to reach out.

kbs+ Ventures Tumblr
We officially launched the kbs+ Ventures tumblog.  Lara has been updating the blog for us and it’s chock full of kbs+ Ventures information and pictures (including our 2011 Holiday Salon).

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Helping Demand Find Supply

about advertising and operating systems. There are not enough advertising dollars in
the ecosystem to be the only revenue model for digital media companies so we must
look elsewhere.
Mobile impacts our future in ways many do not realize yet. When you are in the middle
of the early part of the Gartner Hype Curve, you do not know how large an opportunity
can become and often times, it is underestimated. Being hyperbolic on purpose, I feel
we are underestimating the importance of location, which is brought to use by mobile
data.
The key essence of the line, “Help demand find supply, not supply find demand” is all
about enabling a process, interface or system to help consumers consume, at its purest
form. Let consumers pull information, not just have it pushed down to them.
Mobile affords the opportunity for an interesting ratio (balanced maybe) of push vs.
pull marketing. The majority of marketing is push – supply finding demand. We buy
banners, magazine pages, television spots, billboards and the like so marketers
can reach customers. With location data as now part of the marketing optimization
mix, consumes can now request and pull information. Early current forms of this are
platforms like Groupon or FourSquare.
However, what happens when customers can reach us? What happens when push
budgets are down 80% and that money is invested to marketing around pulling? Could
this happen? It is happening, but Madison Avenue needs to retool and rejigger for this.
There is a famous quote by Henry Ford which says, “If I asked consumers what they
would of wanted, they would have said a faster horse.” This of course, refers to the
automotive empire he ignited. Steve Jobs has similar quotes. And of course, Mark
Zuckerberg does too. In a world where consumes can pull messages or find supply, do
we (as consumer) know what we want or need?
(open question, start thinking….. now)

The above quote stuck out from a recent conference I went to when we were talking about advertising and operating systems.  There are not enough advertising dollars in the ecosystem to be the only revenue model for digital media companies so we must look elsewhere.

Mobile impacts our future in ways many do not realize yet.  When you are in the middle of the early part of the Gartner Hype Curve, you do not know how large an opportunity can become and often times, it is underestimated.  Being hyperbolic on purpose, I feel we are underestimating the importance of location, which is brought to use by mobile data.

The key essence of the line, “Help demand find supply, not supply find demand” is all about enabling a process, interface or system to help consumers consume, at its purest form.  Let consumers pull information, not just have it pushed down to them.

Mobile affords the opportunity for an interesting ratio (balanced maybe) of push vs. pull marketing.  The majority of marketing is push – supply finding demand.  We buy banners, magazine pages, television spots, billboards and the like so marketers can reach customers.  With location data as now part of the marketing optimization mix, consumes can now request and pull information.  Early current forms of this are platforms like Groupon or FourSquare.

However, what happens when customers can reach us?  What happens when push budgets are down 80% and that money is invested to marketing around pulling?  Could this happen?  It is happening, but Madison Avenue needs to retool and rejigger for this.

There is a famous quote by Henry Ford which says, “If I asked consumers what they would of wanted, they would have said a faster horse.”   This of course, refers to the automotive empire he ignited.  Steve Jobs has similar quotes.  And of course, Mark Zuckerberg does too.  In a world where consumes can pull messages or find supply, do we (as consumer) know what we want or need?

(open question, start thinking….. now)

64% of Digital Ad Spend Controlled by 5 Companies

I was doing some calculations for my own purposes and wanted to find out what percentage of the digital media ad spend (search, display, mobile, etc) is controlled by Google, Yahoo, AOL, Facebook, and Microsoft.  Well, after searching through their 10K’s, it’s about $40.1B, or roughly 64% of the worlds digital media ad spend.

According to a ZenithOptimedia press release on October 3, 2011, worldwide digital advertising accounted for about $64.03B.

Google generates approximately 364% more revenue from advertising than it’s next closest rival, Yahoo!.

With Facebook at $1.86B in advertising revenue (excluding virtual currencies/goods) for 2010, it puts them at right behind Microsoft but ahead of AOL.  With Facebook only now starting to monetize their platform, you can start to see how big an impact they could have on the dominance of the digital advertising landscape.

And of course, you can really see how dominant Google is.

Digital Media Ad Spend

Marketing Wednesdays: Agency 101

This post is part of my Marketing Wednesday‘s series which was originally inspired by Fred Wilson’s MBA Mondays and Albert Wenger’s Technology Tuesdays.  This is my 3rd post – the first being on the Chief Marketing Officer and the second being about the Marketing Plan.

There are two ways to handle marketing:  you can perform all the marketing functions inside the brand (client side) or you can hire an agency to handle some or all of the marketing functions.  Today, we’ll cover reasons why you would and should hire an agency.  Note, I currently work for an agency which rolls up to a larger integrated agency.  So with that said, my answer is inherently skewed by the nature of where I work, but this is my own thoughts and not necessarily thoughts of my employer.  OK, the disclaimer is out of the way, so let’s begin.

The Role of an Agency

There are different types of agencies and those agencies come in all shapes and sizes.  There are marketing agencies, creative agencies, media agencies, buying agencies, planning agencies, social media agencies, mobile agencies, search engine marketing agencies, pr agencies, digital agencies, product innovation agencies, production agencies, analytics agencies, and many more.  So yeah, there are lots of types of agencies.   The agencies role is to act as an independent view, but an extension of the client, to create strategy, research, and work and liaison with the vendors and partners needed to carry out with whatever the output might be.  When an agency/client relationship is going well, the agency is essentially an extension of the client, but is just different “enough” to push the thoughts and boundaries of the clients.

Most agencies bill their clients on time and labor based on an overall relationship deliverable or a particular project deliverable.  This is then written into a Scope of Work (and sometimes an MSA) and signed off by both parties.  This is sometimes negotiated by the client’s procurement department to put pressure to bring down the agency cost.  More on this here.

Media agencies will bill based on time & labor for the planning components and will then charge a buying commission based on the media channel which is purchased.

Depending on the agency, they might move to a performance compensation model where they might put a % of their fee or commission at risk for sharing in the upside.  These types of models are becoming more popular but are fundamentally flawed because agencies don’t touch many of the factors that go into a clients product/service, so they could be in a very high risk situation which is very much in favor of the client.

The fee a client pays an agency covers everything from a team dedicated (or semi-dedicated) to a client as well, as, the infrastructure that the agency has invested in (research, tools & technology, processes, overhead).  Many times, the blended rate an agency charges could be less than hiring a marketing staff on the client side with tools & research at parity.

Conflicts

Advertising agencies have to manage for conflicts.  In the USA, advertising agencies cannot work with clients who happen to be competitors.  This goes without saying, clients wouldn’t appreciate that.  Agencies essentially give partial or full category exclusivity when they sign up a client.

Additionally, in the USA, advertising agencies do not markup the cost of media.  Agencies act as “agents” and pass along the cost of media to the client with a pre-defined commission rate bundled on top of it (net/gross).  The commission rates are pre-defined as noted and changes based on the media type (i.e. Television has one commission rate and SEM has another).

Finding the Right Agency

There are thousands of agencies in the USA, let alone tens of thousands across the world.  How do you find an agency that’s right for you?  There are agency “search consultants” who help brands create a list of agencies to talk to and lead the agency RFP and pitch process, there are online sites that have agencies listed, and of course, there are always referrals.  Much of the business we see at the agency are through referrals and search consultants.  Finding the right fit with an agency is important so generally the first meeting is what we like to call, a “chemistry check.”  Having a positive relationship with your agency is like having a positive relationship with your spouse.  You need to make sure chemistry is there and sometimes it takes dating around to find the right place.

A Few Reasons To Hire

1.  Evolved Thinking
Agencies and their staff generally don’t sit within the walls of clients.  Sometimes we do however, though this is not the norm.  This is a major plus because we can help evolve our clients thinking in different capacities because we do not suffer from knowing their artificial constraints (based on politics, budgetary, knowledge, etc).  Since we are in the business of big ideas (or many good small ones), we are constantly ideating and can bring these ideas to our clients.

2.  Multi-Discipline Thinking
When you do the same thing over and over again, you start to think a similar way.  Agencies have many types of clients – you can be working on an automotive account, a juice account, a pharma account and a fashion account.  Thinking across all of these accounts can help bring new ideas that can break through a particular category.

3.  Someone to Blame/Buffer
It’s true, we’ve seen this happen before.  Our car breaks down, we through the automotive brand under the bus.  Of course, it had nothing to do with our driving.  Similar to marketing.  If marketing isn’t working, fire the agency.  Don’t fire anyone at the client side, just fire the agency.  It’s a safety net that has worked for years and Wall Street accepts it, at least for the most part.

Ownership

Depending on the size of the brand/client, they might have one or many agencies.  Agencies might be broken down by discipline (search, social, pr, etc) or by product, or even both.  The overall decision maker for agencies is made by the Chief Marketing Officer of the brand but they might delegate the agency choice to their team depending on the organization they work for.  We have clients where the CMO has chosen us and we have clients where Brand Managers have (and clients in between).

Future Posts

In future posts about agencies, we’ll break down roles within the creative & media agency, discussions around compensation models, sequential liability, USA vs. EMEA contracts and more.  I hope you enjoyed this Marketing Wednesday installment.

I Graduated TechStars, Now What?

I was away on vacation for the past 4 days and had some time to actually think and reflect instead of act and respond to the day to day. I’ve participated in the TechStars NYC program for the past two years and have to say that David Tisch has really created something special. When I walk around their space, the teams absolutely respect him and all he’s done for them. He’s done a great job.

Basically, TechStars lines you up for an intensive ~100 day program in which the unspoken goal is to raise funds at the end.  For many of the startups, the introductions made throughout the TechStars program are top notch.  But, what if you pivoted half way through the program and only have 40-50 days as your “new” entity?  Chances are, you probably won’t get funded at that point.

Is there an accelerator post-TechStars NYC where companies go to literally accelerate.  If TechStars is to help get to an initial (or secondary) funding state, is there an accelerator opportunity to get companies business development traction, hiring, strategy, and sales help?  I’d envision these types of accelerators as being niche:  focused on marketing tech, bio tech, automotive tech, etc.

Maybe there is something here?  Or it might already be here and I’m not privvy to it.

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Marketing Wed: The Marketing Plan

This is the second post in the Marketing Wednesday series.  The first post was on the introduction of the Chief Marketing Officer.  Today’s post is going to be on The Marketing Plan.   I’d argue that the Marketing Plan is as important as the Business Plan for a business and certainly for a startup.

Over the course of this post, we’ll explore the 7Ps of Marketing.  When I was in college, we actually learned about the 4P’s of marketing, but apparently, there are now 7 so lets discuss them.

Product
Your product is king.  Is it the product that consumers will want to buy?  If it’s something that they aren’t asking for, will they be able to understand it and have the vision for it’s application into daily lives?   Is the product at the high or low end of the scale?

Price
Pricing is unbelievably important.  Not only will the right pricing strategy allow consumers to buy your product, but it’ll also help your product be carried by intermediaries such as retail and distribution partners.  Pricing is about economics, specifically about elasticity of demand; so take pricing seriously.  A simple way to look at pricing is to examine competitive (substitutive) products and understand where there is opportunity.  If your product is using high end components, or has a premium feel, then pricing above market is probably necessary.  Economic factors also affect pricing, so don’t just look at your product, understand the economic environment in which you’re selling in.  

Placement
At the agency, we like to say that media is just important as the creative.  Don’t go and design something beautiful and skimp out on where you’re placing the creative.  Same here:  your product is important and where it is being exhibited and sold is just as.  If you’re placing an advertisement during an NHL broadcast is very different than marketing a product at a librarian convention.   

Promotion
How are you promoting your product?  For startups, this is one of the top questions that we like to ask at kbs+p Ventures.  We want to know how a startup intends to get it’s product/service into the marketplace and what type of promoting it intends to do. There are companies built around tweaking promotion, such as a “headline testing” or “multi-variate creative,” and this all falls under promotion.

People
Without the right people, the organization is often suboptimal.  I was speaking at a recent sales conference for a startup and the speaker before me was the Chief Revenue Officer of a Top 5 media property.  He stressed how important it was for him to attract and hire the right people, as it’s the people who sell their product.  And that applies here too:  what type of people do you need internally and externally to evangelize and communicate your product/service?

Physical Environment
What is the tone of the environment in which you are marketing in?  Think about putting a product on a Virgin America flight vs. Spirit.  A very big difference that impacts consumer buying decisions.  

Process
Think Zappos.  The aftersales (or before sales even) service is phenomenal.  What is the value-added services that you are bundling with your service/product?  How can you make it amazing (or not?).  

Packaging
Your experience unbundling your iPhone 4S happens when you go to the store to pick it up, then open up the box.  It’s not when you turn on your phone for the first time.  Great packaging goes a long way.  You don’t need to go overboard, but put some thinking and time into your product packaging.

Now that you know what the 7Ps of Marketing are, they should all be addressed in your marketing plan. While many startups who pitch us today don’t always have a business plan, they have certainly thought thru their marketing plans to maximize their go-to and stay-in market approaches.

How long should your marketing plan be?  7ps – 7 slides.  Simple.  You should also revisit your marketing plan each quarter as you match it up to your business metrics.  Don’t be afraid to tweak and/or radically change.

One of the exercises I like to do around positioning is to create a quadrant chart and position my “competitors” in different areas based on the criteria that I’ve assigned for the x&y axis.  When I plot all my competitors (and secondary/tertiary), I usually see an opportunity within the marketplace by some open space on the chart.  This is a fun exercise to do and will help you understand where there are opportunities within a market.


Marketing Wednesdays

The Chief Marketing Officer

This is my inaugural post for Marketing Wednesdays, inspired by MBA Mondays and Tech Tuesdays.  Please take it easy on me as this is the first in the lengthy series.  I would love all of your feedback, so please leave it in the comments section.  If you are goign to tweet this post, you can use the tag, #mktgwed.

I figured we’d jump right in and understand the role of marketing through the job description of the senior most level, the Chief Marketing Officer.

In almost every large corporation and as startups mature, they add a Chief Marketing Officer (herein referred to as “CMO”).  In early stage startups, this tends to be the founder and/or CEO.  The role of the CMO is expansive and changing but a common attribute of a CMO is to drive vision (sometimes of the CEO) and consensus on how the brand behaves and is portrayed both internally and externally within the marketplace.  Marketers have many strategies and tactics in their role that they can deploy to achieve this.  It could be everything from advertising thru customer service thru product innovation (and many other things).  No two CMO’s are similar and are generally biased by the organizations they spent their formative years at (i.e. P&G, Unilever are very numbers oriented, so CMO’s tend to be heavily focused in research).

The Chief Marketing Officer does not act alone.  They are at the helm of an internal marketing team which may or may not liaison with one or multiple marketing and advertising agencies, which scale depending on the size of the corporation.  Some corporations do everything internally but many have agencies who act on their behalf.  In the coming weeks, we’ll discuss the role of agencies within the marketing world.

When talking to many of our CMO clients, they stress the major shift that’s occurring which has been lubricated by digital; the brand does not always rule the conversation.

Joe Tripodi leads global marketing, customer management and commercial leadership as Executive Vice President and Chief Marketing and Commercial Officer of the Coca-Cola Company.  He wrote a piece for the Harvard Business Review about how the role of the CMO has gone from purely counting impressions to (that plus) making sure consumers are having good experiences with his brand.

Marketing has changed dramatically since Doc Pemberton poured the world’s first glass of Coca-Cola in 1886. On May 8th, 2011, Coca-Cola and our fans around the world will celebrate our 125th anniversary. While I’ll be curious how many impressions our activities generate, I will look most closely to the expressions of our consumers as a better measure of our success in keeping the world’s most valuable brand relevant for the next 125 years.

In most organizations, the CMO reports into the President/CEO and participates on the executive team.  The lifespan of a CMO is typically less than 24 months as per performance around sales is generally attributed to the marketing of a product; so the easiest thing to do is to switch out the marketing leadership.

In forthcoming Marketing Wednesday’s, we’re going to dive into very specific things such as marketing plans, media plans, advertising agencies, paid/owned/earned, clients, procurement, etc.  The list is very, very long.  However, I chose to start with the Chief Marketing Officer since it’s the top role within marketing and oversees any and all of this.

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Announcing Marketing Wednesdays

On the heels of Albert‘s Technology Tuesday’s, I’ll be launching Marketing Wednesdays.  Both Albert and I were both inspired by the magnificent job Fred has been doing with MBA Mondays.

Marketing Wednesday’s will be a post on a certain “marketing” topic which could be applied to both startups and large corporations.  Fred theoretically could cover marketing under his topic as Marketing is offered as a MBA track.  One of the top marketing MBA schools is the London Business School, and they define their Marketing MBA as the follows:

  • advertising
  • brands and branding
  • competitive strategy
  • consumer behaviour
  • customer focus
  • distribution
  • entrepreneurship
  • innovation
  • marketing analytics
  • marketing ethics
  • metrics
  • media
  • pricing and price promotions
  • product strategy
  • related management processes.

We’ll be covering all of the above.  Luckily, I’m part of a top tier marketing agency that has experts in each of these areas, so I can pull them in when I’m not as strong on a particular topic.

The first post of the series will be on Wednesday.  Don’t forget to follow me on twitter or sign up for the RSS feed to keep current.

Advertising Viewability: Are Your Ads Being Seen?

To start off this post, lets look at different media vehicles and examine how you experience advertisements:

  1. Television:  advertisements appear as commercials in “pods” which run in breaks of scheduled content.  Additionally, you can buy your way into programs through product placement and integration.  The majority of dollars however is in commercial advertising (30 second spots).
  2. Print:  advertisements appear as images on pages; sometimes these are full page ads, others are smaller such as ¼ pages.  Advertisers can sometimes cross the church/state editorial boundaries and influence certain articles, however this is a commonly frowned upon practice.  The majority of print advertising dollars is in the advertising on the page (full page ads).
  3. Radio:  Similar to television, Radio allows for advertisers to purchase time between breaks of scheduled content and in addition, radio hosts can do on-air reads of certain messaging which is similar to a product placement/integration.  The majority of radio advertising is run during pods between scheduled content.
  4. Digital:  There are a myriad of different types of advertising but to keep it simple, there are IAB standard ad units (which have scaled as banners) and custom units which generally appear on the same pages as content and /or between pages.  Search creative, excluded.

Beyond some of the intricate differences which can be extracted above, there is another difference I’d like to highlight:  viewabilityIs the advertisement that you (as agency/marketer) are serving being seen by the viewer.

This is a big question.  In non-digital channels such as the above, we can pretty much guarantee that if the viewer is present in the room (TV/Radio), reading the magazine/newspaper, have the opportunity to hear or see the advertisement.  However, with digital, even if you are in front of the computer or mobile device that is accessing content and actively engaging with it, you might not be able to see an advertisement but that advertisement is being counted as an impression.

This is big.  Let me re-iterate.

Ads that are on the screen but out of viewing sight are still counted as impressions; consequently, you as a marketer or agency pay for them.

Most 3rd party ad serving systems (MediaMind, DART, Atlas) today do not measure viewability in their current form.  MediaMind informed me that they do have a Visibility metric but that costs additional to the typical ad serving setup. It’s also relatively new.  We typically have to get the viewability metric through Advertisement Verification partners such as AdXpose (Comscore) or DoubleVerify.  Over time, I imagine that this metric will be a commonplace in the ad serving system, but right now, it’s not.

This has come to be an issue as publishers try to cram more advertisements on a page.  The more advertisements there are, the more ad slots, and the more ad slots, the deeper down on a page they are served.  Theoretically, if you can fill all the ad slots with paying ads, you can derive more revenue from each visitor.  You can’t fault publishers for trying to make more money from their content.

There are a few solves here for viewability:

  1. 3rd Party Ad Serving Systems add in the viewability metric into their reporting either by acquiring or partnering with Ad Verification companies or build their own solution.  This should be standard in all reports pulled about a campaign performance.  This should also directly impact campaign performance.  Do you think engagement/CTR would go up?  I do.

At my last company, IGA Worldwide, an in-game advertising firm, we built a 3rd party ad serving solution or console and PC based video games.  For an impression to count for an advertiser, it had to meet minimum thresholds of size of screen, angle it’s on screen, and time on screen.  I don’t see why we can’t carry much of that over to the display side of business.

  1. Publishers are forecefully limited to the amount of ads on a page, or the places that the ads appear.  I dislike this solution as it plays itself out anyway.  Theoretically, if an advertisement is served but not seen, the performance of the ad will be very low.  If it’s (performance) low, then the marketer/agency will probably cancel or optimize the ad.  It’ll be fixed basically anyway.  Also, I don’t like top down approaches.

Viewability is going to become increasingly important if the iGRP becomes a common trading currency in digital media.  Apparently, brand marketers want to shift large volumes of dollars to digital and they want to do it using iGRP’s instead of performance metrics.

If you aren’t measuring viewability for your iGRP’s, then as an agency or marketer, you are likely to get burned.

If you have worked in digital marketing, you probably have run a banner campaign at some point

Premium Email – A Customer, Not a Number

I don’t know if the word “premium” is right for the header, but couldn’t come up with another term.

I use @gmail for my personal emails.  I also send the inquiries from this blog to that @gmail account.  The problem I have is that I don’t pay Google.  It’s less about paying Google for my email, but since I don’t pay, they probably look at my account as a number, not a customer.  I have no phone number for support, no direct email support, only a user community and maybe a broad email box I can send my request into, which might or might not get returned.

I don’t know if I want a vanity email address.  While I have @darrenherman.com, I theoretically could start hosting my own email thru a an exchange hosting company but I don’t think I want that.

Is there a provider where I can pay for a premium account which has a domain that is already whitelisted by many ISPs or large email providers (AOL, Gmail, etc)?  I want to pay because I value my email account and want someone to talk to in case of issues.  I have way too much riding on a free gmail account where I’m one in a-lots-of-million customer.

Maybe there is a business opportunity here?