Category Archives: Advertising & Marketing

Marketing Wednesdays: Recapping 2011

I launched Marketing Wednesdays in October in order to cover a marketing related topic each Wednesday.  For me, this was bullish due to my schedule, but I took it on and pretty much failed about 50% of the time.  Not good and not fair, since I committed to handling the topic.  So looking back at the reasons I failed at this, I will optimize for 2012.

Here is what to (or not to) look forward to:

  1. Much more specific topics such as Cost Per Point, vGRP, and ad optimization tools
  2. Guest posts from industry thought leaders and not-so-well-known-but-amazing industry participants (reach out if you are interested)
  3. Sometimes short and sometimes lengthy posts but will certainly vary at length

I’m looking forward to this.  I have a bunch of posts already coming together in my head.  I’d love your feedback so feel free to reach out.

Content Creation

Over the summer, I wrote a post on kids & content consumption.  The post came about because I realized that many of the user generated videos that my 3-year old son was watching on YouTube (via his iPad) had over 6MM views on them. I was shocked that these videos accumulated so many views as it was simply kids and their parents playing with Thomas the Tank Engine trains.

Over the past month, when my son was asked what he wanted for the holidays, he mentioned a few toys that we’d not heard before.  After going thru his YouTube history, we realized that he had viewed short pieces of content put online by both big and small toy stores and manufacturers as marketing content.  He watched some of these videos many times and could now tell us all about them.

We are now in the middle of toilet training.  He’s good with his #1s, but is a bit shy about his #2s.  We promised him that we’d buy him any toy he wanted if he started going #2 on the potty (TMI, I know).  He asked for a very specific truck, one of which I said we can get from Toys R Us, but he quickly corrected me and told me it’s only available at Walmart.  He’s 3 years old.  He’s never been to Walmart (none in the area).

It’s a marketer’s dream.  Walmart had unaided recall from a 3 year old.  I’m long content creation over the next few years.

YOUniverse & Personalization

An area I have been studying for a while is personalization, especially under a macro trend that is termed the YOUniverse.  While I did not create the term, Renier did, it’s an area that has been of increasing interest to me.  Personally & professionally, I have been involved in personalization over the years: content recommendations (Knowabout.it), mens shirts (Second Button), and ad optimization (Varick Media Management).  In 2001, I had a business plan to essentially create what become Second Life, but it never got anywhere.  It was all about personalization.

Ninety years ago, pretty much everything was personalized.  We went to the butcher, he chopped meat to our liking.  We went to the tailor and came away with a perfectly fitted suit.  We needed pencils, so we sharpened them ourselves to match what we needed.

We moved away from this customized business world because we optimized our processes to create cost efficiencies that were passed to the consumer as well, as, created additional margin that was kept for the business.  It was a win/win.  The Gap emerged, created a lower cost pair of basic jeans, and was able to sell at a lower price point because they created 1,000,000 items of the same thing in mass factories.  If someone wanted a very specifically tailored pair of the jeans from the Gap, they had to purchase the jeans and then take them to a tailor and the tailor would alter them.  Inefficient, but this is how it works today.

In a world where technology (and software) is penetrating every industry imaginable, processes are going to evolve.  It was cost inefficient to create custom/personalized items back then, but will not be tomorrow.  The world of personalization is starting to unfold at a price point that is palatable for consumers.

What is a key attribute of personalization is that the consumer is part of the creative process.  Every one of us, consumes, have at least 1 bone of creativity in our body and the more we can exercise it, the more we are satisfied and inspired.  Union Square Ventures & Index Ventures both invested in a 3D printing company, Shapeways, which celebrates personalization, but it’s certainly not for the masses, yet.

A recent example of personalization: The Apple iPhone.  The iPhone is a platform which every owner can customize their own experience.  Unlike a feature phone, there is a real relationship with the iPhone because of all of the customization that goes into it on a consumer/app level.

I am very inspired and excited about the opportunities in the YOUniverse.  If you are too, I’d love for you to leave some comments around areas that you are innovating in.

Marketing Wednesday: Media

We’ve covered some pretty fundamental topics here for Marketing Wednesdays including The Chief Marketing Officer, The Marketing Plan, and previously, the Agency 101.  Today, we’re going to cover a very broad topic:  media.

History

Way back when, we used to divide media between Above the Line and Below the Line (ATL/BTL).  Above the Line was typically “brand” advertising which included print and television amongst others.  Below the Line was the non-sexy stuff such as direct mail and even today, most of the Internet.

We then went into an offline/online world; this was primarily from the 1990s thru today.

And now, we talk about media within the POEM construct:  paid, owned, and earned media.

  • Paid media is what you buy.  It’s a big billboard.  A 300X250 on Buzzfeed.  A captcha via solvemedia.
  • Owned media is what you own.  It’s your brand’s website.  It’s your Facebook page.  It’s your store windows.
  • Earned media is what gets amplified.  It’s the re-tweets.  It’s the check-ins.  It’s the word of mouth referrals.

Todays modern communications plans require thinking across the entire media landscape.  If you view slide 15 of our public Media Kitchen credentials presentation, you’ll see how we talk about this thinking.

I believe that the best marketing experiences play to POEM all in one.  It’s the future.  However, to deliver on tomorrow’s media opportunities, many folks will have to re-tool and re-structure.

I also believe that the way we purchase media will be re-tooled, to go from a human led and optimized process to a hybrid process of using technology where possible, not just for procurement but for optimization and insights.  We have invested in many of those companies here, but the entire media space is ripe for innovation.  This post is not about marketing technology, but about media, so I’ll stop there from a tech speak.

Buying

Many vendors sell media.  The way that agencies or marketers purchase media from vendors are on different cost basis:  CPM (cost per thousand impressions), CPC (cost per click), CPL (cost per lead), CPE (cost per engagement), ratings points (for TV), CPA (cost per acquisition), and others.  Each cost basis can “back into” others and savvy media buyers know how to work the numbers to make them work for individual clients.

If a vendor fails to deliver whatever is contracted, it’s common for make-goods to be delivered.  These make-goods are essentially exactly what they sound like: additional inventory to make up for missed performance.

When purchasing media, sometimes media properties bundle in “added value” which is essentially additional opportunities surrounding a core purchase that helps make the idea bigger and/or bring down the cost.  When a media vendor sells a package, the purchaser buys the specific package at a specific rate, but the added value is on top of it, which brings down the final cost-per metrics.  This is very common in the offline world and I’ve seen it often when buying site-direct sponsorship opportunities (online).

Media is also a big part of the agency world.  There are buying agencies, planning agencies, and integrated agencies.  I happen to work at an integrated agency where planning & buying are together (I can’t imagine them separate).  Agencies charge clients largely based on planning fees (based on time & materials) and buying commissions (relative to the media channel they are purchasing).  Some agencies put a % of their fee at risk so they can get a bonus based on performance.

Many people believe that the media agency model need to change, but I’ve not seen another model put forth which is the “golden” model.  All of the new models I’ve seen put too much risk on any one side of the equation.

We've Seen It Before

I walked into the office this morning and my colleague at kbs+ Ventures, Taylor, greeted me with excitement around some of the latest mobile marketing studies that were released.  TechCrunch has an article titled, In Mobile Advertising, Does Size Matter? and Forbes has an article titled, What if Mary Meeker is Wrong and Mobile Ads Never Really Take Off?

Thru our clients at the agency, I’ve deployed many mobile campaigns.  I also oversee a tablet/mobile client of ours, so I’ve spent quite a bit of time within the mobile space.  Additionally, we’ve invested in a few companies that participate directly with the mobile space.

Mobile engagement rates are higher to what we saw with the early days of the web, but it’s a false positive.  Let me explain (and I’m certainly not the first to do so).  If you’ve heard me talk and heard the line, “it’s the same cupcake, just with different sprinkles,” then this is exactly a use case for the line.

#1:  Screens are smaller, thumbs are wild
Our thumbs (and fingers) tend to touch ads by accident.  It happens and we’ve all done it.  You’d be shocked at how many people touch ads and then immediate click away.  We ran a click-to-call campaign for a client and it drove significant response, but most callers didn’t actually mean to call.

#2:  Bigger drives higher engagement, but more disruption
It doesn’t take a rocket scientist to calculate higher engagement with bigger units.  We saw it on the web.  We could have immensely huge units on the web that drive the same engagement, but do we really want it?  How many desktop web publishers adopted the OPA-sized ad units?  Didn’t we do away with pop-overs and unders?  Do we really need bigger units on the mobile device?  Just because we can, does that mean we should?

#3:  Newness drives engagement
It’s true.  Look at any new platform (or even app) and the engagement rates with the entire platform is higher than when looked at over a period of time.  This is my thoughts and I don’t have data to back this up, but I know from my own experience that I’m more excited on a platform early on than over time.

Net/net, we’ve seen this all before.  CTR’s and engagement rates for email and desktop display were high in the 90s; multiples higher than they are today.  Marketers should certainly take advantage of these high engagement rates if they can as they won’t last forever, I hypothesize, as they come down over time.

I don’t believe that today’s mobile banners are the best use for mobile advertising.  I think there is a better way to monetize the mobile web.  I don’t know what the perfect state of mobile advertising is, but it will involve location based data.  I do believe however that marketing with mobile data will be huge, in whatever form it takes.

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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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