December 6-9, 2009  |  Scottsdale, Arizona
Published: December 08, 2009
The audience is here. Now what do we do with it?
 

With massive new audience creation vehicles now in play, should agencies be tasked with creating marketing demand or fulfilling it? Our panel of industry experts comes out fighting from all sides of the issue.

The advent of the digal media age has created more ways than ever for brands to connect with audiences and drive purchase intent and action. But the rapid growth of advertising opportunities is leaving agencies struggling to define the role they should be playing in the equation, and how to position and monetize this role.

As a panelist and host of a passionate debate at the iMedia Agency Summit in Scottsdale, Ariz., Jim Spanfeller, former president and CEO of Forbes.com, recognized the precarious position that many agencies and publishers now find themselves in.

"Old business models are not working, and that's true across the board," he said. "Client marketers see a cloudy horizon. It's not without opportunities, but there's just so much we don't know."

Here's what we do know, according to Spanfeller:

  • Legacy media is not transitioning well.
  • Consumers are spending more time online, and while media dollars follow consumer eyeballs, they haven't been doing so at pace with the amount of time people are going to the web.
  • Online metrics are at best flawed, but no one seems ready to get rid of the standards of offline measurement.
  • Everyone wants accountability, but they aren't sure what they should be accountable for, or who the arbitrators of measurement and accountability should be.
  • Marketers need to build brands to drive conversions on better terms, but brand building online hasn't yet reached a high watermark.

But there are some important elements that need to be determined before the industry can begin acting on these learnings, including:

  • How should we be defining niche?
  • What will the new metrics be, and how will they be applied across multiple media?
  • If direct response is promotion, advertising is brand creation and digital, and the new game is about brand creation, what is the best role for agencies to play? 

The first topic posed to the group for discussion by moderator Doug Weaver, founer and CEO of Upstream Group Inc., was what the industry thinks it will see in the next two years. Will marketers be using the web more as a demand creation platform, or will all this targeting just make us better and better at the demand fulfillment role we've been playing all along? Weaver also offered up a third option: These are both false choices.

The consensus seemed to be that both answers will come into play. As Spanfeller sees it, creation and fulfillment will both move forward, but agencies may play more of a role in demand creation.

Michael Hayes, EVP and managing director of digital communications for Initiative, put it this way: "Those who have the peso, will also have the say so," and he agreed with Spanfeller that there will be a blend of both strategies. "Marketers want marketing breakthrough, but this has to come from experience as well as measurement."

Eric Hippeau, CEO of The Huffington Post, reminded attendees that marketers shouldn't ignore the creative factor. "To create great media destinations is a combination of art and science." Though he acknowledged that there is a natural tension between the two, he anticipates that the tide will turn more toward the art of marketing in order to grow and scale marketing efforts.

Doug Schumacher, founder and creative director of Basement, Inc., also stressed the power of creative, but he views creative itself as catalyzing an additional change to the marketing formula. "There will be a lot of brand money coming to the web, but the significant portion will be going toward brand experiences and away from display units," he said. "There will be a strong paid media component, but that inventory's job will be to drive people to the experiences." 

Schumacher added that such brand experiences scale very well, citing the successful efforts of brands such as Burger King and Red Bull as proof that great creative can lead to great results. "Red Bull creates destinations that are redefining how we approach what branding is," he added.

"We are still in the transportation business, bringing audiences from point A to point B," Weaver said. "Now those points are destinations rather than paid media."

Philip Smolin, GM of Turn's Platform Solutions Group, reminded the audience that the question that is particularly relevant right now is whether publishers and the IAB will create standards to determine how these strategies can and should work together.

But does the whole question of what the industry will see in the next two years ignore the bigger picture?

Jason Burnham, CEO of Burnham Marketing, disagreed with the panel's overall forward-thinking focus. "We need to look at the root of the issue and focus on the monetization, not the visionary standpoint," he said. "From an execution standpoint, it's a mess out there. On the agency side, clients are condensing margins to levels so slim that they are just staying afloat. It will take more than just two years for clients to understand why they need to spend more money online and for agencies to educate them about how it will impact their ROI."

Weaver took a page from Burnham, asking if the IAB's Randall Rothenberg's assertion that the industry can stem the commoditization and falling prices of online ads by staging a creative renaissance was true, naïve, or completely beside the point

Again, Schumacher championed the power of creative in the equation, saying that Rothenberg is right directionally, but he is a little too optimistic. Schumacher urged marketers to go back to the brand experience component. "The scope of what you can do has so much more potential to create that renaissance," he said.

Eric Hippeau likened the situation to being stuck in the radio age -- and the need to move beyond the concept of selling radio-style ads on TV, and TV-style ads online. "We are all for ad units that enhance experience," he said, predicting that we will see a transformation of the way ads and marketing look on a site.

Spanfeller countered that if you focus on brand equity and worth, those are also classic offline measurements, which are very limiting. "I would tell you that if it becomes strictly about demand fulfillment, the need for media buying goes away," he said.

Initiative's Hayes mentioned that when rates increase, it's usually because there is value there. As long as the results are there, he feels that it's OK if rate structures go up. "It's when there isn't reinvention of the industry that we see erosion of the bricks," he said.

Smolin felt that the question fell into the naïve category, saying that in a stable economic environment, if prices are coming down, either it's because value isn't there or value isn't being measured. "Supply management is critically important. If ads are not going to monetize at the level they should, take them off the market and reuse the budget for something else," he said.

Weaver responded to this by adding a third option to Smolin's assertion: That the value is there but it's being measured against the wrong scale.

Speaking out from the audience, Ray Costa of MyDailyMoment.com also felt that the IAB's stance is naïve. "We now have exploding inventory at the same time we have a recession. You cannot stem that with just better creative. It drives it, but what we need to do as publishers is to help agencies better educate brands that not all inventory is the same," he said. 

Weaver posed a final question to the panel on the topic of targeting. He asked if since all our new social media technology is creating tons of new inventory, is targeting technology a vital foundation for the future of our business -- a solution out looking for a problem to solve -- or just a headache for agencies and a business nightmare for media owners?

Hippeau felt that targeting is a solution looking for a problem. "I love technology, but so far it has just driven prices down... It's not a good solution for publishers or clients," he said.

Smolin said targeting is a vital foundation, but asserted that the key word is foundation. "It's one component of the solution," he said. "At the end of the day, 'Let's avoid technology and keep prices high' is what publishers are trying to say and it's not a strategy. The goal for everyone here is to help dollars be allocated to online."

Of course, the whole conversation could soon be a moot point, as Hippeau pointed out, citing upcoming congressional debates on consumer targeting and the potential dissolution of the strategy to an opt-in only option as confounding factors.

Weaver then closed the discussion with this observational nugget of wisdom: "As long as the click- and post-click metrics dominate our thinking, it's like a big crack pipe -- our life doesn't get better until we get off it. The ROI discussion has to precede all other considerations."

Jodi Harris is senior editor at iMedia Connection.

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