Follow the Money: Why Some Advertisers Successfully Use Emerging Media and Why Others Can Not - Or W

Moderator: Matt Coppet, Head of Global Media Strategy, UBS
Panelists: Matt Rosenberg, Group Direcor, Organic, Inc.
Mikael Blido, VP of Marketing, Sony Ericsson
Frances You, Senior Manager, Telecom Media Technology, Deloitte Consulting

This was a provocative session looking at the big question of ad dollars moving online, a topic near and dear to many Ad:Tech attendees, I’m sure.

It’s an interesting time now with the writer’s strike.  The central issue of contention is how to compensate writers for distribution of content on new media platforms.  Writers feel so strongly about this that they are willing to shut down an industry worth billions of dollars in the near term to protect the long term.  This is tangible evidence that the decline of TV is happening and new media are emerging, changing the playing field.

From an advertiser’s perspective, emerging = unproven.  Advertisers “do emerging media” when they have a bucket of dollars left over, and don’t put a lot of emphasis on it otherwise.  In digital media we have an ecosystem: banner advertising, campaign sites, search, all those different things.  It all relates back to a channel where 90% of people who buy a phone will use a website.  It’s not as clear with Video On Demand (VOD).  For experimental purposes yes, otherwise no.

Question: is money flowing into digital media?  People spend 20% of their time online, whereas only 4-6% of money is spent online.  Why is the spending not proportional?  Have we set the right expectations?  Online video distribution pundits estimate for 2008 paid video will run $600 million to $1.1 billion.  Why such a range?  It’s really hard to set the right expectations.  In terms of how fast this platform will take off, high spenders on telecom and entertainment spend $200/month.  The new media platform has constraints: money is flowing but not at the pace at which people have set the expectations.  There’s a lot of hype about expectations.  The ecosystem around emerging media is immature, there’s no sophisticated tracking system yet.

There’s another structural issue as well.  For big advertisers their agencies are large traditional focused agencies which are used to the TV model: pick up the phone, one phone call can get 10 million eyeballs on Seinfeld and a 15% agency commission.  On the digital side it’s not so easy.  The fee structure is driving downwards.  Agencies have to spend more time for less money.  When you talk about the interactive wing of the traditional agency you get lazy and do more boilerplate plans.  It’s just harder to get the GRPs online. 

Another obstacle: internal sell-in.  Marketing is colored by traditional thinking.  If you can’t prove it, it won’t happen.  A lot of traditional marketers go online and what do they see on interactive marketing creative?  They see a lot of dancing silhouettes selling low cost mortgages.  Don’t you hate those?  A lot of what’s there is a turn off for a sophisticated marketer. 

So, will it be a traditional media model transplanted from TV, or print online, or a different business model?  Take online video: today it’s still an image of the more traditional model   On $218 million spent online for online video only 2% is performance driven.  What’s the value proposition for inventory owners or content owners? 
If all the money came all at once from TV into digital tomorrow, digital couldn’t handle it.  How would we actually absorb that kind of spend?  We need to put experimental dollars into the “next thing” to support it, otherwise the “next thing” will not be born. 

In CPG companies we see tremendous growth in the digital marketing spend.  They do a lot of promotion because it’s measurable.  There’s going to be some effective way to market to people via mobile (beyond annoying SMS messages).  If you’re willing to do it you can learn from it. 

What are the barriers to moving money into aggregators?  You can’t control where your messages go.  Mitt Romney’s campaign was putting messages into gay.com (an excellent placement, I’m sure).  You lose a lot of control over networks. This creates opportunities, though also danger.

When will we see the spend moving from TV to online?  When you look at Google or Youtube you see 65 million visitors per month but at the bottom of the top 10 sites (e.g. the 9th or 10th in the list), you see very little traffic. We need good integration of complementary content: TV, offline and online.  A major limitation is whether you do follow-through well. 

Even now, a lot of marketers have separate digital and traditional depts.  And they don’t sit together and are not integrated.  So don’t hold your breath about internet replacing TV anytime soon.

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