As technology and data shape the next wave of digital media buying, the need to approach the entire process from a statistical mindset is growing in importance. In the not too distant future it won’t be surprising for a day in the life of a digital media buyer (or trader should I say?!) working on a response brief at a typical agency to involve monitoring campaigns on multiple trading systems whilst working with a team of analysts, crunching campaign data using analysis packages such as R.

Google Chief Economist Hal Varian in an interview for The McKinsey Quarterly earlier in the year mentioned that statisticians will be the sexy job in the next ten years and with Numbers pulling in prime time audiences on TV it certainly seems that he’s not too far from the truth. This could happen a lot faster in the quickly evolving media buying industry and gazing into a crystal ball reveals that skill sets will also need to also evolve to keep pace with the technology infrastructure that is powering the industry.  Gone will be the Head of Trading whose lunch ability knows no bounds to be replaced by the Head of Data whose skill and value will be in interpreting the vast amounts of data that agencies will be generating through their trading platforms, and developing meaningful insights from this. Think of it as being more Wall Street (minus the suits of course!) than Mad Men. All in all, a combination not just of statistical techniques but also marketing know-how will be an integral part of the new agency product. It doesn’t take a huge amount of insight to spot the increasing importance of data but what does it mean on a practical level for your average digital media agency? Using statistical techniques to help analyse and optimise campaigns has multiple benefits ranging from improved ROI for advertisers through to greater operational efficiency for media agencies. In short it’s in everyones interest.

Infectious, as a ‘new breed’ agency has been built around this core belief. Our underlying infrastructure, skillsets and services are designed to get the most from this new world. It will be interesting to see how quickly the wider agency community embraces this shift.

A new breed of search engine has made waves this month which goes by the name of Wolfram Alpha. A strange sounding name to the uninitiated, Wolfram Alpha is a computational search engine. What does that mean? Well instead of just serving a list of websites its an engine that literally computes the answers to any factual question you type in. A bit like Ask Jeeves claimed to do. This is across a range of subjects including technology, travel, weather, cooking, and more. The sources of information are scientific journals, encyclopedias, government repositories and any other source the company feels is credible.

The difference between Ask Jeeves and Wolfram Alpha however us that Wolfram Alpha has answers to factual data which means it could do a better job of answering questions. The downside is the engine cannot cope with generic questions such as ‘inflation rate’ but will do better with ‘inflation rate uk’, so it may turn away users getting frustrated at not being able to get factual answers even if the answer does exist in Wolfram Alpha. Ask Jeeves failed because the message from the advertising campaigns strongly suggested that people could get any answers they wanted when in reality it was just a search engine.

Google on the hand already to a very limited extent provide factual data similar to Wolfram Alpha for searches on stock market ticker codes, calculation operations, and other information whilst continuing to serve search results below. Google have responded with Google Squared which allows the users to get similar answers to similar factual questions in spreadsheet format although the quality of the results looks like its not quite there according to the YouTube demo.

The rivalry between the two companies is clearly on and nobody knows which search engine will deliver the best structured search results. Given that scientists struggle to agree on certain issues, and the bias of information out there, I think its hard to avoid serving a list of search results with different answers so that users can decide for themselves - no matter how good Wolfram’s algorithm will be.

Will people use Wolfram Alpha to shop for the best car or cheapest flights to Croatia? I doubt it unless the engine starts taking in feeds from every air carrier to give users the cheapest flight data. How will Wolfram Alpha monetise its service? Will we see search evolve so that companies lease APIs from Wolfram Alpha and Google for corporate level structured search results? Will Wolfram Alpha end up as another Ask Jeeves? Probably not as Wolfram Alpha is retuning factual data and doesn’t promise anything more at this stage. Will Google buy Wolfram Alpha? Maybe, Google could use Wolfram Alpha to power the factual search queries made and also get there hands on Wolfram Alpha’s intellectual property instead of reinventing the wheel.

It’s too early to draw any conclusions about the impact this may have, but it’s great to see a breakthrough in search and finally some potentially real alternatives to Google Search.

There’s an article on Business Insider today which in turn quotes a great Business Week article from 2000 that insightfully asked ‘How will Google ever make money?’

The crux of the article is this:

‘The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors.’

This is interesting for a couple of very different reasons.  Firstly, as a historical reminder that Google flipped the industry on it’s head in breathtaking fashion.  They did away with the predominant image based ad, borrowing the business model of Overture to serve text ads linked to an auction pricing model and took something new to market.  At the time (as a media buyer) I certainly didn’t believe it would work, preferring, instead, the glamour of AltaVista (RIP) banner advertising to the three line text ad on Google.  Fast forward to 2009 and Google is the biggest ‘media owner’ in the world, generating $6bn of advertising revenue per quarter.

The second interesting point to come out of the Business Insider article is linked to comments made recently by Eric Schmidt, speaking at the Morgan Stanley technology conference.  When asked about where Googles growth in revenues would come from, he replied:

‘Where is [our] next source of revenue? [The] next source is current business functioning better. Next and adjacent is a set of display businesses and an exchange being built from DoubleClick business.’

A slight change of tactics from their stance back in 2000 but the reality is that the market for text ads is maturing and growth is levelling off.

There are few details on the Google exchange product but this time they have bought the business that they will use to to leverage display (Doubleclick), instead of borrowing the model and being sued at a later date. So what could this product look like, given that Schmidt sees it as so crucial to revenues going forward?  Well, instead of thinking about Google as a purveyor of text ads on the search results page, think about them as the largest owner of intent data in the world through their search engine.  One way they’ve used this intent data is to serve text ads against search tems, but this is only one execution of an ad against a hugely powerful data set.  Through a display media exchange it becomes possible to intelligently  serve display ads against that data on any site, which will open up a huge new market to Google in highly targeted display advertising.

To make this a reality, a big challenge for Google to overcome is the issue of data privacy. Two weeks ago Google made a significant announcement around a basic ‘behavioural’ targeting product across You Tube and its Ad Sense network. It was only a matter of time before this happpened, but they have clearly gone to great lengths to introduce it in a simple, (relatively) transparent and cautious way. The media whipped up an ‘information privacy’ storm around Phorm in the UK, and it seems that Google may have been waiting for that to die down a little before dipping their toe in the water in a very controlled way (with plenty of user control and opt out-ability). The obvious omission from the announcement was the use of Googles search data in the targeting formula.  Make no mistake, this will come in the future (Yahoo! announced their own Search/Behavioral retargeting solution last week), but Google may be waiting for people to become comfortable with this simple behavioral model first, before ramping up the sophistication with the reams of data they hold.

Much of this is still speculation, as things are heavily under wraps, but the Google Exchange isn’t too far away and there’s little doubt they have both the data and the distribution channel to make this the market leading product in display, flipping the market back on its feet and with display advertising on a more even footing once again.

We’d love to hear what you think…

I like data.

It has stood me in good stead in this industry as I’m sure it has many others. Our campaigns produce tons of the stuff and increasingly agencies are reliant on companies that process and present this data to push our thinking forward such as Atlas and Doubleclick.

But data isn’t (and shouldn’t be) the be all and end all. It’s easy to forget that data is a product of something that has already happened and as media planners we’re often trying to find something new, especially in digital. Take search for instance, the ultimate data driven medium. We analyse search patterns and use algorithms to determine bid strategies; all based on what has happened in the past. There’s nothing wrong with this but it can be a dangerous obsession and lead agencies to a one dimensional and commoditised offering.

To illustrate this point, I’ve seen and given hundreds of presentations that are based around a marketing funnel. Where data driven techniques are at their most potent is in pulling customers through that funnel and converting demand that is already there; think PPC search and retargeting. But this is an ever decreasing circle as it does nothing to actually create demand for a product or brand, it is just squeezing the most out of demand that’s already there.

Advising a brand on how to act strategically to create demand requires a different type of thinking. This is insight driven, takes an understanding of a advertisers business, their product, their brand, their market and shock horror: ‘people’ and how they behave. There shouldn’t be a spreadsheet in sight for planning purposes, no formulas or macros and definitely no definitive answers. Overlaying and translating all this thinking into media terms is a wonderful exercise and for us is what media planning is really about.

So as a digital media agency, the skill sets you need for a complete offering are hugely diverse and need truly different people, but that’s what agencies should be about:- a collection of people with different specialisms that integrate seamlessly for a client. It can be difficult to reconcile some of these skillsets but these are our challenges. Data skills are clearly hugely important but if that’s all it’s about then perhaps it’s time we started employing monkeys and bought some typewriters.

Here’s Mel Carsons’ latest Media Week blogumentary post. http://is.gd/hFEZ

Also see Episode I and Episode II.

Thanks Mel!

Instinctively we’ve all known there is a relationship between display advertising and search advertising with the former always presumed to have a positive impact on the latter but this has rarely been quantified outside of individual client studies.  However a new US study by Comscore has confirmed this relationship and gone deep in to what the dynamics of this synergy actually are.  To summarize:

1)  46% lift in site visits vs control over a four week period

2)  38% lift in use of advertisers brand term within a search

3)   27% higher online purchase intent

This is all interesting and the basic insight is that people don’t really click on banner ads but they do respond to them in different ways and hopefully this will put another nail in the coffin as clicks as a benchmark for campaign success.

But for us, the most interesting insight in this relationship comes in looking at the size of audience exposed to different ads.  In terms of reach, 81% of the audience only saw a display ad whilst only 8% received only a search ad.  In effect this is saying that display and search are connected in a cause and effect way within the purchase process and the number of people who search for a brand is positively linked to the amount of display advertising that a client is doing.  This has big implications at the current time where budgets are being cut everywhere.  Instinctively it feels like display advertising should be scaled back as click based ROI is much higher for search but in doing this, search will actually become increasingly less effective over time as no new leads are being fed into ‘the funnel.’  Braver clients will stick to their guns on display and as inventory prices fall will reap the rewards in overall ROI whilst a knee jerk reaction to plough everything in to display could be the start of another death spiral……

Food for thought.

Times are economically hard, there’s no doubt about that but feel for the poor salesman in digital media who is going to get it in the neck worse than most in an unsung revolution that’s taking place.  Digital is leading the  way in the automation of trading platforms (although all media are thinking about it), something started by Google with the inception of Adwords a few years back.  Search has gone completely self service with all engines allowing, in fact forcing, you to use their tools to run your campaigns rather than pick up the phone to them.  Google even went so far as to offer short term incentives (Best Practice Funding) to increase agencies competence in the self service approach and ironically have paved the way for the acceptance of this type of trading in display now as well as search.

For media owners it makes a lot of sense, account managers can handle much larger volumes of transactions, won’t make as many mistakes, admin is cut hugely and the automation is generally founded on some sort of targeting technology making inventory work harder and therefore more valuable.  For good measure the buying model inevitably moves to an auction to achieve optimum pricing for media owners and buyers.

Two sets of media owners on the display side are now moving forward with self service interfaces which are going to change the way things are done on this side of the market.  The big social networks, working out how to monetise their inventory better have both released self service interfaces, initially to appeal to smaller advertisers and monetise the long tail whilst the long awaited media exchanges are starting to make moves over from the US where they already have huge critical mass.

There are two overriding implications for the agencies; the first is macro level in terms of market dynamics.  A small agency will be able to deliver the same pricing as a network agency as, similar to PPC, it’s all auction based.  So then if noone can be bigger, you have to be better.  However on a micro level, each of these new systems requires skilled people to push the buttons and in our experience the larger you are, the longer it takes to adopt new systems.

So, as always happens when new technologies and ways of doing things emerge, there will be gaps to be exploited and before this particular revolution is finished there will be a new set of household names.

The Infectious Digital blog is a really useful way for us to express our opinion on areas of interest and hot topics. We’ve covered a diverse range of subject areas over the past 6 months, since we launched, and we have hundreds of regular visitors and subcribers to our RSS feed (thanks for the interest everyone).

It struck me, this week, that we haven’t spoken enough about Infectious, and the type of work we are doing for our clients, so i thought an update was well overdue.

First and foremost, Infectious is a digital media agency. It’s just that we offer a much broader range of services than your typical digital media agency. Here’s why.

We see 2 huge areas of change in the digital media landscape, and the services we provide are designed to get the most from these 2 areas.

1- ART

The boundaries between Online PR and Online Media continue to blur. Many of the best digital marketing opportunities involve non paid-for content integration. Social media and disruption to the content distribution value chain is driving this. Infectious plan and execute campaigns that fuse the optimal blend of paid for and non paid for activity. Getting the blend right, and understanding how the various components interact and work together is the ART of smart campaign planning.

2 - SCIENCE

Digital media targeting and buying is increasingly data and technology driven. Media exchange platforms offer ultra efficient access to display formats, optimised to business goals (in a similar way to PPC search). Understanding these new platforms and working with our own tools/ systems to optimise across them, and across channels, means we can plan and buy digital media more effectively than ever before. This is what we call the SCIENCE of digital media. Not all digital media buying is suited to these new platforms, but a growing proportion is. Again, we use the mix that is right for your campaign, based on the business objectives at hand.

At Infectious, we beleive it’s the combination of this ART and SCIENCE that provides our clients with the most efficient route to their marketing objectives.

A lot of people have written a lot of stuff on the use of social media in the US presidential election and have hailed Obama as the clear winner in this space.  This has been a seminal election from that perspective, with Obama’s campaign videos garnering almost one billion views, but I thought it would be interesting to look at more traditional digital media and how the candidates made use of it within their media mix (not least because I ‘Linked Obama in’ ages ago and he hasn’t got back to me yet, I don’t buy the fact that he’s too busy).

Over the course of the election Obama spent $8m, with the figures for McCain unreleased.  This sounds like a large number but to give an equivalent figure for the UK based on the relative size of the population this would be a spend of £1m on digital media over the election year.  Figures are sketchy but overall media spend for Obama is estimated at over $250m, meaning that digital is weighing in at 3.2% of spend at most whilst overall digital accounts for 18.2% of spend overall in the US.  Broken down further and $3.5m of this money has gone to Google leaving less than $4m for display advertising when Yahoo and MSN Search are taken into consideration.

I think these figures are all low, really low in fact and all the excitement over social media and its effect on young voters has overshadowed a surprisingly small digital campaign element and a missed opportunity to use digital as a mass medium for communication.  Political campaigns have always been slow to embrace digital, with the UK political parties only just managing websites let alone advertising and there seems to be a distinct fear to move away from the traditional mix of TV and Outdoor almost exclusively by media agencies probably fearful of upsetting a formula that can’t be criticised.

It was disappointing and a little surprising then to see these US figures given all we’d heard about the progressive and digital nature of the Democrat campaign, as Digital media does lend itself to political campaigning in a number of ways:

1.  Fundraising works in digital.  Reported to have delivered $4 for every $1 spent for Obama and helping him towards the huge total he raised for the campaign.

2.  Search can give precise, issue based targeting on those floating voters seeking information on particular issues.  This can now even be targeted regionally and Obama used this medium to effectively dial-up spend in states he needed the votes with the appropriate level of spend relative to the need.

3.  Regional targeting.  Obama employed regional targeting of display and went so far as to tailor creative for each state to increase relevance.

4.  Digital is great at reaching some audiences it’s difficult to find in other media and who have been traditionally incredibly apathetic voters.  Obama trialled in-game advertising in ten key swing states with Massive but for less than $50k.

5.  Digital is a rich, engaging advertising environment.  Video ads are now widespread and the medium offers unrivalled opportunities to engage with the message and find out more.

So, whilst a lot of the right noises came out of the Democrat campaign, the reality was they were reticent to really change the tried and tested political campaign media mix  and digital media was used as little more than a niche targeting mechanism.  To put these numbers into context, TV spend for Obama in October alone was over $100m with his 30 minute advert on Fox costing $6m.

It will take another four years to see the next US election, but the political parties in the UK must now start to think about how they will be using digital media.  If they can break the mould then perhaps they can  seize the huge opportunity digital presents to genuinely influence a wide spectrum of the electorate and not just the youngest generation.

It’s a dirty word alright, but someone’s got to say it.  Recession.

So it feels like the UK is moving into a full blow recession now rather than the more palatable downturn, but what does this mean to me?

Lessons from 2001 gives us some good clues as to the way things might go:

1) Search will be relatively OK.  There’s a lot of talk at the moment about how search is recession proof.  I’m not so sure about this, as a medium advertisers will be loathe to pull back from it but as budgets fall there will be an inevitable hit. One of the biggest spending sectors, finance, is currently experiencing a dramatic decline, and within that sub-prime finance is all but dying.  If you’re looking for another sign of fear in the sector, it’s interesting, and probably not altogether coincidental, timing for Google to drop their stance on not taking gambling advertising in an effort to claw back some of the revenues they are currently losing.  We see search flattening and perhaps dropping slightly in the UK but not declining notably.

2)  Display advertising will take the biggest hit.  The stellar rise of search has always masked a more modest rise in display advertising which was just beginning to pick up pace.  With a smaller ROI and higher proportion of brand money than search, display advertising is going to suffer and there are already whispers from media owners of a large decline in revenues.  Unfortunately, this slump in spend is coupled with expectations and headcounts that were set in more favourable financial conditions and leaves many media owners exposed.  These will be interesting times and companies such as IPC and Bauer (EMAP in those days) will look back to the 2001 slump and be glad they weren’t so exposed now as they were then.  Brave businesses like the Guardian will also breathe a sigh of relief that they invested in the future and now have a more balanced sales proposition.

3)  Agencies - it’s time to see who cuts the mustard.  Back in 2001 I was working at Tribal DDB in the infamous and rather depressing days where the company was reduced from 100 staff to 30 in the space of a very short period.  The agency survived but other notable stars of the time such as DeepEnd and Avenue A’s first venture into Europe didn’t.  Digital businesses are built on much stronger foundations and revenues now, but it will be a time where agencies reduce or at least freeze staff numbers and the dreaded search for good people may become just a little easier.

But this will also mask a positive story.  Digital media is increasing its share of consumption at a steady rate and even though the absolute spend in digital will stagnate, the share of media spend going to digital will continue to increase relentless.

So my point?

Across all these sectors, the winners will be those who adapt to new technologies the fastest.  Business models will change and from this period some great companies will be born.  Will it be Phorm or NebuAd or perhaps the media exchanges will start to come to the fore, whichever it is clear is that media owners will turn to technology solutions to boost their yield as times get harder.  The effect on agencies will be that those which turn as fast as supertankers will struggle to defend an ageing business model whilst those who innovate, can adapt quickly and are willing to take risks will build an advantage for them and their clients.