Media Buying & Planning Guide: Consolidation Rules

Performance marketers have always been quick on their feet, scooping up deals and making creative changes on the fly. It’s the nature of this business to be intuitive and reactive at the same time. Experience, of course, goes a long way, too.

With this round of Response’s semi-annual “Media Buying & Planning Guide,” industry experts at leading agencies weigh in on the latest trends in digital marketing and offer predictions on what to expect in the coming months — and perhaps years — ahead as technology continues to transform and coalesce media and commerce.

Media Mix

A number of digital brands, such as DraftKings, GoDaddy,
Trip Advisor, and — above — LifeLock have had success
adding TV to their previously digital-only marketing strategies.

Advertising seemed to reach a tipping point during the past year when, for the first time, digital outpaced TV spending in the U.S. According to eMarketer: $72.09 billion was spent on digital advertising by the end of 2016, while TV spending landed just under the mark at $71.29 billion. As digital advertising continues to grow and pull media dollars away from traditional TV, networks and MVPDs have responded with competitive over-the-top (OTT) services and skinny bundles, and they’ve created package media deals and other incentives to help their clients target and connect with audiences across these various channels.

“We do much work in the branded content space, where digital/social components are key to each deal,” says Kevin Lyons, president and CEO of Opportunity Media (and member of the Response Advisory Board), which provides exclusive direct response representation in the U.S. for A+E Networks and Zee Entertainment. “We are constantly looking at new ways to enhance existing offers via digital channels.”

It’s all about connecting with viewers whenever and wherever they watch TV, at home and on the move, through live programming, DVR, video-on-demand (VOD), or any other platform they choose.

“We are bundling digital VOD with our TV buys to capture both live viewers and those who prefer to watch content on a time shifted basis,” says Peter Koeppel, president of Koeppel Direct, a full-service media buying agency in Dallas and member of the Response Advisory Board. “In the VOD environment, we can buy pre-roll, mid-roll, or post-roll ads. This is really about meeting the consumer with an ad placed in a relevant environment with content they are able to watch in their preferred way — live or time delayed. The result is a lower overall CPM on an aggregated basis.”

The networks are aggressively pushing their respective OTT platforms, too, says Koeppel, in an effort to reach cord cutters.

“Almost all larger cable networks either have OTT platforms or are in the process of developing them,” he says. “We will be testing out these platforms in Q4. As audiences erode and become more scattered, the networks appear to be hurting for revenue, so they are charging for everything on an à la carte basis and not offering digital as a value add, unless you commit big media dollars.”

Pricing for digital add-ons is also a concern for Doug Garnett, president at Portland-based Atomic Direct.

“A fair number of them overvalue their digital options, so generally we haven’t found it makes sense to do that,” says Garnett, a member of the Response Advisory Board. “It doesn’t mean digital’s not important. We’ve found it more productive to seek digital through digital, and TV through TV.”

As digital media becomes more ubiquitous, it’s understandable, he says, that advertisers want their campaigns to include a strong online component, and networks are responding to that. However, it’s important to remember the advantage and power of traditional TV.

“The problem is that TV works exceptionally well because it reaches a broad audience — and microtargeting has a weakness, which is that it very often narrows the audience so much that you no longer get the benefit of future sales,” says Garnett. “Think about it this way. When we’re buying traditional TV, we’re also building the people who are going to buy six months from now and the people who are going to buy two years from now. A lot of the microtargeting options are so hyper-targeted that you’re no longer reaching people who might buy in six months to two years.”

Rather than starting from a digital-first position, he recommends that his clients take a step back and think about overall campaign goals. Ultimately, media is media, and it’s most important to coordinate the right mix to reach audience effectively and affordably at scale.

“The right thing to figure out is what’s the challenge you have and how do you meet that challenge,” Garnett says. “Then decide which media types are best for it. So, even though digital is where people like to start, if your challenge is a brand new product that nobody knows about, digital is a very hard place to introduce a new product. TV is a very good place for that. If your problem is reminder advertising where people already know about your product and you need to get them searching and coming to your website, then digital may be a great place to start.”

Compelling Content

This all ties back to the Consumer Journey series, a phased approach to performance marketing that Response has revisited throughout 2017.

Online therapy and medical advice is a growing vertical, one
that could benefit exponentially from the right mix of online
and offline performance-based marketing tactics.

“Reaching people at different stages of their journey requires different media, and you need to understand what you’re attempting to do in order to know which media is the best one to apply,” says Garnett. “TV is good for certain things. It’s not good for other things.”

It’s also important to adjust messaging and tone for continuity and context. Though the concept of watching TV has started to blur, a viewer’s expectations and tolerance for ads and various ad lengths differ when watching mobile video on the go, binging time-shifted content, or tuning into live programming.

“The definition of TV I use is very broad and includes the TV experience viewed across multiple devices,” says Lyons. “In terms of traditional TV viewing, not only is that activity quite healthy, it represents an excellent environment to reach the consumer, who is less distracted than they would be if on the move.”

Live programming is still at the top of the content hierarchy, says Steve Netzley, CEO at Havas Edge in Carlsbad, Calif.

“Whether it’s a reality TV contest like American Idol or The Voice, whether it’s live sports, an awards show, that is the content that delivers an audience in real time that is measurable,” he says.

It’s because these are still the most compelling stories that people want to see, says Netzley, and that’s what TV is all about. At it’s core, that’s what successful advertising is, too.

“Video messaging, especially in the acquisition and performance marketing space, is about storytelling,” Netzley adds. “Whether it’s online or offline, the more compelling the story, and the more engaging the content, the more successful the ad.”

For all of the advantages that digital marketing delivers with targeting and tracking, it just doesn’t have the same storytelling capability and emotional appeal of TV — which is why commercials have worked so well for the many notable digital brands that Netzley has worked with, including DraftKings, GoDaddy, LifeLock, and most recently, TripAdvisor.

Networks may be losing dollars to the digital space, but there are plenty of digital brands funneling investment back into TV, and this trend will only continue to grow, says Koeppel.

“Shorter spot lengths continue to be an effective tool for driving web traffic,” he says. “The media costs less and it allows an advertiser to increase their clearance and their frequency. We’re seeing an immediate and powerful effect when we run an ad and online activity that is increasingly coming through mobile. Therefore, it’s crucial that the mobile experience be optimized to make it easy for consumers to interact and transact. It’s also important to carefully manage an advertiser’s reputation and social proof so that prospects aren’t lost to the competition.”

Among these digital advertisers, Lyons adds, is an emerging segment that people will see much more of in the coming year.

“The typical categories of financial products, household, wellness, and beauty continue to succeed across our networks. These are just some of the areas,” says Lyons. “An area of increased growth in the future will be the field of online therapy or teletherapy, as well as telemedicine. This field is poised for significant growth and DRTV will certainly be part of that story. Another issue is the increased scrutiny on digital transparency in advertising, led by market leaders like P&G. This issue must be addressed and it is very helpful leaders are helping to shape this change.”

If advertisers want perfect clarity from their digital performance, Netzley recommends looking at outcomes rather than impressions.

“The reliable numbers part should be fairly simple if you’re buying outcomes,” says Netzley. “So if the way you’re measuring success is by how many people come to your website, how many people transact business with you over the phone or on your website, those are outcomes — the results, the relationships, those people truly showing up. If you’re buying an outcome where you’re valuing how much you pay that person based on how many people click through a link, or go and enter a promo code, or however you’re tracking it, then it becomes much easier.”

Fragmentation and Consolidation

Cord cutters often revel in the amount of choice they have, that the decision to break away from expensive cable bills was easier to do with the amount of quality content readily available through a variety of alternative providers. However, managing a bevy of subscriptions — and then seeking out which shows to watch and how to access live programming — has introduced another kind of inconvenience.

As streaming services continue to grow and invest in content, Peter Feinstein, president and CEO of Phoenix-based Higher Power Marketing, believes that traditional TV will continue to have real strength.

“[Streaming services] are going to probably need to become ad supported at some point,” says Feinstein, a member of the Response Advisory Board. “I need the streaming people to figure out a valid, useful, productive advertising package, and nobody has yet. Some have preroll, some have commercials in the middle that you have to watch, some have commercials you can volunteer to watch. I want something that I can just buy.”

When asked if perhaps some form of consolidation is on the horizon, an option to bundle each of these subscriptions in one place, he says, “That sounds an awful lot like cable.”

The irony isn’t lost on anyone in this business, but as Netzley points out, there’s already a serious amount of consolidation taking place.

“The lines are becoming blurred between content distribution and content creation,” says Netzley. “You’ve got a lot of consolidation occurring on what I’ll call the content creation side. A great example is Discovery buying Scripps. That’s consolidation. Comcast buying NBC: that’s consolidation. And then what you’re also seeing is distribution buying content creation. What it seems like is that the most highly valued thing is content, and the consolidation is coming at a time when you’re seeing this increasing pressure on skinny bundles of TV services. If you’re a secondary or tertiary, in terms of distribution cable network in a skinny bundle world, you’re in a really difficult space. As we look into the future, if your brand, if your business is aligned with content that is compelling, and targeting, and delivering an audience similar to what you’re looking for, you’re fine.”

There’s a really simple way of looking at the shifts we’re seeing, adds Netzley.

“This entire conversation we’ve been having is about content,” he says. “Advertisers want access to it. Content creators want money for it. The simplest answer I can get to is what does that look like going forward? Well, it looks like there’s probably a relationship there somewhere.”