Can brands evolve from digital advertisers to mass communicators?

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Session Name: The State Of Play In Digital Advertising

Speakers: Announcer David Card Jeffrey Dachis Bonita Stewart

Announcer 00:03

All right. Now we’ve got a conference going. A lively debate over that. That is fantastic. Don’t tell Om, but I’ve been a professional freeloader at GigaOM for five years now. All right. So, we’re going to move on to our next panel which is the The State Of Play In Digital Advertising. It’s going to be moderated by David Card, he is our VP at GigaOM Research, he’s going to be talking with Jeffrey Dachis, he’s the former CEO and co-founder of Razor Fish, current CEO and Chairman and founder of The Dachis Group, and Bonita Stewart, the VP of Americas Partner Business Solution at Google. Please welcome our next panel.

David Card 00:42

That’s going to be a tough act to follow. Those guys were feisty. So, we probably won’t be feisty because I don’t think I have competitors here, although I do have some differing opinions. So, this could be interesting. We just heard a little bit about one way the media companies are trying to save themselves with pay walls and sponsored content and things like that. The other thing, of course, that the digital media industry is facing right now are things like ad pricing CPMs going to zero and zero and below, I think, is Jeff’s theme [chuckles], as well as confusion over what role an advertiser or marketer plays in the content creation business. So, what we used to call sponsorship or advertorials, now is native advertising, right? You’ve got this opportunity for a marketer to actually end run the media company and create content experiences directly for their customer base. So, what do they do about that? So, I thought I’d pose a question to Bonita and Jeff about two of the other hot things that are on the table these days; mobile and social. The big question would be, can mobile and social save the media industry from itself? Jeff, you were talking about the CPMs going to zero and the digital brand advertising – which is where the big bucks are spent on television – is just largely ineffective. Do you want to riff on that a minute and we’ll see what Bonita has a solution for?

Jeffrey Dachis 02:16

I did make that statement.

David Card 02:23

I saw it in an e-mail, so I know it must be true.

Jeffrey Dachis 02:24

Let’s put it in context. I think there’s a huge shift underway right now in the way brands get built. What we’ve seen is the advent of this ability for people to share and express their ideas in ways that we’ve really never seen before. We’ve seen the ubiquitous bandwidth, battery life, screen resolution, processing power, and then mobility. In power, each individual in the world to be able to express and share their ideas with everybody else in the world. This shift, from what I believe to be mass communications to a mass of communicators has created, I believe, a strong fundamental shift in the way brands are going to get built going forward.

David Card 03:14

Okay. So, instead of the mass reach– you’ll still have to cobble together mass reach, but you’ll have individual lines of communication?

Jeffrey Dachis 03:22

In a way. Let me then further that idea and say that among the mass of communicators, I think brands when they want to figure out how to reach a group of individuals, they’re going to have to figure out how to engage with people versus advertise at them. So, with the shift from communications to mass of communicators, and the idea that brands need to be built in different ways by engaging with people versus advertising at them, I think that poses some fundamental challenges for the media industry as it exists today and the way that it monetizes its content.

David Card 03:57

Right. So, if a brand is just one of those communicators, they’re in this mass, can Google help them reach – I’m going to lob a softball here. This is the definition of lobbing a softball – what about re-building that mass reach again? How does that happen in this new space?

Bonita Stewart 04:13

I think with our publishers, we know that there’s disruption that’s occurring, but we don’t limit it to just mobile and social. We believe that – particularly for publishers – as they’re trying to navigate some of the disruptions that are occurring and we are finally moving beyond the banner, but we do think that a publisher should take a more holistic approach. So, it includes mobile and it includes social, but we know that 90% of people are using multiple devices. So, it’s incumbent upon publishers to actually look very holistically at how they’re building their brands. That’s why we start to see a combination of how this is all working together. Whether it’s programmatic and they’re looking at, ” What do I do direct? What do I do indirect? What do I do in between?” So, we’re just seeing very different approaches that are coming together, which is creating more of a cohesive strategy in the market right now for publishers. So, we don’t think it’s one or the other, we think it’s the combination across all of the new opportunities. So, it’s maximizing every single impression. One, that we’re trying to get–

David Card 05:32

So it’s a super efficiency kind of play, right?

Bonita Stewart 05:35

Yes.

David Card 05:35

I think, traditionally, display advertising, purchasing has been– most of the measurement dollars are spent on efficiency of buying rather than effectiveness of messaging because it’s so expensive historically, but that’s probably changing.

Jeffrey Dachis 05:52

I think around display advertising, I think it’s worthwhile to have the discussion around what are brand marketers trying to accomplish? Typically, at the top of the purchase funnel, you’ve got brand awareness and mindshare that brands are trying to create. Display, in some form in the past has been the primary driver of brand building. When you start to get into purchase conversion, you start to look at middle and bottom of the funnel. Digital has been a phenomenal driver–

David Card 06:23

Let me introduce you to the most profitable media ad-seller in the history of media.

Bonita Stewart 06:27

We’re seeing CPMs though. We do think there’s a huge opportunity for the brand. Particularly with ad formats, driving engagement, but we’ve seen CPMs that were at $5 or growing at 24% year over year and CPMs at ten are growing at 23% year over year.

David Card 06:46

Is there a common theme that characterizes what people can actually charge for?

Bonita Stewart 06:51

It’s the infrastructure and some of the tools and the techniques that people are using. So, if you think of from a programmatic perspective, it’s not just the run in sight, it’s looking at, “We are a brand. So, why don’t we bring into using the tools to bring in secondary premium”, even premium. We’ve seen that with the Washington Post where they’ve been able to actually capture a rate card what they’re doing from a premium perspective. So, it’s starting to segment and differentiate your–

David Card 07:25

Is it a positioning thing or is it a format? Are they selling video on that slot or–

Bonita Stewart 07:29

It’s positioning. It’s working and understanding your direct sales model and positioning and segmenting your inventory so that you can capture brand at all levels and then using some of the techniques, whether it’s if you have a particular advertiser, you might do a preferred deal. There might be others – a group of advertisers – that you might bring in and into a private exchange. So, we’re starting to see more preferred deals; private exchange that’s happening within the programmatic space. And it’s supporting branding, and that’s what the advertisers want.

Jeffrey Dachis 08:11

Are we seeing more of an increase in CPM rates for display advertising because they’re more effective, or because they’re reaching more people more effectively for branding purposes or because they’re converting better? Why are we–

Bonita Stewart 08:29

I think they’re becoming more effective. We’ve been spending a vast amount of time focusing on the innovation of the ad format. So, whether if you’ve heard about some of the light box, just more engaging ads that are now available for brand marketers; True View and True View running in all formats. 25% of YouTube now is on mobile. So, the True View and focusing on user choice, where they have the opportunity to skip, they have the opportunity to engage, they have the opportunity to opt in. I think there’s just a new model, but it’s just a broader breath of ad formats.

David Card 09:09

And that’s actually pretty format independent if it’s the opt in add. It could be a video that you opt in for, it could be display or a takeover or whatever. A lot of the new action is called social media advertising, but it’s really buying a lot of cheap, mildly targeted inventory on Facebook. Facebook’s built a multi-billion dollar business off of that. Is that social media marketing or what is social media marketing? Can that restore some of the value to display ads as well?

Jeffrey Dachis 09:47

Social marketing, in my mind, is brands engaging directly with their constituent. Engaging with them in the kind of conversations and in the kind of social platforms that exist in the Market Place today. And that buying billboards or ads in people’s engagement streams is not necessarily the most effective way to spend money. That said, media buyers and the people who spend money to build brands and to help try to connect with consumers, they have so many options available to them today; many of them new, many of them interesting, many of them not that interesting, or not that effective or not that new. I think, generally speaking, what you’re seeing is an enormous amount of money going into testing, tasting and trying some of these new formats and seeing what’s working and what’s not working.

David Card 10:36

Does it have to be online focus groups and real time conversations, or how does that work with that mass of micro-communicators that you were talking about? Is it harnessing bunches of them at a time, or is it zeroing in on one at a time?

Jeffrey Dachis 10:55

I think the most effective social marketing is marketing that engages at scale. The only way to engage a constituent base at scale, is to actively target and communicate with the power brand warriors, or power advocates that exist in an ecosystem and have those brand warriors and those advocates amplify that activity authentically in a trusted way and in a transparent way.

David Card 11:20

So, you draw the tree diagram. There are tipping point influencers that carry more weight than other people do and it’s part of your guys’ mission to identify those and label them and empower them.

Jeffrey Dachis 11:35

Correct.

Bonita Stewart 11:36

Because there’s a school of thought that says some of that tipping point science research was maybe over-stated and that things that spread may be more evenly than through those pockets of–

Jeffrey Dachis 11:50

I think it’s pretty well known that people tend to trust the reviews or thoughts or recommendations of friends and family, or even strangers more so than they do brand advertising copy. I want to pose to the audience here, if you can raise your hands, how many people in the audience here have bought something based on the recommendation of a friend, a family follower, or even a complete stranger online? Interesting. Almost everybody.

Bonita Stewart 12:18

I like professional reviewers too.

Jeffrey Dachis 12:20

Sure.

Bonita Stewart 12:19

It could be sponsored.

Jeffrey Dachis 12:21

Sure. Absolutely no question about that. The point being that I think, social marketing in my mind is engaging with a group of individuals and having those individuals echo and amplify that authentic, trusted and transparent messaging on behalf of a brand. With that you can get engagement at scale.

David Card 12:38

Obviously, anything you could probably pull off in social could be multi-channel or multi-platform?

Bonita Stewart 12:52

Actually, we’ve seen that with our hangouts. This is a free product–

David Card 12:55

People are doing them off the phones?

Bonita Stewart 12:54

Jeff talks about at scale. I thought this was such a great example of the cleverness of publishers at Glamour, I don’t know if you’ve read about that, but they are using the Hangout product; bringing in their thought leaders, some of their editors, engaging across a variety of topics, and bringing in products and they’re actually now bringing in sponsors. So, if we talk about what was done years ago and now we bring this in – I heard the prior panel talking about just native advertising, but now all of a sudden taking a product such as Hangouts, and you can hangout anywhere. You can bring more ingenuity to this type of medium at scale and it’s quite engaging on a topic that would be of interest to a number of people.

Jeffrey Dachis 13:53

I was going to say I think the challenge for a lot of the media companies is to figure out how to really, truly use the tools like Hangout or others that are out there to meaningfully engage with their audiences at scale. When I can publish my gluten-free cupcake recipes and reach a global audience just as effectively as a big media company can, when the means of production and distribution for thoughts and ideas are the same for me as they are for a big media company, we’ve got an interesting dynamic for the publishers out there that are trying to monetize their content in traditional ways. So, I think it’s up to the publishers now to try to figure out how can we engage our audiences and our community effectively at scale, and then what new forms of monetization are there? I think the advertising form in its traditional shouting at people to build brands isn’t necessarily going to be effective over time as people figure out that they can engage with each other and achieve a better result.

David Card 14:55

So, again, Facebook feels like– people engage on Facebook. Whether they engage with brands or not is debatable in some cases, but Facebook proved that they can actually make money selling those same kinds of things on a mobile platform. Google has certainly proven that search is very profitable in the mobile business as well. What’s the other mobile format?

Bonita Stewart 15:20

It’s video on mobile. If you look at YouTube and as I said, there’s a billion views that are moving through on the mobile platform, and 25% are in the mobile platform. We’re talking about mobile and social, and that’s why we take a more holistic approach in terms of working with publishers because you need to bring in that video element. What’s great about video? Video can be social; you can watch a hangout video together. On the other hand, video is mobile. So, taking a more holistic approach across all screens, all devices, all ad formats is–

David Card 16:03

It does seem like a lot, with the exception of something like The Hangout, which does take questions in. It’s definitely engaging, I’ll grant that one for sure. It feels like a lot of video advertising is television advertising. Again, it’s that shouting message, so how does that play? You’re probably going to say don’t even bother to do that on the phone.

Jeffrey Dachis 16:27

I would probably say that. I think mobile is the perfect engagement tool. It’s your personal communicator and your ability to connect and engage with not only with your friends and family and followers, but brands in real time, in HD, is possible.

Bonita Stewart 16:46

And with all the tools, such as Geo, the location, the access to call. So, I just think using the computer in your pocket, it just offers–

David Card 16:59

How do you help a media company take the television normal shouting experience and convert it into something that is– Geo is just for your location, but is it Click2Call? Do you have to embed that into–

Bonita Stewart 17:16

Click2Call is clearly one. Here we are during–

David Card 17:19

It’s not too scalable for a bank I don’t think.

Bonita Stewart 17:21

Yes, it is [chuckles].

David Card 17:22

Good.

Bonita Stewart 17:22

I can say that [chuckles]. It is. It actually brought the call center to life again. So, Click2Call has actually been a tremendous application for the finance industry, insurance industry.

David Card 17:42

It feels like bundling an offer with that communication or that engagement thing. That seems like a natural. I don’t know if it’s easy to do that on scale, but —

Jeffrey Dachis 17:53

Again, I’ll highlight where marketers are in the cycle. If they’re at the top of the funnel and they’re brand building, it requires a different set of activity to build awareness, mindshare, or advocacy than it does for middle or bottom of the funnel conversions into sales or into legion. So, I think publishers need to be conscious of where are they? What are they trying to accomplish? What are their marketers or their clients trying to accomplish? If you’re a big television firm, the best thing that you can do is help build awareness and mindshare. How can you do that versus building a conversion in the funnel?

David Card 18:24

Okay. I’m conscious that we’re between you and lunch. So, let’s give a bullet point or two bullet points apiece of word of advice to the publishers and the media companies about how they can use mobile and social to save their business. Bonita, what’s your two bullets that they must take away from this?

Bonita Stewart 18:45

Take a holistic approach to building your sales strategy and I would to be not afraid. Jump in and really evolve, and we’re seeing that from many of the publishers right now in terms of picking up the pace and participating and experimenting in very creative ways.

David Card 19:07

Jeff, you have one last take away for–

Jeffrey Dachis 19:11

Really consider the shift from mass communications to the massive communicators and how that creates a fundamental shift in the way brands get built from advertising to engagement at scale.

David Card 19:21

I think that is pretty good advice to leave with. We’ll go to lunch pretty soon and give it up for the panelists. I think that had some good things there.

[applause]