Australian mobile ad spend quadruples plus big moves in retail display

Mobile advertising quadrupled in 2013, increasing 305 percent year on year to reach $349.2m in the twelve months ending 31st December 2013.  In the December quarter it represented 14.3 percent of total online expenditure, up from 11 percent in the previous quarter.  Video advertising reached 15 percent of display revenues in the December quarter, a 72 percent growth on 2012.  Display advertising also experienced particularly strong growth in the December quarter, reaching 35 percent year on year growth.

Motor Vehicles, Finance, and Retail were the top three dominant General Display industry categories in the December Quarter, representing 41.3 percent of the reported General Display advertising market. This was up from 40.2 percent in the December Quarter 2012.

Retail was a big mover this quarter, increasing its category share from 8.8 percent in the December Quarter 2012 to 10.5 percent  in the December Quarter 2013. This has been the strongest quarter for retail category share since the commencement of industry category data collection in 2008. The strength of the retail industry category for General Display advertising this quarter was also reflected in the greater retail movements in the market. Shoppers spent a record $22.6 billion in December 2013, following strong sales in October and November.[1]

IAB Australia’s Online Advertising Expenditure Report February 2014

How do we structure our communication agency partnerships for social?

Some of the biggest changes to the marketing industry since the 1960s are upon us and organisations now have to make difficult decisons about the best way to run their activities. TV changed everything so we shouldn't be too surprised that the Internet, a far more pervasive technology, refuses to be contained by traditional structures. David Ogilvy was never too sure if TV advertising was going to work. He thought someone would figure out how to make money from it in the ad industry but that it wouldn't be him. David Ogilvy was right. 

It used to be easy. Cut the marketing budget into an advertising agency, throw some to the PR agency and use the rest to sponsor a few sports teams and a couple of conferences. The client-side team structures are arranged by product or by brand channel and everyone marches along nicely and completes an annual marketing plan.

We now have to ask some questions like:

  • Do we need a fulltime agency? What do they do and what do we do?
  • Why are we buying media? Should we be making our own media? Should we have a newsroom and a newsreader-type person?
  • How do we hire and manage the most skilled people when we don't have the skills ourselves? How do we assess what a good mobile-first strategy is when we've never done one? 
  • How do we make sure we have the best technology for the future when we don't have knowledge about what the 'best' even is?

If it all seems a bit confusing then you are probably on the right track. Just take a look back to the influential management article 'The Nature of the Firm' by RH Coase from 1937.

"Apart from variations in the supply price of factors of production to firms of different sizes, it would appear that the costs of organising and the losses through mistakes will increase with an increase in the spatial distribution of the transactions organised, in the dissimilarity of the transactions, and in the probability of changes in the relevant prices. As more transactions are organised by an entrepreneur, it would appear that the transactions would tend to be either different in kind or in different places. This furnishes an additional reason why efficiency will tend to decrease as the firm gets larger. Inventions which tend to bring factors of production nearer together, by lessening spatial distribution, tend to increase the size of the firm.

Changes like the telephone and the telegraph which tend to reduce the cost of organising spatially will tend to increase the size of the firm. All changes which improve managerial technique will tend to increase the size of the firm" p 397. 

Run that by me again?

“efficiency will tend to decrease as the firm gets larger. Inventions which tend to bring factors of production nearer together, by lessening spatial distribution, tend to increase the size of the firm.

Changes like the telephone and the telegraph which tend to reduce the cost of organising spatially will tend to increase the size of the firm. All changes which improve managerial technique will tend to increase the size of the firm."

So what he's saying is

  • The bigger you get, the more inefficient you get
  • Inventions and technology increases the size of the firm, thus increasing inefficiency
  • To combat the inefficiency, you improve managerial technique
  • Improved managerial technique increases the size of the firm
  • Rinse and repeat

So the answer then is the startup right? Spin it all off.  Move to smaller structures for organising resources. However, the advantage of the startup is invention and efficiency. Both of these factors lead to growth and hence, inefficiency, so you’re actually on the same wheel according to Coase. Eventually you will have to loop around and make decisions about how resources are structured and directed. The organising mechanisms will need to be in place whether the activity takes place in your company or outside in an agency. At what stage do you start to build client-side capability and learn the new methods? 

The article summarises this relationship by stating that we "thus have a theory of moving equilibrium...the question always is, will it pay to bring an extra exchange transaction under the organising authority.” 

In simple english, should we be doing this or should we be getting someone else to do it? It is the problem of management to be solved so don't feel you're not making progress if you have some frustration and reservation about the way your marketing activities are structured. Keep having the difficult discussions because, if Mr Coase is correct, then you are trying to achieve an equilibrium and not a perfect, static solution in your organising authority (marketing team) and new technologies will keep shifting the balance. It's just change management I guess.  

The Nature of the Firm-full article pdf

David Ogilvy: A conversation about advertising-video

How do you get people to talk about your knickers?

I mentioned in a post last week the importance of using the correct term when you are talking about ‘marketing’ and ‘advertising”

Why does it matter?

Let’s look at the successful underwear company, Spanx

Which statement or statements are true? 

1. Spanx spends no money on advertising

2. Spanx spends no money on marketing

3. Spanx spends no money no money on paid promotion

4. Spanx spends no money on paid media

I saw an interview on 60 Minutes where the founder, Sarah Blakely and a journalist were talking about the success of the business and how they ‘spend no money advertising’. Some people hear this as 'no money on marketing,' and assume that if they build a better mousetrap, they won't have to invest people or money in marketing activities. 

To say that Spanx spends no money on marketing (or paid promotion) is incorrect. How do we know this?

First of all, the fact that Sarah Blakely was on 60 Minutes, filmed at a Spanx-run fashion show. I’m imagining here that Spanx created a fashion show event,(owned media-event), invited some influencers and media (earned media-influencer management and public relations), and obtained earned media through an interview on 60 Minutes (earned media-TV interview). 

Spanx did not pay for a 30 second TV commercial during 60 Minutes so they spent no money on advertising (paid media). They don't buy paid billboard space or take out pages in fashion magazines. However, the activities they carried out to plan and execute the event, influence and obtain earned media stories, did require people and money investment from Spanx. I’m also imagining that they promoted their event through email lists or social media channels and amplified their coverage on 60 Minutes through their company channels. All of these activities require effort on the part of Spanx and don’t simply happen organically. 

So does Spanx spend money on marketing? Yes. They don’t spend money on paid,third party advertisements but that is not to say they ‘build it and they will come’. Spanx invest people and money to get influencers talking about their products and build preference. Spanx has an excellent product and an excellent marketing approach with a focus on earned and owned media. 

The correct answer is 1 and 4.

Related posts:

Is paid-earned-owned media thinking still relevant?

Dave McClure 'most companies suck at internet marketing'

Future of marketing-The Naked Brand

I just watched The Naked Brand video. 

It's got some great ideas, especially for retailers around trust and telling the true stories of your company and products rather than making up fictional, highly produced advertisements. It's very...ummm what's the one with the drowning polar bears and Al Gore?... An Inconvenient Truth.

Good things:

-The perils of taking 30 second and print display mindset into new media. Yes yes yes. 

-Zappos and Tony Hsieh saying clever things about people and culture

-Patagonia saying clever things about transparency and how customers are smart and would rather here the truth about your company, even if the results aren't that great or where you want them to be.  Have a look at some of the work they are doing with WalMart. 

A couple of pet peeves for me:

-Lack of disclosure up front about who The Naked Brand is and why you are making a video to tell me about the future of marketing?

-Interchangeable use of the terms 'advertising' and 'marketing'. Advertising is a subset of marketing and promotional strategy. Product and service design has, and will always be a function of marketing. Sorry, that's one of my soapbox things. 

- I find it hard to believe anything Bogusky says. It's a trust thing. 

The one advertising question you should never have to ask

Are we doing a brand ad or a product/price ad?

You should never have to ask that because the business objective and deal mechanic that you ultimately choose will answer the question for you. 

For example, let's say you have excess coffee plungers in stock that your Merchandise team need to sell. 

Problem:  Thousands of coffee plungers sitting in the distribution centre. 

Objective: Clear the coffee plunger stock. 

Background: We bought them because they were cheap but they are an ugly red color and didn't sell so get rid of the things because we need the room we've got more containers coming in. 

Pricing: We thought we'd get $15 but our competitors have them for $9 and their aren't as ugly as ours so just move them. 

Deal mechanic: Multi-buy 2-for deal. Try two for $10. Yes I know that's $5 but we need to get rid of them. Have you seen one? So ugly. 

Channel: Instore and online. No we're not putting ugly red coffee plungers on TV. We'll put them in the catalogue if there's nothing else by Wednesday. 

Location: Regional. Just put them in the big box stores. End of aisle cut-box display in an aisle of value or something like that. A big cut box display of ugly red cheap coffee plungers. Excellent. We're no shipping them around the country-we've spent enough money on them already. Ship them to the big stores in the 'burbs. 

Deal GP%: Don't care. Just get rid of them they are costing us more in storage and don't buy anymore of those ugly red things. We've lost money on them already. 

Creative: Clearance bargain shoppers. Big bang on the price and the multi-buy. Don't put the ugly red coffee plunger on there-nobody needs to see that.  Just use the template we used to get rid of those outdoor loungers with the teddy bear cushion covers. Lordy who bought those? 

Deliverables: 1 x AO instore poster, 1 x A2 instore poster, web banner medium rec and a clear cut of the ugly coffee plunger for the website. They can print them on the in store printers, that'll do. Chuck the clear cut in the 'hot deals' section on the website. 

Timing: They'll be in store tomorrow morning so we'll need something by the end of today (sound familiar?). 

So, are we doing a brand ad or a product/price ad?

Both. We are doing a product/price deal mechanic consistent with our company brand. Everything is brand. Call to action is to purchase the two for $10 deal. We're not going to create cute jingles and make dancing coffee plungers. The objective is to run-out stock so we're not going to spend a lot of time and money on artwork- there is no money in the deal.  We will use functional company branded templates and reuse existing artwork where possible. Attention comes from the runout pricing and cheap deal cues (aisle of value, hot deals section). 

The business objective answers the question for us. 

Is content acquisition cost (CAC) the new metric we need for true marketing ROI?

Everyone seems to on the lookout for the metric that will magically make all of your business understand the true costs of marketing with the changes going on in the wider media and advertising industries.  The myth that social marketing is free really bites when you present to a CFO and find yourself looking at a nodding, smiling but essentially, blank face. 

If we want to make the necessary changes to budget allocation and organizational structures, I think we need to talk in terms of 'cost of content acquisition" (CAC) as a top-line financial measure. 

Marketing teams are freed up with some CAPEX to invest in sustainable tools like marketing software, CRM management and content production tools and aren't just working campaign to campaign. The true costs of resourcing campaigns can be evaluated more efficiently as we are looking at labour and production costs in the same budget line. 

A couple of assumptions:

1. Every company has a content production and distribution requirement

2. It's going to cost you something to produce and distribute that content

So the next questions become: 

Are we going to pay money to access other people's audiences e.g. TV and magazine users, website visitors?

Are we going to build our own audiences and transact our good and services through them such as events, online communities and user groups?

Are we going to use a combination of both? (most likely)

The traditional media buying method of putting together a mix (TV, print, radio, digital) and allocating budget across media types limits us on the owned and earned media sides.  It gives us a very activity-based view and doesn't allow for investment in audience building activity, mainly through increased resourcing of the client-side team to produce and distribute content. 

For example: We are an enterprise software company.

We need to produce training videos, user documentation, blog posts and events. 

We need to decide if we hire a video producer as a full time employee, contractor, outsource to an agency or buy paid space on a training provider's videos.  

Do we buy camera equipment, purchase editing software and fly our video person to big international trade shows. Do we give our sales team smartphones and teach them how to shoot vlogs with their clients on site visits?

By taking a broader view and looking at 'cost of content acquisition' (CAC)  we can investigate new media tools and distribution methods with more rigor. Suddenly the $500 smartphone for the junior account manager doesn't seem extravagant if it is used for audience building activities such as tweeting, taking photos and capturing video for direct upload to the company video channel such as Vimeo or YouTube.  The administration time on campaigns goes down as content is being published directly to audiences so we get a more accurate measure of the labour costs on our activities.  By sticking to a content acquisition budget, the fact that someone spends 10 hours per week on Pinterest is no longer subjective but a real input into a business process. 

I thought of this in the shower this morning so initial thoughts etc but if we treat cost to acquire content (CAC) separate from cost to acquire customers then will be able to calculate a more reliable ROI?

You're probably better off reading the Mary Meeker one

I read two research reports last night. 

One was on internet trends like mobile phone adoption in China versus the United States and Chinese people now have lots of phones. I've linked to the slideshare so you can have a look through that. It's a Mary Meeker thing and she's quite clever. 

The second one was about uppercase C creative-as-a-person-and-a-noun in Adland and how important those anointed, special people are and how we should be nicer to those people and spend more money with them and not be annoying them with unreasonable requests like asking for measurable outcomes. I'm sure you'll be shocked to discover that the report was published by a purveyor of the magical bottled upper case C creative elixer that can only be found in the armpits of those who write with Artline 200 pens. 

The first report stated the environment situation as it currently is and predicted where it is going.

The second report tried to desperately justify a business model that no longer makes money. 

I was bored by then so I went and looked at some lower case c creative curation by teenagers on lower case t tumblr on my lower case i iPhone and was entertained for about an hour. 

My media is better than your media

When you get a TV person and a radio person and a print person and put them on a media panel, they will sit and talk about why their media is better than everybody else's. 

The TV person will say that broadcast TV is a cost effective way to tell a story and reach a large audience. 

The radio person will say that radio is agile and had lower production costs.

The print person will say that print holds authority and can convey technical product information. 

All three of these statements are true and useful for campaign strategy. 

The brand marketer thinks media mix and media plans so you need to educate them on real events when your media works at its best- and also be brave enough to tell them when it won't work so well. 

If traditional media companies want to stay competitive and provide trustworthy information to their agencies and advertisers, they need to communicate a multi-channel strategy and show how integrated campaigns deliver effectiveness. 

The tech companies are taking ground in the media environment by working collaboratively and providing options for consumers to build and share portfolios of media that suit their audiences.  TV versus radio versus print versus online is not useful when the marketer wants to buy and campaign across multiple channels. 

Adobe research shows marketers are missing the digital mark

New research from adobe marketing cloud 'Click Here: The State of Online Advertising' shows that marketers are still sticking to what they know and haven't yet developed the skills and confidence to develop integrated online media plans. 

I've just pulled out one page that shows the leaning to TV and print in the mix. Blogs and social should be tracking a lot higher based on effectiveness measures that we're seeing from comscore and nielsen but the mindset of loading the media mix in traditional continues. It's chicken and egg: failure to invest in online leads to lower quality campaigns, lack of discernment in media buying, and a perception of ineffectiveness from both the consumer and the marketer. 

I wouldn't pay too much attention to most of the qual 'consumer' rankings, (consumers always say they aren't influenced by marketing) other than perhaps some privacy level perceptions on page 14 that could be useful considerations when comparing transactional permissions and third-party data sharing. 

Have a look through the full report if you have a few minutes. 

Global Entertainment & Media Outlook 2012-2016

PWC are predicting a moderate, 5.3 % growth in the global advertising industry today with the release of their 2015 outlook. 

The global advertising market is expected to grow from $434 billion in 2010 to $588 billion in 2015, increasing on average by 6.2 percent per annum (2011-2015). 

The correction is welcome after the hard trading of 2008-09.  

The PWC segment categories are a little confusing with digital and social grouped into the generic category of 'internet' which doesn't provide a lot of insight; focusing on the channel rather than the device. 

The Forbes VSS Industry Forecast 2011-2015 predicts 5.7% growth with consumer internet and mobile fueling spend at 18.1%. PWC predicts around half this at 9.6%. 

The PWC newspaper growth rates between 1.0 and 2.5% seem optimistic considering the revenue drags experienced throughout the US and major restructure announcements in the Australian industry. The Forbes VSS Industry Forecast 2011-2015 predicts a global decline of 3.8% which seems more realistic. 

Static numbers in outdoor and trade media support the theory that digital will continue to extend the media mix rather than cannabalise it-encouraging news for both media companies and agencies. 

The challenge now is for the media companies to redesign their organisations as quickly and painlessly as possible so they can deliver advertising products that work. Traditional revenues are still well behind what's needed to transition to digital and the people managing the heavily siloed structures are not designing products that reflect consumer media consumption. 

How fast newer players such as Google, Facebook and Twitter can design and sell ad products that will compete for significant amounts of spend (10%+) still remains uncertain.