Adding value: Inspiration from the IAB blog

Ben Shepherd writes: No … not the local IAB, but the US one. It has a fantastic blog mainly written by Randal Rothenberg, CEO, and veteran ad man (and author of Where the Suckers Moon).

Rothenberg is a smart guy … and has to be one of the global thought leaders when it comes to digital advertising.

The last six months have seen some fantastic posts from him – well worth a read – – covering everything from audience measurement, economic troubles, publisher value and more.

The local IAB could follow suit and show more analysis I feel. The PWC reports are great but reporting on figures doesn’t really mean much if there’s no analysis behind it and knowledge that can provide the basis of future predictions for the industry.

Over the last few weeks I have been thinking about the importance of having a point of difference, especially now as everyone is scrambling for whatever piece of new business is available.

When I think of media agencies, what sets them apart? Is it buying clout? No … most groups have that. Is it tools? Probably not, everyone has similar tools? Is it data? Maybe … depends what data it is? Is it their people? Well, sorta … everyone says they have ‘the best people’ and I’m sure most believe it … but people can only be a differentiator if they are given the flexibility/freedom to express their own point of view and stance on their area of expertise. Media agencies over the past few years have started adding elements – content, digital, analytics – it’s all aimed at adding value but often it’s removed from the agencies core offering in the clients eyes hence is often interpreted as ‘added cost’ and not ‘added value’.

What sets publishers apart in AU? Is it audience numbers? No, everyone is engaged in a contest to have the biggest number for reach … so much so reach doesn’t really mean anything anymore? Is it their ad units? No – they’re mainly the same. Is it rates? Not really … most rates are pretty low right now? Is it the people? Not really but it can be if you have a shit hot salesperson on your business. Is it their trade marketing? No, because it’s all rubbish generally? Is it their junkets? Maybe for some. Is it their knowledge of their audience? Generally not as no one seems to really understand what really motivates their audience. For most publishers, added value is Run of network bonus.

Most feel there is a real need for both publishers and agencies to start ‘adding value’. But to do that we need to ask … what does that mean?

Rothenberg talks about the pressures that existed in the 1980’s magazine environment and how digital is facing similar issues now. Again, it focuses around the idea of ‘Added Value’

In the 1980s, for reasons not dissimilar to those we’re experiencing now, magazine advertising rates came under pressure. Changes in production technologies and distribution channels prompted a flood of new periodicals, most of them in niche segments that promised marketers more targeted reach to consumers than the established mass magazines. With larger magazines losing scale and facing an explosion of competitive inventory, ad agencies began demanding price concessions, forcing publishers to consider breaking the fixed-rate structure that had dominated the industry for decades.

Publishers tried to resist going off their rate cards by offering their customers what they euphemistically called “added values.” These included in-store events, ride-and-drives, shelf-talkers, polybagged inserts, and a multitude of other gimmes. In effect, they were combining an above-the-line program — magazine advertising — with various below-the-line elements drawn from the disciplines of trade promotion, consumer promotion, direct marketing, and events marketing.

The problem was, most publishers saw these “added values” as disguised discounts, instead of looking at them as service offerings for their best customers. So most did not build out the new strategic capabilities that the changes in the marketplace demanded; they continued to consider themselves publishers of print periodicals, not providers of marketing services. As a consequence, they did not invest in the talent, technologies, processes and relationships that would allow them to scale these services, and they didn’t develop hybrid pricing models that valued the bundled services appropriately. By sticking to the fiction that they were in the brand-advertising-supported print periodicals business, many publishers relegated themselves to endless rounds of price competition for inventory their customers increasingly viewed as a commodity.

Rothenberg’s lesson is this.

Development of new marketing services and the hybrid compensation structures that go along with them is the key not only to survival, but prosperity.

Agencies are already trying this. It’s clunky and awkward in some instances but it’s a start. Publishers, not so much … they are still interested in taking orders for banners and textlinks. Radio as a medium is excellent at adding value.

Credit to ninemsn – they have been innovators in this field with nine pixels and HWW … but aside them no one else is really doing this.

And they could. Publishers are closer to consumers than advertisers generally … and should be able to incorporate bespoke services that connect advertisers with an audience.

Rothenberg: Publishers must help brand marketers and their agencies by offering the online equivalent of visual merchandising and sales promotions techniques that are designed to reinforce brand while contributing to pulling the product through the channel. Said another way, eyeballs and clicks just don’t cut it any longer.

Very true. Advertisers are going to demand it and longer term viability will require diversification. Agencies need to provide this to.

Across all channels.

And more reading  (A Services Strategy for Interactive Publishers) –


2 responses to “Adding value: Inspiration from the IAB blog

  1. You might want to remove the ‘credit to ninemsn’ as they shut down Nine Pixels and cut back HWW in their recent restructure. Seems it’s heading in the wrong direction after all….

  2. talkingdigital

    hi ben – not sure how correct some of your post above is … I have asked ninemsn for clarification as I have been told differently.

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