Reality check for online advertising?
McKinsey Quarterly has conducted research (sign up for free to read the whole article) that indicates that demand for digital advertising will soon outstrip supply. Result? Higher prices.
On video ads: "Short-term mismatches between supply and demand appear greatest for the
video ads that interrupt or precede online content, such as news clips." McKinsey expects the demand (in the US) to grow from a current assumption of $600 million to anything between $1.4 billion to $3.2 billion...(Not sure about you, but what is the value of an estimate that ranges between 1.4 and 3.2 billion?)
Paid search: "Annual growth in the overall number of searches is slowing, from 30 percent in 2004 to 20 percent in 2005." "but without significant changes in consumer click-through rates or in the prices advertisers are willing to pay, we estimate—using our analysis of the prevailing cost per thousand impressions (CPM) and Nielsen Media Research figures on paid search—that the maximum current value of paid-search advertising is about $7 billion. Meanwhile, our analysis of current and forecast page views, ads per page, and CPM rates suggests that advertisers will want to spend $9 billion to $12 billion on paid search in 2007, up from around $5 billion in 2005. Even without severe supply bottlenecks, there won't be room to handle rapid near-term growth."
This is McKinsey, and I am unworthy but there is no mention of the impact issues like click fraud might have on the reputation and desirability of paid search advertising. Shouldn't that be taken into consideration when you make projections into the future? I am sure that some media companies will find these figures handy in a board room presentation but I question the real value. How about you?
More on elevator pitches
Will Swayne has a good question/comment regarding my earlier post (April 21) on elevator pitches:
"Hi David - A lot of people I talk to are keen to come up with a great "elevator speech". I like the idea too but it's very hard to come up with one that works without sounding too rehearsed, salesy or corny. Can you share any examples of successful elevator speeches? "
I agree, it is very hard to come up with a good elevator pitch. The reason it is hard is because it is the final outcome of a fair bit of hard work. The elevator pitch is in essence a well-worded distillation of what your business/brand is about. One of the reasons why many elevator pitches sound rehearsed, corny or salesy is because they have been developed with the purpose of getting someone's attention, not to engage with them.
It's a bit like walking around with a flowerpot on your head: you will get people's attention, but I doubt they want to give you their business.
A good elevator pitch is nothing more than a distilled version of your normal sales presentation; and that's the catch. Unless your sales presentation clearly defines what specific problems you solve for your customers and how you differentiate from competitors it will have little impact.
The substance of a pitch is what sells first. The form is about understanding the emotional pressure points of your audience; what are their fears and motivations.
So if your elevator pitch is not as sharp as it should be don't just work on the appearance, work on the substance and go back to work on what actually differentiates your company. Once that is clear, tell the story based on those emotional triggers you believe your audience responds to.
What are your experiences with this?
How is technology changing marketing?
- - How we manage our relationships
- - How we communicate with our customers, partners and prospects
- - How we develop new ideas for products and services
- - How our customers look for us
- - How we look for our customers
- - How we monitor our competitors
- - How we monitor customer satisfaction
- - How we source our products
- - How we sell to our customers
- - How we check our pricing strategy
- - How we present our company
- - How we analyse our performance
- What have I missed?
Advertising money can’t buy; unplanned and very effective
Melbourne, Australia is arguably the most sports mad city in the world.
Australia also has it's own code of football, Australian Rules, better known as "Aussie rules" football. I won't go into detail about the game (just follow the link if you're interested.)
As with most sports, many people have a particular commentator they love; maybe because they know their stuff, maybe because they are funny, maybe a bit of both.
Here in Melbourne a fellow by the name of Rex Hunt (an ex-footballer, ex-cop who is also known for his international fishing show) has a massive local following because of his unique humor infused into his commentary. He also has competitors from other radio stations and he doesn't mind having a dig at them.
His biggest slur on his competitors is that they are boring, so he calls their team of commentators "The Tobin Brothers" which happens to be a leading brand in the undertaking business...
Imagine, your brand name mentioned in the middle of commentary, to a massive audience without spending a penny. Now that's advertising money can't buy.
PS: I recently met the Managing Director, Martin Tobin, and I can tell you that he had a smile on his face when I asked him about this.
Why advertising agencies don’t advertise
Re:Focus: Why Don't Ad Agencies Advertise?
I love this; it really is a good question. Seth Godin highlighted this article from April 17, 2006 issue of BrandWeek written by SinekPartners CEO, Simon Sinek.
So why don't they advertise? The article notes that advertising agencies find PR much more effective than simply advertising. Why don't they practice what they preach?
Maybe because they know that just advertising your brand is ineffective and inefficient.
Because starting an advertising campaign in isolation is not marketing. the real question is not if you should advertise, but how you should advertise.
My question is how many advertising agencies actually have a marketing strategy. If they did, they would use a mix of media in a coordinated campaign, not just an advertising campaign using the most expensive media available.
Imagine this; advertising agency wants to gain customers in IT industry, determine that an online, interactive presentation of their work is a great way to communicate with this tech savvy audience. They use a combination of offline and online media to drive traffic to this dedicated website through curiosity inspiring creative. The online presentation is so good that it starts buzz in blogs which is in turn picked up on by their PR people...and so on.
The problem in the marketing services industry is that everyone is trying to sell their solution as the answer to clients marketing needs. And that simply doesn't make sense.
Advertising is dead…or is it?
I read Seth Godin's blog and her referred to this story of "How KitKat became number 1". It describes how KitKat, through a very patient and subtle promotion got their product go from an un-cool brand to a best seller with the kids.
There are three things that I think anyone can learn from this, no matter what your product or service is:
1. To get somewhere in a promotion or marketing activity you have to plan. These guys had a very clear strategy with an end-goal and specific steps in place. It wasn't simply a great idea; it was a great idea with a great plan.
2. Understanding the audience. A key to their success was that they understood that traditional advertising has no credibility with their audience. The essence of their campaign was word of mouth advertising. I wonder, does traditional advertising have any credibility with your audience?
3. They took their time. Creating interest and influencing behaviour takes time. You are dealing with people, and people need time to adjust, to accept.
Brand schmand? Does it really matter in B2B?
Our customers almost exclusively deal business to business. The reason we focus on this specific segment is because they tend to have limited in-house marketing resources, so we can fill a gap in a flexible format. As a rule, B2B companies in the SME space have a management team consisting of a CEO/Business owner as well as a Sales, Finance and Operations Manager.
Selling is the key marketing activity. And clearly, selling is the most important marketing function in B2B.
Marketing is generally equated with advertising, which is on the nose (and often for good reasons). Marketing is not seen as a strategic tool, because it is often not understood. The Accenture report I referred to in my last post pointed this out too, but related more to large corporate companies (with Marketing Managers) rather than SME's who have no internal marketing champion.
Take branding. When recently discussing a proposed tagline with a customer they insisted on using a tagline that would explain what they do. I argued that we need to aim for an emotional response, not a factual one. I read an interesting article in MarketingProfs by Kevin Randall, which has an interesting observation:
People say that they are not influenced by advertisements, but data and client spending suggest otherwise. In the early-to-mid 1980s, IBM did
not have the best computer systems or pricing. "Big Blue," however, became the enterprise systems market leader because you never got fired for buying IBM (same with Cisco today). IT Directors "bought" a relationship, company,
reputation, service, people, assurance. In other words, they bought
goodwill or the brand.
I still believe that most marketing services are aimed at either large corporate or FMCG organisations, not business-to-business, not SME. They need a combination of marketing services, rather than point solutions. From help with analysing opportunties to branding, to marketing communications and customer satifaction/loyalty programs.
A great opportunity for progressive B2B companies, a great opportunity for marketing firms.
It may not be a great business tool yet, but…
When you see stats like this every marketer should pay attention:
These figures show the growth of blogging sites, and it's phenomenal. I am interested to see how the local aspect of blogging will take shape, especially from a business perspective. Because let's face it, for a business in Melbourne Australia there is not a lot of value in being wel-known in Seattle unless you actually turn your blog into an advertising site, which I'm not interested in.
The non-local nature of the Internet has always been a key weakness. In Australia the largest telco, (51% Government owned) launched an Australian specific search engine searching the web, the yellow and white pages, etc. Not sure how successful it is, but the concept of being able to use the Internet to specifically communicate locally makes as much sense as it does to communicate globally, depending on what your goals are.
Word of Mouth – Democratising Marketing
I read this post from a Kerry Stranman, a contributor to the Word Of Mouth Marketing Organization (WOMMA) about Democratizing Marketing...that title put me off a bit (it has that "advertising agency" flavour to it), but the gist is interesting; marketers are losing control over "the message" they wish to deliver because customers can now directly communicate with massive audiences of other customers via the Internet. If it's great, they'll spread the word, if it's bad they will too...
Right now, you may think that this doesn't relate to your business. That your customers don't look online for information about your type of services or your company.
I don't care what anyone says; within the next couple of years what you do online will be just as important as what you do offline; it's only a matter of time. Why? Because when people buy stuff there are two things they will always want to know: am I getting the best value for money? Can I trust this product/brand?
People's networks are the first place where they look for this information, and the growth in online networks or communities are phenomenal. Maybe no one is talking about your product or service yet. But how long before they will?
The great confusion about “digital media”
This fellow has been working for one of the leading publishers in Australia in the "digital media" area.He has put together a consulting offer with the aim to help SME's get some idea about how they can take advantage without getting ripped off by one of the many cowboys that typically surround an emerging growth market.
When I started thinking about how I was going to explain this service to my customers, I realised that if "marketing" as a concept was poorly understood (some people see it as just promotion and advertising, some see it as sales, etc...), how much hope would we have in demonstrating the value of "digital" marketing?
What I realised is that unless you can paint a picture, create a reference point for people who have a very limited knowledge of a new concept, you're dead. So we have to paint pictures, demonstrating not only what these new channels are, but how they relate to an SME's world. How they work together with what they are currently doing.
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