Networked Advertising: Growing revenue in a highly fragmented business

More Complicated Than Ever

The Industry Group Perspective

Reprinted from KPMG Thought Leadership Publication 4/10 

Full Advisory Document here – KPMG Networked Advertising PDF

Greg Stuart has insights that stem from a diverse advertising career that includes five years as CEO of the Interactive Advertising Bureau (IAB) — an industry group of more than 400 leading media and technology companies that sell nearly 90% of online advertising in the United States — and co-authoring the book What Sticks (Kaplan Business Books, 2006) a research-based look at what makes advertising effective.

“As the digital advertising ecosystem evolves at a furious pace, its myriad technical complications, options, and opportunities seem almost overwhelming,” Greg Stuart says. “The relationships between agencies, media buyers, ad networks, exchanges, data providers, verification services, measurement companies, publishers, and content owners have become complexly interwoven, obscuring participants’ roles, true value, data ownership, and consumer access. If—as an industry joke goes—‘advertising was a business created for C students,’ that isn’t the case any longer.”

Hermawan Kartajaya interview with Greg Stuart

Hermawan: Greg, I met you at your Public Seminar in Jakarta organized by Detik.com, Kompas.com and KapanLagi.com at Pacific Place. I was speaking before your session. Why did they bring you all the way from New York City?

Greg: Hermawan, yes I enjoyed our discussion and getting the chance to meet. I’d heard a lot about you. My reason for being in Jakarta was the major portals there, Detik, Kompass and Kapanlagi all believed that marketers in Indonesia were not using the online advertising medium to the degree they should.  Abdul Rahman, President Director at Detik saw a presentation I’d given in New York late last year and he thought that information would be beneficial to marketers here.

Hermawan: In Jakarta you convinced everyone that all marketers must change the paradigm. What are the fundamental reasons behind your strong statement?

Mobile Advertising: Maybe Next Year … or the Year After That

For nearly a decade I’ve been hearing: “This is the year for mobile advertising.” Based on recent polling research, I suspect the mobile industry has a fundamental problem that slowing its adoption: Even advertisers hate the idea of ads on their phones.

Advertisers Hating Ads?

The Vizu poll of 2,000+ visitors to Adweek.com shows that 76% of advertising types said “over my dead body” would they be willing to receive advertising on their cell phones. Only 15% said “yes”, but even that was a qualified “yes,” requiring permission. And these were ad people being surveyed, not general consumers.

As former CEO of the IAB, I have learned a thing or two about what it takes to create a new medium and garner advertising industry support.

Mobile Targets Like Nothing Else

What if the Consumer Hates Your Product?

Reprinted from Adweek Magazine

In a twist on John Wanamaker’s famous quote, research suggests that more than 50% of consumers hate what advertisers do for a living.

Consumers Hate Ads

A Vizu Answers online survey sampling over 2,000 Internet users, found 56% of respondents said that they want to eliminate all advertising, while only 44% accept advertising as it is. Even more bleakly, 72% said they find advertising “annoying” or “extremely annoying.”

Hating Ads Leads to Avoiding Ads

While consumer dislike of advertising may not be new or surprising, the degree to which consumers hate ads and the actions they take to avoid them today is worrying for the entire industry. 

Advernomics – Advertising Campaigns Fail at a Horrific Rate because that’s what Marketers Pay For

Advertiser Mag

First published in Advertiser Magazine

Research against $US 1 billion in advertising spending reveals that 47% of campaigns fail before a dime is spent on media [1]. This would suggest that not only was John Wanamaker right but that the ad industry has improved little since he predicted that was the case 100 years ago.

While my book, What Sticks, addresses a variety of reasons on why advertising fails, there is one element I believe is doing the most damage to advertising effectiveness. That is the underlying economic fundamentals of the relationship between Agencies and Marketers and in particular the misaligned incentive system. I’ll let the reader decide if this explains a horrific 47% ad failure rate.
So what does the current business relationship between advertisers and their agencies incentivize? Based on what I have observed, it is winning awards. Let’s look at how that works. Commission structures and hourly fees structures incentivize volume, or more revenue, for agencies. When the incentives are directed at volume, then the agency is perpetually directed to win new business (the backbone of any agency today) and one of the contributing factors to winning new business is awards (the backbone of new business). And I’ll go one step further, awards are best garnered from “big idea” high production values TV commercials, which is certainly reflected in today’s media allocation. It’s a perfect system, unless you value effectiveness. 

Foreword for Mobile Advertising: Supercharge Your Brand in the Exploding Wireless Market

Mobile Advertising: Supercharge...

 

Forward by Greg Stuart from Mobile Advertising:  Supercharge Your Brand  

Reprinted with Permission in Adweek Magazine 

“How do we not make the same mistakes the Internet guys made” is the most common question I get from each of the “newer” media channels, whether it be digital out-of-home media, IPTV (Internet Protocol TV) or mobile. 

Looking back at my experience as the CEO of the Interactive Advertising Bureau during the initial growth of the industry from $6B to $17B in online ad spending between 2001 and 2006, it’s clear that success was not easily won. That’s hindsight, of course, for the online ad spending, but it’s opportunity for mobile advertising! No one wants to make the same mistakes and everyone wants to get there quicker. 

There are a number of perspectives I gathered from that experience that I’d offer as relevant this time around.

Steven Levitt’s Foreword for my book – What Sticks

I thought this was so good, I wanted to reprint it here.  Greg (Man Saves Dog blogger)

By Steven Levitt, Award Winning Economist and author of Freakonomics

There are two kinds of problems in business. Messy ones and neat ones. Inventory forecasting is an example of a neat problem. You can go in and count the inventory in the morning, then count it again in the evening and calculate the depletion and replenishment needs – model it and become more efficient. It might not be easy to develop the tools for optimal control of inventory, but at least the problem is well defined and everything is easy to measure.

Then there are the kinds of problems I like. The messy ones. The ones where it is hard to even know what the right questions to ask are. And once you ask the right question, figuring out how to answer it isn’t easy either. These are the kinds of problems that people tend to fall back on conventional wisdom to answer, but these are also precisely the problems where conventional wisdom is most likely to be wrong.

If There Ever Was an Industry that Needed Disruptive Change…

Always On Article

Always On Magazine Article

Or, Dear VC’s, Marketing is s Mess – Please Help

In my recent co-authored book, What Sticks, Why Advertising Fails and How to Guarantee Yours Succeeds (Kaplan Publishing 2006), we estimated $112 billion of the total $295 billion in U.S. advertising spending is wasted. While most waste is a result of ineffective advertising and poor media choice, this is just the tip of the iceberg of the advertising industry’s problem.

Advertisers Slow to Seize Interactive Ad Opportunities

As the soon-to-be-former-head of the interactive media trade association the IAB, I witnessed one symptom of waste and inefficiency firsthand: the slowness of traditional marketers and their agencies in adopting the Internet as an advertising medium. While the interactive ad industry made great progress during my tenure, growing from $6 billion to $17 billion annually, our research for What Sticks suggested if advertisers were more rational, online advertising spending would be closer to $40 to $50 billion.

TV, Radio, Print Claim Accountability – You’re Kidding, Right?

I have been reading recent comments on media accountability. Some media lay claim to being “the most accountable medium”. Accountability is clearly the topic of the day, given the increasing need to understand the value of advertising and the recent public debate over TV research methodologies. I suggest that much of the debate is fueled by the more accountable world of online marketing.

Accountability can be viewed in two veins:

•  
  1. What is the confidence that a consumer saw an ad?
  2. What measurable direct action did the consumer take as a result of that ad?

Based on my 20 years in advertising and marketing (two of which were as an agency media researcher studying media measurement), I suggest any media that claims accountability is, politely, absurd.

Direct Marketing in the New Economy

I was recently asked to take on the CEO role for two different Internet marketing services businesses. Examining these businesses got me thinking about the future of direct marketing and what it might look like in the New Economy—one that is largely driven directly by the Internet.

Direct Marketing Is In For Change

When thinking about the future, we need a clear definition of direct marketing and the elements that make it distinctive.  DMA literature contains this definition:

“Direct marketing is an interactive system of marketing that uses one or more advertising media to affect a measurable response at any location. The response can be in the form of: