The Asia Media Journal
April 17, 2014

June 15, 2009

The Machines Are Winning

A publicity poster for ‘Terminator 3: Rise of the Machines’ turned out to be rather an effective way of portraying digital publishers’ own battle of man versus machine: as sales teams try to raise the price of online ad space, machines – in the form of automated bidding – are driving it down.

What’s more, the machines are winning. Pricing an ad based on how many clicks it gets is easy to understand and has proved popular with marketers, who like to make sure their advertising succeeds in reaching potential customers.

This tends to over-estimate the worth of the final link in a much bigger campaign however, while undermining the true value of the brand advertising, often integral to the final click, that online publishers should be making more money from.

Google, perhaps the ultimate performance-driven media business, is not just good at what it does. It really is tucking into everybody’s lunch

If publishers weren’t spooked by the ‘Rise of the Machines’ pic, used in a presentation by Microsoft Advertising’s regional director of strategy and monetization, Doug Stotland, another slide quoting what Nike’s global brand management VP Trevor Edwards thinks about media should have done the trick.

‘We’re not in the business of keeping media companies alive,’ Edwards said in an interview with The New York Times. ‘We’re in the business of connecting with consumers.’

Media under attack
Speaking at a recent breakfast panel organized by Sopa – The Society of Publishers in Asia – Stotland cheerily recommended that media owners pay more attention to the latter part of Edwards’ remark, as a prelude to a passionate call to arms for publishers to raise their game.

Without precedents to work from, setting online ratecards is far from easy. Digital sales executives can help however, by figuring out what marketers want and using that to price ad inventory based on the contribution of both brand advertising and the value of a click or a conversion.

“We really struggled to set the price,” Stotland admitted. “The thing that has been most useful has not been the math; it’s been more about keeping the pricing analysts close to the sales people, getting them involved in the discussions, so the math in coming up with the pricing is really fed by intuition.”

Digital’s dilemma
As Starcom’s regional digital chief Pushkar Sane has argued elsewhere, online publishers sitting on undervalued inventory face a real dilemma in today’s recessionary climate: damned if they hold firm on rates while other media are cutting theirs, potentially losing out on new business; and damned if they don’t, converting new clients to digital but sacrificing their own health in the process.

The answer lies in something commercial media has relied on ever since the first ad was sold: good sales people. “You can stick a price on the list but a good solution-selling, top-notch, aggressive negotiator is worth his or her weight in gold in this kind of situation,” Stotland declared.

Selling brand advertising
The night before Sopa had held its annual awards gala dinner, celebrating the best of what Asia’s publishing industry has to offer. Magazine and newspaper executives who skipped Sopa’s breakfast panel discussion the morning after, however, also missed a chance to hear what needs to be done to keep the industry robust in the future.

One tricky challenge will be persuading marketers already confused by digital media to swap a simple way of doing business – counting clicks – to something far more complex. For Stotland, it’s a challenge they mustn’t shy away from.

“Realistically, the level of technology and the level of sophistication to get this done is probably beyond what 99% of marketers are ready for today,” he said.

“We just need to be very articulate about the concepts, and have the data to back it up. All the publishers should be talking about this, their sales force should be trained to talk about this."

Time to take on search
Technology has been driving down the price of online brand advertising. It’s time publishers fought back.

“The industry should be doing this,” Stotland continued. “If you think about an organization like Sopa, that’s a perfect example where we should be pooling our resources together, doing the research, publishing the studies, shouting it from the top of the trees.

“Because search is charging advertisers for the content that we paid for, for the audience that we brought, for the value that we created.”

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