Digital Hollywood: Media Agencies Are Here to Stay -- Ad Networks, Not So Much
"Brand is magic... there is no computer that can figure out magic," according to Jim Heckman, CEO and founder of 5to1.com, explaining why advertising and marketing will always require a human element -- meaning the good services of media planners and buyers. During a panel discussion on branded media marketing Wednesday afternoon at the Digital Hollywood Summit in Los Angeles, the former chief strategy officer for Fox Interactive and his fellow panelists also criticized online ad networks for what they described as a wrong-headed attempt to dilute and cheapen online advertising.
Heckman said advertisers and publishers alike are reconsidering their relationships with online ad networks, as these deal in remnant inventory that "denigrates the brand" and have resisted demands from advertising clients for greater transparency and control in their ad placement systems. Instead, Heckman and several other panelists agreed, online advertisers and publishers are rediscovering the importance of associating products and brands with high-quality premium content.
While a huge surplus of inventory and the ultra-low CPMs offered by ad networks have served to depress ad rates across the Internet, premium publishers "are creating scarcity intentionally now [and] kicking out the major networks," Heckman said. Contrary to what ad network advocates claim, he insisted that "branding is not just about audience [size]" and demographic characteristics. "People want efficiency, but not at the price of killing their brand" through, say, untoward associations with questionable online content. On this subject, "it's unbelievable how often algorithmic placements are wrong."
On the publisher side, the new skepticism about networks was confirmed by Brad Davis, the senior vice president and West Coast multimedia lead for Disney, who said Disney doesn't work with ad networks, while ESPN (a Disney subsidiary) "pretty publicly withdrew from ad networks three years ago." If Disney's online properties have unsold inventory, "we use it to drive traffic to our partners and co-branded initiatives" -- a strategy that allows the company to exercise price discipline and maintain high CPMs. Recognizing Disney's special position, Davis said advertisers "realize we bring that brand value that is not available everywhere."
Additional confirmation came from David Freeman, the general manager of Matter for Edelman Sports & Entertainment Marketing. Freeman said: "Our problem with the networks has been transparency" regarding the context of ad placements, some of which are simply unacceptable for clients including major packaged goods advertisers. "We don't want to get a call from Clorox saying our content was appearing next to something that was, uh, not good at the end of the day."
And this brought the panel to the continuing need for a human element in creating, planning and placing premium brand advertising. Taking an example from recent headlines, Heckman asserted: "There is not an algorithmic or cookie-based way to make Toyota great again in the eyes of consumers." Meanwhile, "sponsorships have never gone away, and they never will... and that's always going to be done on Madison Ave. with cocktails."