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."

7 comments about "Digital Hollywood: Media Agencies Are Here to Stay -- Ad Networks, Not So Much".
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  1. Jaffer Ali from PulseTV, May 6, 2010 at 7:55 a.m.

    Something is going on...you can sense it...smell it...or hear a faint echo. Real marketing folks are beginning to assert themselves and not letting algorithmic reductionists (how's that for jargon!) have the day to themselves. Bravo Media Post for allowing an alternative narrative to attract an audience!

  2. Christopher O'Hara from Krux, May 6, 2010 at 9:15 a.m.

    Great article. There is nothing wrong with using networks, of course...but, as a media planner, it is not enough to simply buy from them either. Until agencies can again become the media (planning AND buying) experts for their clients, they are going to be under threat from the dozens of technologists in the space. Thanks for publishing!

  3. Bruce May from Bizperity, May 6, 2010 at 10:28 a.m.

    The fact that publishers have had no control over their own landscape has always been a key distinction between online and traditional media. It’s not just an issue for an individual brand concerned about what other ads may appear in the same media channel. Any publication is defined in large part by the advertisers that occupy their ad space. Just flip through an issue of any national print magazine and you immediately see the power of this. Online media can never move forward and create the kind of user experience that consumers really want until they gain control of the whole experience created by their sites. That also includes the overuse of “busy” ads. When I open a page that has too many animated flash ads I quickly loose interest in hanging around to consume the content (I often find myself scrolling down a page just to get the flashing ads off my screen). Years ago I was involved in building custom designed video players for high end media clients. We created our own ad blocks inside the players and gave control of those ad blocks to our clients who sold the space directly to major sponsors. That created much greater value for the space and gave complete control of the user experience to the publisher. It was clear at time that this was the ultimate solution from the point of view of the publisher and it still is.

  4. Matt Johnson from Evolution Marketing, May 6, 2010 at 11:09 a.m.

    Good Article, that more people should see. Having sat on both sides of the desk, 10-years as a planner/buyer and now three years on the digital sales side, there is a place for both direct publisher space and ad networks. The part that boggles my mind is why is it so important to hold a higher CPM on publisher sites? After all what is it the site really wants? Higher CPM's, more bonus space and few dollars spent or a slightly lower CPM, less bonus (in trade for a lower CPM) but more dollars spent with you than with your competition? I work for an ad network now that targets outdoor enthusiasts. Is our content not premium because we only target a certain passion point of the digital audience? In our case, a client isn't going to be put next to questionable content because they know what they are getting when they buy. So, I agree with Chris, that agencies need to become the media expers and the buyer needs to fully understand what they are buying and where the ads are running. After all, if a network doesn't want to share where the ads are running, then they run the risk of not being on the buy. Advertiser budgets are a powerful influencer.

  5. Richard Frankel from Rocket Fuel, May 6, 2010 at 12:36 p.m.

    Indirect media organizations (ad networks, DSPs, exchange mechanisms, etc.) are carving out an increasingly larger piece of the display media pie because we are offering better value, innovation and dynamism to the marketplace. It's not too surprising that agencies and advertisers are spending more money with the most exciting part off the marketplace. It's no wonder that large publishers feel threatened, they just cannot keep up with the new technologies or new innovative media strategies. Those who engage innovation will succeed. The rest will just spread FUD and wonder why their budgets are shrinking.

    New media outlets do not "dilute and cheapen" online advertising. No media buyer is interested in that. Instead they do just the opposite -- they increase the value of media and make it more attractive for advertisers.

  6. John Ardis, May 6, 2010 at 1:10 p.m.

    This wrong-headed lumping of all networks or other media aggregators into one bucket and calling them bad, as the sweeping comments in this article do, is misleading at best. Let me offer a few points to consider...

    1. Any network or exchange that exposes a major brand on inappropriate content with any frequency at all won't be around long...period. For networks that have been around 10+ years, they've only been able to do so by protecting the brands they work with and by continuing to evolve with advertisers' needs - including, yes, transparency.

    2. "Branding" - any network that is claiming that branding is "all about audience size" won't be around long either. Reputable, well-established networks actually encourage clients to incorporate branding studies into campaigns so that they can understand the upper-funnel impacts in addition to short-term response and conversion. In this way, modifications can be made across the full spectrum of interactions, depending on the client's objectives.

    3. "Remnant" - This is a misnomer in the online world if there ever was one. If this media is so undesirable, then why is it that agencies who are building or licensing media buying platforms, real-time bidding, etc. are using exchanges as a primary source of inventory? Exchanges generally offer less transparency than networks, and the CPMs on them are also generally much lower than the "ultra low" ones that the article claims networks provide.

    4. "Premium Content" - The reality is that the designation of "premium content" has changed considerably in the online world. Media properties that have spent many years and great deals of money establishing themselves in the offline world can have struggles occupying the same lofty status online, primarily due to the low barrier of entry for content creation and distribution online. It's not enough anymore online to just have a "name" that brands feel comfortable with - these media entities also have to prove what value they're providing. This is why advertisers and their agencies continue to work with media aggregators like networks and exchanges - it's all about the value exchange they feel that they're getting, regardless of if they're going for "branding" or "direct response" objectives, or both.

    The reality is that savvy marketers should want to look at all effects of a campaign - from brand awareness measures all the way through to conversion and, subsequently, lifetime value. But they should take this view against all of their channels & placements, holding them all to the same standards of brand protection, reach, frequency, performance, etc.

    John Ardis
    ValueClick, Inc.

  7. Andrew Fischer from Choozle, May 7, 2010 at 10:31 a.m.

    As always, the term “network” is used broadly as a definition for most online advertising representation intermediaries. I would make an assumption that the Digital Hollywood panelists are referring specifically to large or “horizontal” networks. These larger networks are generally comprised of hundreds (or thousands) of websites and utilize technology/algorithms to provide cheap, efficient reach to advertisers. It is agreed that publishers who leverage networks for incremental revenue will experience price and brand erosion. This is where “premium secondary” and/or “verticalized” networks come in to play as they provide real sustainable value to both advertisers and publishers. Because of the targeting, transparency, and brand safety of this approach, smart vertical networks can achieve results for advertisers with no risk. Conversely, these niche networks provide an excellent complementary revenue to publishers from great brand advertisers at healthy CPMs. It’s a win-win-win.

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