• by John Nardone , Op-Ed Contributor, July 15, 2010

Plugging the online spending leaks

We all love a big budget, don't we? Clients with big budgets get wined and dined. Agencies with clients with big budgets make money ... and get to go to sporting events and cool parties. And the clients that spend big online, are a special kind of celebrity. These clients are on the cutting edge - the brave and innovative who push the limits of the only growing medium. For that, they don't just get wined and dined - they get promoted and recruited.

And now, those same innovative clients that built the justification for these big online budgets are about to tear them down and start again. I know because I have seen inside enough similar big-budget campaigns to know that they have been absolutely wasting 50 to 70 percent of their spend. They have been spending against people who will never buy, and they have been bombarding the hand raisers, the people who might buy, with impression levels far beyond diminishing marginal returns. And clients are smart. As these facts become clear to them, the budget restructure will be swift and decisive. 

It is the advent of integrating targeting platforms, or "demand side platforms" that are giving clients a new view of their online media, and a means to respond to the new insight. These platforms consolidate data at the cookie level, so we can see audience characteristics, frequency distribution and performance across multiple media sources. And at client after client, agency after agency, they are revealing the same truth: You have to run all your media through one platform that can control targeting, frequency and overlap, or you will leave big money on the table.

How are campaigns being restructured?

First, the old approach of using multiple networks that compete for attribution is dying fast. If you have more than two ad networks on a plan, start over. Second, remarketing is quickly being consolidated with one or two providers so that frequency can be optimized. If more than two partners have remarketing pixels, start over. Third, optimization engines are zeroing in on the audiences that perform, and cutting away the waste. If you are not running an algorithmic engine to optimize run-of-network inventory, start over. If you do, the result will be better performance with a fraction of the budget.

But wait a second, you say. I LOVE my big budget. I don't want to spend less!

OK, Mr. and Ms. Innovator. Here are some ideas for what you can do with that extra budget:

Test dynamic banner messaging. All that new audience targeting data can be passed in real-time to a creative engine to display highly targeted messages and offers. 

Test a combined email and display strategy to raise your email open rates. Precede email drops with display messages to "look for the offer in your mail box." Give consumers who don't open the emails follow-up display ads.

Test targeted online video ads. Video is a huge opportunity for growth and innovation. Test different formats. Test different creative approaches. Get in front of it.

Optimize your site and landing pages. Nothing makes a display campaign more productive than a site that converts better. For that matter, nothing makes search work better than a site or landing page that converts better. This one is a no-brainer.

Now, to be fair, this set of recommendations is a lot more work than just giving your big budget to a bunch of ad networks and letting them fight it out. But it is worth it. Your CFO will love the dramatic improvement in ROI and your CMO will love the innovation and learning gained from testing new approaches. So what if the ad networks don't take you to Yankee games anymore? You'll get a big bonus and a promotion instead.