Michael Zeisser Seattle

Generating advertising revenues in digital media Lessons Learned WHO AM I? • SVP, Liberty Media Corporation Interactive Group – Fun Technologies, Game Show Network, QVC, Provide Commerce, GSI Commerce, OpenTV, etc • Partner, McKinsey & Company; Co-founder and leader, Internet Practice • Founding Board member of Future of Advertising Stakeholder cross-industry committee involving AAAA, ANA, IAB (1997-2000) • Keynote, Procter & Gamble Interactive Advertising Summit August 1998; Harvard University Interactive Advertising Conference 1996 – frequent speaker at industry events and press source on digital advertising issues TODAY’S AGENDA Lessons learned The media buying process Media: A business in transition SELLERS SPEND BILLIONS TO INTERACT WITH BUYERS $ Billions, per year Sellers Advertising/media National branding Local advertising Direct Buyers $100B $100B $150B Channel management Stores, dealerships, $? branches Incentives, $100B + promotions, rebates Customer servicing Call centers Maintenance, repairs Loyalty programs Billing costs $? $? $? $? 100 million households 200 million adults TRADITIONAL MEDIA REACHING DIMINISHING RETURNS 78% Consumers who fast-forward through commercials when watching a TIVO/PVR recorded show 73% Households that channel surf to avoid advertising 48% Adults using internet while watching TV when TV and PC are in the same room 30% Less time spent watching television by consumers with internet access 23% Viewers who mute out TV commercials ADVERTISING HAS BEEN AROUND FOR A LONG TIME Radio 1922 1700 1850 1900 1860s Magazines 1850 Outdoor moving (railways) 1835 Outdoor 1704 Newspaper Television 1941 1950 Internet 1995 2000 WHAT ADVERTISERS SAY THEY WANT Do more with less Thinking consumer-in, not brand-out From products to services Integrated communications Consumer becomes “part of the brand” HOW ADVERTISERS FEEL ABOUT MEDIA TODAY TODAY’S AGENDA Lessons learned The TV media buying process Media: A business in transition THE TV MEDIA BUYING PROCESS Step 1: Advertiser communicates campaign objectives to agencies Ad Agency Advertiser Increase consumption among “stay-at-home” Moms • • • • • VP, Advertising Brand Manager VP, Marketing Research Director Media Director Increase brand awareness among college-age males Emphasize Tide’s new “Stain Preventor” feature • Account Executive • Creative Director • Media Director Media Agency • Account Executive • Media Director • Media Planner THE TV MEDIA BUYING PROCESS Step 2: Initial Media Plan is created and reviewed/approved by Agency and Advertiser Media Plan Planning Tools • Strata • NCC • eSM • In-House Tools Objectives • Target audience Reach/Frequency Strategy • Allocation of dollars by media type • Local market allocation • Optimization of schedule Tactics • Vehicle ranking & selection • Contingency plan THE TV MEDIA BUYING PROCESS Step 3a: Media Plan gets divided among the media buyers TV buyers then request avails from networks and spot markets via RFP’s ion vis e l Te Network RFP Eastern Spot RFP Central Spot RFP Western Spot RFP Print Rad io Ou tdo or Buying Tools • • • • Donovan Adware Ad2Media In-House Tools THE TV MEDIA BUYING PROCESS Step 3b: The Creative Team also goes to work on the “copy” a Concept d Production e Post-Production & Distribution Ideas Testing Budgeting Editing Duplication Insertion b Client Approval Sets Props Location Shoot c Pre-Production Creative direction Budget Creative Partners • Agencies • Studios • Post-Production Casting Scheduling Storyboarding THE TV MEDIA BUYING PROCESS Step 4: 50-80% of national inventory is purchased during the “Upfronts” in May as package blocks Spot is sold as individual avails Insertion Orders Trafficking Tools • Advision • Eclipse • Novar THE TV MEDIA BUYING PROCESS Step 5: Commercials are run and monitored Shortfalls are corrected with make goods Affidavits and invoices are generated Invoice Monitoring Services • Nielsen Media Research • CMR • Bowden Billing Tools • Advision • Eclipse • Novar TODAY’S AGENDA Lessons learned The media buying process Media: A business in transition LESSONS LEARNED ON PREVIOUS BATTLEFIELDS Invent a different – not just better – mouse trap (ad-unit) – Uniquely leverage the media – Demonstrably superior to existing solutions – Priced to value Make it easy to buy – Sell it the way they buy it – Standardize ad-units, buying process, metrics Develop credible metering and research – Third-party validation Create wins with reputable ad-buyers and promote the pioneers and their successes CURRENTLY WINING AD-UNITS/FORMATS ARE MORE UNIQUE TO DIGITAL MEDIA Examples Online Online advertising advertising Search Search products products Paid listings on Google Integrated Integrated solutions solutions Sponsored page on Myspace Respectable Standard Standardmedia media products products Banners and buttons on People.com Waiting for broadband Enormous PRICING INNOVATIONS HELPED GROW MARKET Impression Cost per exposure Unit of time spent Clickthrough Internet pricing models Cost per response Lead Download $ Revenues Cost per transaction Transactions • Digital media unique in supporting multiple pricing models • Opportunity for marketers to shift the burden of risk to sites • Pricing has evolved to a hybrid of traditional and performancebased models GO WHERE THE FISH ARE Priority product categories Example Categories in which consumers make purchase online Travel, electronics, music, software Categories with hard to reach users (genY, working women) Movies, video games, diet foods Categories in which consumers use web to make purchasing decisions Cars, mortgages, financial services Categories in which privacy matters Botox services, incontinence treatments Categories in which Internet connectivity can broaden consumer experience Dieting, Healthcare, Foods, personal care Generating advertising revenues in digital media Lessons Learned