CMO’s: Changes in Media Mix for holidays

Every year, it seems like there is discussion about marketing spending and declining budgets. As a CMO, I obviously watch these macro trends in addition to watching my own budget. Most of the time the conversation is centered around yearly budgets and how those are trending versus past years. But there is an increased lens on holiday spending in particular every year since the season is so crucial to most brands and retailers, and the importance of differentiation and getting your marketing message through so much clutter is increasingly difficult.

According to BDO’s Retail Compass Survey, 63% of CMO’s said this year’s holiday budgets are flat compared to 2009. But they’re not in decline: the good news is that only 20% of CMO’s said their budgets declined for the holiday season, which continues a downward (positive) trend from 32% who said they declined in 2008 to 26% in 2009. This signals an increasing amount of flexibility in how CMO’s utilize their advertising and marketing dollars, and is a good sign of general health for most marketers.

What seems to have changed for most, and I can confirm this myself, is the marketing mix within budgets. Even when overall budgets for the season or the year don’t change, the mix does (and has, in recent years). There are a couple fairly major trends within the numbers cited above that merit consideration here. There is a huge decline in print marketing spend, with major increases in TV and Online spending. Only 42% of marketers said they would spend a majority of their budget on print (down from 64% in 2009). TV and Online have picked up the slack and then some.

This isn’t too surprising at all, we have witnessed in the last few years an acceleration of budgets that are heading towards digital, mostly in place of print spending. Nothing really new here.

What is new is the chasm between social media usage and spending (budgets). This signals major opportunity for expansion of these efforts, and we are seeing it too through our burgeoning social business. 75% of retailers are utilizing social media in their marketing efforts (up from 51% in 2009); yet because of the relatively low cost nature of certain types of social media, 62% said that less than 10% of their budgets would be spent on social media. This is fascinating, because while social media is relatively inexpensive, major brands want to do it “right” and are willing to spend some money to tighten their social media footprint. I would expect these percentages to be a little different in 2011, given that we expect social media usage to keep increasing and for ad budgets in this area to catch up to usage.

Where the multiplier effect comes into play for brands and retailers willing to spend more money on social media and digital as a whole is in the positive preliminary numbers we’ve seen from Black Friday and Cyber Monday. I would expect when all is said and done that those brands who were willing to spend more in online will probably experience more measurable and larger sales return which might contribute to a more robust overall holiday season than we’ve seen in recent years. We’ll have to wait until the dust settles this year, but the results so far are interesting.

Mike Sprouse, CMO

Epic Media Group Q&A With…..

Sheldon Owen, General Manager – Social

Every few weeks, we will be doing a Q&A with various members of the Epic Media Group team to talk about their business units, the trends happening in the marketplace, and what we can expect in the future. This week, we welcome Sheldon Owen, General Manager of the company’s growing Social business, to the stage.

Q: Can you give us a quick background on how the Social team has evolved and its history within Epic Media Group?

A (SO): Our team was initially formed in late 2009. We were really one of the first dedicated social media departments at any company of our kind. In early 2010, we began helping clients of all types run campaigns which extended across all verticals and expanded their presence on social media. Since January of 2010, our results really speak for themselves and every month since launching this business we have had record-breaking growth. We’ve been laser-focused building new tools and building an impressive roster of happy clients.

Q: How has the world of social media evolved since your team has grown?

SO: Well, clearly with the rise of Facebook and the popularity of social media to consumers in general has made this a huge marketplace for advertisers. It was a burgeoning market a year ago, now its white hot. Advertisers want to be where their audience is. Increasingly, that audience is utilizing social media. Brands want to engage with consumers within the confines of social media. The question is, how do you effectively do that? It is definitely art and science. We are able to help brands reach and target consumers through a variety of proven methods.

Q: What are some of those methods? What tactics have been successful for your clients and what do you do?

SO: We are the only ones in the marketplace uniquely able to target users through both the social and open web. We are one of the only companies that can retarget social users and actually re-engage them for our clients. We make brands likeable, shareable and famous within social media through display advertising, video, Facebook pages, virtual currency, custom applications, and much more.

Q: How are you different than some of the social media companies already out there or companies who have emerged as of late who are trying to piggyback on the social media wave?

SO: First and foremost, we are proven. Just ask any number of our clients who have become repeat clients over the past 10 months. Second, we are the only company out there who can retarget and re-engage social users effectively. Third, and this is important, we don’t drive low quality traffic and prospects like many others out there. While there are many companies who can acquire fans for brands, very few can drive high-quality targeted users. Our solutions are proven to outperform and have actually delivered higher yielding results, which has allowed for reengagement after the initial acquisition and has maximized lifetime value.

Q: How does a brand cut through all the clutter and messaging from so many vendors about who to partner with?

SO: The first thing to understand is that there are a lot of social media solutions providers out there touting themselves very publicly. Most of it is noise, and is not able to be backed up or qualified. I would say first go onto a vendor’s website. If they just list a bunch of marketing points and don’t list any clients, it is probably because they have none or none that are noteworthy. Second, look for other people’s testimonials about that vendor. Again, if there are none, and the only things about a vendor come from the vendor themselves through press releases and the like, the messaging is likely pretty flimsy.

Q: Who are some of your clients? Care to share any case studies with us?

SO: We really have knocked the ball out of the park with some great brands in recent months. Probably one of the more high-profile clients we’ve done work for has been for Carl’s Jr. We’ve done work for any number of other major brands, from Dreamworks and Disney to KFC and Verizon.

Q: What’s in store for social media in 2011, and specifically your team?

SO: Social media, by all accounts, will continue to prosper next year. Usage is at an all-time high. Internet advertising spending is at an all-time high as evidenced by the IAB’s most recent report from Q3 2010. We will continue to see large brands wanting to acquire and engage customers and prospects in 2011 in the world of social media. So, social media is not going anywhere. As for our team, we have several exciting things happening that I can’t talk about yet. Stay tuned. I can tell you our goal is to continue to build our portfolio of advertisers and to continue to distance ourselves from the competition.

New Record for Internet Advertising in Q3 2010

The IAB just released its Q3 2010 report on internet advertising revenues. In Q3, revenues hit $6.4 billion which is the highest quarterly result ever for the internet advertising industry in one quarter. It is a full 17% increase over the same period in 2009. You can read more here.

This is significant in a lot of ways. Clearly, we’ve seen the trend in the last couple of years of ad spending shifting more towards interactive channels and away from more traditional media – and these figures back that trend up. In addition, more brands and agencies are understanding that they can engage with consumers and prospects better and far more effectively via interactive channels. Finally, the numbers show a continuing shift in consumer behavior towards the internet; clearly the growth of social media has had a major hand in that.

Ad:Tech NYC – Thank You!

We would like to thank all our clients and partners that attended Ad:tech New York. You all helped make the show a great success for Epic Media Group! We look forward to seeing you in April, in San Francisco.

For those who missed out, Mediapost did a nice little write-up about Epic’s client event hosted at Hudson Terrace. You can read about it here. We’re proud to continue setting the standard for events in the industry.

A packed house!

A fun time had by all!

Kelly, we’re glad you made it in time for the White Castle delivery!

Always a big hit!

Epic Media Group Q&A on AdExchanger

Be sure to check out the in-depth Q&A with Epic’s Art Shaw posted on Adexchanger.com. You can click here to view it.

The Evolution of Ad Networks

NOTE: This article was written by Michael Sprouse, Epic Media Group CMO, and published in mThink’s Online Advertising Blue Book.

Sitting here in 2010, the advertising network landscape looks vastly different than it did eight, five or even three years ago. Like most things in their early stages, the industry in which ad networks exist has evolved rapidly. The general ad network space, which of course includes CPA and affiliate networks, has been maturing for some time now.

Three years ago, I wrote an article for a major trade publication that pondered the fact that there were hundreds of ad networks, all seeming to be coexisting happily with profitable, scaling businesses. In fact, it seemed a new network popped up every week.

There were very few barriers to entry, startup costs were minimal and the business model, when executed properly, was very efficient. The popularity of performance- based advertising was booming at the expense of impression-based models, with a larger variety of products, goods and services being offered than ever before on a performance basis.

Compared to traditional ad markets, the online industry could apparently accommodate a huge number of networks because of the massive growth in users, traffic and websites. In addition, accessing the web via wireless networks and mobile devices was beginning to take off, providing even more “reach” potential.

So what happened to the network environment since then and where should networks hope to be heading in the future?

As we now know, and as a few pundits predicted at the time, there has been a fair amount of consolidation. This has taken three main forms:

1. networks disappearing or closing up shop completely;
2. networks dramatically scaling back their offerings and becoming smaller and more focused;
3. networks acquiring or merging with each other.

It is important to understand why this consolidation has happened in order to understand where things are heading next.

First, the marketplace had become over-saturated. While the industry might have been able to sustain a lot of networks, it couldn’t sustain several hundred of them. There were simply too many.

Second, there were very serious concerns relating to fraud and that negatively impacted a number networks. Often, fraudulent activity remained undiscovered or unattended, and this resulted in networks taking significant losses.

Third, the emergence of ad exchanges and subsequently buy-side platforms or DSPs has challenged the role played by traditional ad networks.

Are networks doomed? No. But, there is probably going to be even more consolidation to come and companies in the ad network space will have to create discernable value in order to differentiate themselves. Potentially powerful differentiators include:

1. Technology and Targeting – This needs investment, and is where the battle is being fought by the new and emerging platforms that represent a major challenge to less sophisticated networks.
2. Compliance and Forensics – Having an in-house or reputable third party compliance and forensics group is not a luxury, it is an absolute necessity. There are emerging companies in this space who cater to networks and have cutting-edge technology and well-qualified staff that are specialists in rooting out abuse. This has the potential to be a huge competitive advantage for networks that move quickly because many other buy-side platforms are not yet focused on this issue.
3. Compelling Creative – Unique and compelling creative executions that can’t be delivered in an automated fashion through platforms run solely by technology will be key. Standard ad units and banners are fine and necessary, but those networks that can unlock unique and more powerful ad units will stand out.
4. Extensive Reach – Networks are able to provide immense reach as a value proposition, and for some networks this has increased consistently over time. Networks must continue to look for reputable partners – not just advertisers, but also publishers and other distribution partners – so that reach continues to be a large piece of the value equation. It is still the case that most advertisers are looking for efficient reach and expansion of their audience, and this is especially true for those large spenders just dipping their toes in the water with ad networks.

As the last five years has brought tremendous growth, change and evolution, so will the next five. Networks of all types need to be alert to the marketplace trends around them so as to ensure that the coming years are as successful as they are chaotic.

Epic Direct Network named top CPA Network

The Epic Direct Network, a division of Epic Media Group, is very proud and honored to have been rated the #1 CPA Network in mThink’s BLUE BOOK top 20 annual rankings. Here is an excerpt:

Epic Direct is rated the #1 CPA network in this BLUE BOOK Top 20 ranking for Fall, 2010. Epic received strong write-in support in our open-field question designed to measure the enthusiasm people feel for a network, and also ranked very highly in terms of sheer popularity. They even did well with our Blue-Ribbon Panel, with several members choosing Epic as part of an “ideal portfolio” of networks.

Pick up a print copy of the magazine during this week’s Ad:tech NYC, or click here for the complete rankings.

Ad:tech – New York City

For those of you attending Ad:tech New York City this week, please feel free to stop by and say hello to Epic Media Group, which encompasses our flagship brands Traffic Marketplace and Epic Direct Network. Our booth is #1518.

We will have much of our New York-based staff in attendance, including several members of our executive team.

See you there!