Epic Wins “Marketing Team of the Year” Stevie Award

Last night at the Marriott Marquis, Epic was proud to take home the top national honor across all industries for “Marketing Team of the Year” at the American Business Awards (the “Stevie Awards”). It was the second time in three years the team from Epic has received this accolade, following up its win in 2009.

In 2010, Epic won an overall company award for “Best Overall Company – Under 2,500 Employees”. We shared this honor with Apple who won the same award for the over 2,500 employee category. So we’re thankful to have been honored with an award in three consecutive years.

For more details, you can check out the official press release from Marketwatch here.

2011 Predictions

We’re sure you’ve all seen, on various blogs and industry outlets at this time of year, pundits who attempt to make predictions about 2011. Especially in the interactive marketing industry, making predictions is a tough thing! Still, it happens every year, and since we have several pundits of our own on the Epic Media Group executive team, we thought we would take the opportunity to share some thoughts about what 2011 might hold from each person’s unique perspective:

* Don Mathis (Co-CEO): I believe you will see ad intermediary companies rise in positioning in the online ad ecosystem next year. They will make tangible gains through reach & scale, data, robust in-house platforms and technology, and ability to move quicker than most others in the industry. Will there be further consolidation? Perhaps so. The ecosystem is fairly convoluted. However, the value-add and opportunity for the better intermediaries is clear.

* Charlie Black (General Manager, Platform): 2011 will be the year of continued consolidation across the industry and will be the Year of the Platform. Agencies and their advertising clients will look to partner with entities that can deliver campaigns (Brand and Consumer Response) across multiple media channels (display, social, mobile, video …), with unified reporting and more robust insights across all channels. Use of anonymous data will continue to be an essential piece of the performance puzzle as well as development of next-gen algorithmic approaches to build more complete models to accommodate additional data and data types. Movement away from the click and progress toward new attribution models will finally gain significant momentum throughout 2011.

* E.J. Hilbert (President, Online Intelligence): As evidenced by some of the recent hacking, cyber terrorism and piracy events, online security, protection and anti-abuse measures will be of the utmost importance to everyone in the online ad ecosystem. Advertisers and brands obviously want to be in front of their audience (which is increasingly online); so, they will need to rely on compliance experts to keep their brands and businesses safe.

* Mike Sprouse (Chief Marketing Officer): The change in “marketing mix” will be the story of 2011. This change in brands’ and advertisers’ marketing mixes has already begun happening, but will accelerate next year. Simply put, ad spending in TV has held fairly strong, with print (newspapers, magazines, direct mail) and radio in decline. The web (and digital as a whole) has been a significant growth area in terms of spending and will continue that way, which will prompt there to be more drastic changes in the way marketer’s look at their overall mix compared to past years. For more predictions, visit Mike’s personal blog.

* Chris Pirrone (General Manager, Traffic Marketplace): Brands and agencies will continue to need experienced partners who can support their client’s goals of interacting with consumers in the display, mobile, social and video channels. Marketers will need partners that understand how to effectively reach consumers throughout the purchase funnel in a brand-safe manner. Partners and intermediaries that succeed will possess demonstrated experience, reach, a commitment to transparency and compliance, and an ability to help scale campaigns quickly and effectively, across all of the major marketing channels.

* Rick Okin (Chief Information Officer): Some of the major trends in 2011 will be related to Data and the “Cloud”. For intermediaries, the ability to analyze and share data in a timely manner with partners will be essential for maintaining the ability to perform well. There will be a shift towards the convergence of offline and online data to help ascertain where media budgets should be focused. More and more companies will host their infrastructure in the cloud to provide the level of elasticity needed to scale across growing and new areas of digital business. The cloud infrastructure will gain traction in allowing companies to focus on business challenges rather than the underlying mechanics of running the business.

* Sheldon Owen (General Manager, Social): Social media 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, and doing so through proven solutions providers, not one-trick ponies.

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

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.

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.

What To Take Away From the IAB’s First Half 2010 Report

Earlier this week, the IAB released its 1^st Half 2010 Internet Advertising Revenue report. As many expected, the findings were mostly positive and show a nice recovery for online advertising. In fact, the first half of 2010 produced the biggest six month total of online ad spending on record. This is generally good news for everyone in the online ad ecosystem.

Some of the highlights included:

• Online Ad Revenues of $6.2B in 1H 2010 were an 11% increase compared to the 1H 2009.
• Online Ad Revenues in Q2 of 2010 produced a 14% increase compared to Q2 of 2009.
• Double-digit percentage growth in Search and Display.

Consider the parts of the report that didn’t get much press coverage but yet are still important for most of us to keep in mind:

• Search & Display still account for most of the online ad revenues to the tune of 70%. This is basically unchanged from 2009.
• Revenues derived from performance-based models continued its fast upward climb. That category now accounts for 61% of online ad revenues, compared with 58% in 1H of 2009. This underscores the continued softening of impression-based pricing models, down from 38% to 35% of ad revenues. This is quite a turn since the beginning of 2007 when impression-based was the predominant model.
• Finally: the top 10 leading ad sellers accounted for 70% of total ad revenue in Q2 (which is basically unchanged from 2009). The top 50 ad sellers accounted for 90% of ad revenues (likewise, basically unchanged from 2009).

Most of you by now have read or heard about Google’s great 3^rd quarter operating results, which could lead one to generally believe the strength shown in the first half of the year for online advertising will continue through the second half. This is good news. I would say though that before all of us in the online ad spending industry clink our glasses together, let’s pay attention to some areas of real opportunity:

1)      The majority of revenues are still attributed to the very largest players, in this case a 70/10 rule. With all boats seemingly rising higher based on the IAB’s report, that 30% of revenues still represent a great opportunity for most online ad companies; though the fact that the concentration of revenue hasn’t changed should be noticed. There is real opportunity for the rest of the top 50 ad companies to garner more than 20% of the overall dollars, and certainly for smaller players to garner more market share too as the overall online ad spending climate continues to appear a little brighter.

2)      It is interesting to see the trend towards performance-based pricing models accelerating at the rate it is. This should signal to companies that performance-based advertising does work, and perhaps is a call to some companies to think about at least a hybrid pricing model if they haven’t already.

3)      The other categories besides Search and Display are still relatively small, and with the rapid decline of sponsorships and classifieds, I would expect the real opportunity to be in rich media and digital video which has rapidly increased its percentage share since 2006. In fact, I would expect this category to chip away at the two biggest ones fairly rapidly, so if you aren’t thinking about this sector you should be!

Michael Sprouse, Chief Marketing Officer

Fragmentation: What It Means for Marketers

Note: This post initially appeared here on August 30, 2010.

Over the weekend, on the heels of two very successful events run by my marketing team, I was asked by a client how marketing today was different than marketing 10 years ago. I thought about it and answered “CMO’s and GM’s need to be comfortable in embracing the fragmented nature of the world”. He looked at me strangely and here’s what I meant:

Fragmentation happens in two ways for marketers: There is audience fragmentation and marketing fragmentation. Both occur now in ways that just simply weren’t applicable a decade ago. This is because of two things: a major shift in consumer trends and growth in technology (specifically devices).

At its core, marketers fundamentally want to go where their audience is to give them the best chance to promote their brand, generate sales or generally appeal to those they think will be most interested in information, a product, or a service.

Audience fragmentation means that it is much tougher for a marketer to get in front of their target audience. The shift in consumer behavior to cause this has been an increasing demand for all things to be “on-demand” and digital, thereby giving consumers a vast number of choices in what they consume and how they consume it. No longer do consumers actually behave in a way that has them interacting with just a few forms of media. This is good for marketers as well as a challenge. Good, because there are now tons of ways to reach people; a challenge because the number of ways to reach people is actually dizzying.

It seems like the days are behind us where consumers rely or interact with a handful of media to get their information. It isn’t just a daily printed newspaper, a handful of TV channels, and a couple of radio stations. Think about what consumers use now which fragment a marketers audience: hundreds of TV & satellite channels; hundreds of satellite radio choices; a vast array of devices like the iPhone, iPad, Kindle and more; millions of websites, forums, search engines and blogs like the one you’re reading. In fact, if you were born in the mid-1980′s or later, you probably can never remember a time when there was no worldwide web, cell phones or hundreds of DirecTV channels.

Audience fragmentation always leads to (or should always lead to) marketing fragmentation, meaning a wide array of budget line items. So like actual consumer behavior, a marketers toolkit must follow with a wide assortment of line items and creative thinking. No longer are there only traditional elements to a marketers toolkit like advertising, public relations, event marketing, etc. Now, a marketer must have a strategy for mobile devices; a detailed web strategy which includes many elements like social media, display and search – and often a strategy-within-the-strategy for each of these pieces. Depending on your industry, there is probably still TV, radio and print strategies in your budget, but those are becoming less as consumers shift their usage; there are simply dozens of new things that have to be accounted for by a marketer.

I would qualify a marketer’s job, or challenge, as somewhat ironic. Ironic in the sense that consumers are more fragmented than ever before because of the number of choices available with which to consume things; yet, there are a wide number of tools, applications and strategies with which to reach that fragmented audience. What will make CMO’s or GM’s successful is their ability to educate themselves, watch what consumers are adopting and be highly-organized in their approach.

One thing that hasn’t and won’t ever change is a marketer’s desire to “go where their audience is”. What has changed and will continue to change are the ways that marketers actually make that happen.

Ad Networks: The Next Generation

In a recent post, we at Epic Media Group predicted the interactive marketing industry will consolidate somewhat in the months ahead. In that post, we had purposely used terms like “interactive marketing industry” and “digital marketing services companies” instead of “ad networks.” Today, we are addressing what ad networks look like now, and what they will look like in the future.

For a few years, certain industry pundits and followers have claimed ad networks would become irrelevant over time. Since our business has been categorized as an ad network, we certainly didn’t believe that and concrete industry data refutes this as well. In fact, old school ad networks have given rise to much more comprehensive digital marketing services companies that are deeper than the traditional ad network of a few years ago.

As we and other industry experts have stated, the interactive marketing ecosystem is cluttered and this chart exemplifies this point. The chart is useful as a snapshot showing all the various service providers and types of services in the chain; however it is also somewhat outdated in terms of what many of these companies are striving towards and are currently delivering for advertisers and publishers in practice today.

Speaking only for Epic Media Group and Traffic Marketplace, I can tell you we don’t consider ourselves just an ad network by the traditional definition. Sure, there is a major piece of our business that is driven by a network effect, meaning we leverage tremendous scale and reach for advertisers and agency partners by garnering distribution via dozens of safe, targeted, high-value publishers simultaneously rather than one-to-one. However, to say that’s all we are is incredibly short-sighted. Referring again to the ecosystem chart above, we could be categorized within mobile networks, performance-based networks, rich media networks, yield optimizers, DSP’s, and creative optimizers. Not to mention what we’re doing in brand protection; technology, RTB (real-time bidding) and our platform; emerging media; and across specific verticals.

While it’s easy to analyze the companies that support the industry by putting them into buckets, it can be inaccurate. Modern interactive marketing companies are a lot more strategic – and diversified – than the ad network of even a few years ago. This does not diminish the value of running massive networks; it simply doesn’t tell the whole story of what some intermediaries provide or are focusing on strategically.

Consider one definition of an ad network: “a company that connects advertisers to web sites and publishers that want to host advertisements.” If that’s all it is, you can see why hundreds of ad networks were born over the last several years.

We have stated before that the lines are blurred in the interactive marketing space unlike any other medium. People and industry experts like to analyze things in nice, neat buckets. Offline, there are direct response advertisers and publishers at one end; brand advertisers and premium publishers at the other; and there is a one-to-one relationship between advertiser and publisher in most cases.

Online, it just isn’t the same simple model, yet analysts like to put together charts such as the one linked to above with service providers lumped into specific buckets. The reality is that there will likely never be a one-to-one advertiser/publisher relationship in interactive marketing. But is it accurate to say that there are, by my count, 22 potential other parties in the advertising chain? No, but it looks great on a PowerPoint slide. New, digital marketing services companies are already performing many of the functions niche companies serve today – under one roof, no less.

The strongest ad intermediaries have businesses today that look like a good investment portfolio. They are well-diversified and bring a host of solutions to their advertising and agency clients. To some extent, they’re a one-stop-shop which was the goal of the formation of Epic Media Group. A few other companies have followed this strategy as well. Using the financial services analogy, a good intermediary’s portfolio is data-driven, squeaky clean from a compliance and brand protection standpoint, focused on technology and expansion of one’s platform, and possessing an eye toward forming long-term partnerships.

The ideal portfolio digital marketing services companies must provide to advertising clients includes in no particular order: 1) generating scale; 2) the ability to run ads on a number of devices and platforms; 3) targeting ads based on the distribution type (display, search, social, etc); 4) protecting their brands; 5) optimizing campaigns utilizing technology and real-time bidding capabilities; and do all of this on a global scale. While a network effect may be underlying a few of these items, it is not the sole thing companies who support the interactive marketing space nowadays hang their hats on; it’s much broader and more comprehensive.

It is a fair assumption to claim that there are many ad networks still out there based on the old definition, and still provide some value in that capacity. But, there are a handful of companies that go beyond that and are considered the next generation of Ad Networks. For those who believe things like RTB are replacing the ad networks of old, it is actually the networks themselves which are doing so.

Michael Sprouse is the Chief Marketing Officer for Epic Media Group.