Author Archive for Mr Media

09
Nov
09

Media Buying Strategy and Negotiation

By Mr Media Leave a Comment
Categories: media buying

There are a number of strategies and approaches that can be used in media negotiations.  In this article we will discuss some of these approaches.  But before we get into the approaches themselves, we should consider strategic segmentation of negotiation partners. It can be advantageous to divide the media owners you are working with into strategic segments so that the correct negotiating principles can be applied to each segment.

Strategic Segmentation for Negotiation

Not all media owners will be of the same strategic value to you. It can help you to deploy your time and resources appropriately by segmenting  media owners into a number of strategic groups based on their value to you. For example, some media owners may be “Must-have’s” or “Stars”. Here you need these media owners more than they need you so you will need to tread carefully and build a relationship with the media owner so they are prepared to work cooperatively with you.  On the other hand, some media owners may be “Borderlines”. This group can only work for you if you are able to trade at exactly the terms you need. Here the approach can be more cavalier. If they don’t agree to your terms, they don’t go on the schedule.

Now we have segmented our media suppliers into segments we can look at how specific techniques can be applied.

Reason / Logic

Reason and logic can form a strong platform for a successful negotiation. It is important that you negotiate with the logic of a lawyer. So for example, you build arguments with logic, just as a barrister may present his case in the courtroom. You build your argument in steps based on if-then logic.  “If x=y, then a=b”.  This may manifest itself as “So you are saying that if I deliver X to you, you can deliver Y to me”. You gather information to build a logical case for deciding on the negotiation terms your present. If the person you are negotiating with buys into your logic, you reach a point where they have to buy into your desired (and shared) outcome.

Win-Win

Whilst win-win is not a strategy in itself, it is an outcome which informs a collaborative negotiation strategy.  It is unlikely that a win-win outcome will be achieved through a high confrontational style of negotiation.  A confrontational negotiation will almost certainly result in at least one side feeling that they have not got the best possible outcome. Win-win outcomes often require cooperative and transparent negotiation. Co-operation and transparency engenders trust which allows negotiations to develop in a constructive manner.  Here both the agency and the media owner feel they are working towards an outcome that will work well for both parties.  The media agency gets a value of communication they need, whilst the media owner gets the revenue they need.

Zero-Sum

Zero sum negotiations work on the basis that if somebody gains, somebody loses. By definition, zero sum negotiations cannot be win-win negotiations. So, what is zero sum? Imagine negotiating for pieces of apple pie and the pie is cut into 8 pieces. If one person has five, the other person can only have three. The person with five is the winner, the person with three is the loser. Zero sum is not usually present in media because media owners can usually expand their pie (items supplied) and media agencies can usually expand their pie (Money to buy media). However, there are often fixed media budgets, so for example £1m for a TV campaign. If there are 5 TV stations vying for a share of budget then those TV stations are effectively engaged in a zero sum game. The agency can of course exploit this, as each media owner wants a bigger slice of the budget, the agency can improve the terms on which each slice of the budget is allocated.

Sanction

Assume you are dealing with 5 media owners, all of whom can give you the audience delivery solution you need, but media owners 1 and 2 want a  lot more money for the solution they are offering.  If you are in a position to get what you want from the other parties then you can threaten to sanction Media owners 1 and 2. Here you say that they cannot agree to your terms, there will be no further negotiation and you will deal only with the alternative suppliers (3,4 and 5).  Sanction is tough talk and can have long-term negative consequences. At some point in the future you may need either Media owner 1 or Media owner 2, and by the time you need them, they may not need you.   Some UK media stand-offs have famously gone on for months.

Confrontation

Whilst confrontation is not a negotiation strategy itself, a negotiation can be  run in a way that builds tension and results in confrontation.  This is usually caused by one party acting in a very bullish way and trying to impose their solution on the other party.  Whilst this approach might work in certain circumstances, the most likely outcome is that one party will leave the negotiation and the negotiation will fail.

Remember, we don’t buy space, we sell money

Whilst working at Ogilvy the Head of Print Buying used to say, “I don’t buy space, I sell money“.  Media agencies are often selling money. They are saying you can have this slice of the budget, but these are the terms I need in order to give that budget to you.  This approach effectively makes the media owner the buyer of the budget.

You can find more information on media agencies here.

29
Oct
09

What is a good online click through rate?

By Mr Media Leave a Comment
Categories: Online media planning, media buying and media planning

This is a question we get asked often. The answer depends on two things: 1) what you paid for the impressions that generated the clicks and 2) what cost per click to have to generate to secure  your target cost per sale.   Let’s say you get a 0.05% CTR. That looks low. Now lets imagine you have a target cost per click of £1.   If your click through rate is 0.05%, then you are generating 1 click with every 2,000 impressions.  This means that to reach your target CPC you must buy your 2,000 impression for no more than £1. If your CPM rate is £0.50, then your impressions cost will be £1. So, the 0.05% click through rate is giving you your target cost per click.  But if you are paying a £10 CPM, then the 2,000 impressions you need for every click will be costing £20 – then your CTR of 0.05% is terrible.

What can you do to improve things?  There are three things you can do 1) negotiate down the CPM on the basis of performance or 2) improve the nature of the offer e.g. 5% off list prices will pull less well than an offer 20% off list prices and 3) improve the creative  – the message or call to action may not be strong enough – beef these up and your click rates could climb significantly.

28
Oct
09

Calculating CPMs and Impressions

By Mr Media Leave a Comment
Categories: Online media planning
Tags: , , , , , ,

Online display advertising is often traded on a CPM basis. But what does this mean? CPM means cost per thousand impressions. So if your CPM is £1, you are paying £1 for thousand times your ad is seen.  The lower your CPM the more impressions you will get for the same budget.  A budget of £10,000 spent at a  CPM of £2 will secure 5,000,000 impressions. A budget of £10,000 spent at a CPM of £1 will secure 10,000,000 impressions.  It’s worth pointing out that this does not mean you will actually reach 5m or 10m real people. Sometimes some people will see your ad twice, three times or even four times, depending on the level of frequency planned into your campaign. You could buy 10,000,000 impressions but actually only reach only 3m people, who would see your ad an average of 3.3 times. Managing this relationship between budget, cost, impressions and frequency is part of the role of the media planner.

There’s a nice little CPM calculator here.

28
Oct
09

Online display advertising formats

By Mr Media Leave a Comment
Categories: Uncategorized

Theres a good guide to the different online advertising display formats here.

28
Oct
09

Key types of digital display advertising media buy

By Mr Media Leave a Comment
Categories: Online media planning and media buying
Tags: , , , , ,

Here’s a list of the key types of digital online display advertising media buy:

  • Affiliate Display – display ads run as part of an affiliate display campaign for new customer acquisition – usually traded on a cost per click, cost per lead, or cost per sale basis.
  • Behavioural targeting – online display ads shown to users who are anonymously tracked as using certain sites
  • CPM Display – buying display formats like banners, MPUs and buttons on sites traded on a CPM basis
  • CPC Display – buying display formats like banners, MPUs and buttons on sites traded on a CPC (Cost per Click) basis
  • Contextual targeting – display ads that are targeted based on the content of the site (can include in-text boxes)
  • Newsletter / bulletin banners – display banners and buttons etc included in digital newsletters
  • Retargeting – showing ads to people who have visited your site and then transferred into an online advertising network like Specific Media
26
Oct
09

Online media buying: CPC or CPM?

By Mr Media Leave a Comment
Categories: media buying
Tags: , ,

CPC and CPM sound similar but that last letter makes a whole heap of difference in online media buying.  Cost per click (CPC) involves paying only for clicks, regardless of how many people actually see your advertising.   Paying for clicks is good because the media owner is sharing performance risk with you. Clicks are  a response from the consumer – you are paying for responses. THis is very different to CPM where you are paying for audience impressions. In other words you are simply paying to be seen. Being seen does not necessarily deliver a tangible business result. But a click visit to your site can. If you advertising with a lower budget where every penny (or cent) has to count in terms of short term business results, then you are better advised to go down the cost per click route.

Google is famously a major provider of click traffic. MSN’s Bing and Yahoo! are other major sites where advertising can be bought on a cost per click basis. If you want to move beyond classified type text boxes and into more visual display communication that is still traded on a cost per click basis, you can consider the larger online advertising networks who will trade on a CPC basis. However, unlike Bing and Yahoo! many of the larger players have minimum order values so if you are a smaller business, these may be too expensive.

26
Oct
09

Online media buying rates

By Mr Media Leave a Comment
Categories: media buying
Tags: , , , ,

Online media buying rates are a function of several factors. These are market supply and demand and click rate performance and CPM. The supply side comes from the impressions that the media owner offers and the demand side comes from the level of media buyer demand for that inventory. As demand for higher quality sites tends to be higher than that for lower quality sites, CPMs tend to be higher on higher quality sites.  As online display advertising campaigns are often evaluated on a cost per click basis, you will also need to make sure that the CPMs you pay will deliver your target cost per click at the click through rates delivered. Let’s look at some examples:

Online display standard banner

The standard 468×60 banner is the most common format in online display advertising. Unfortunately, this has given it a “wallpaper” quality which means that it is not particularly effective.  Whenever planning to buy an online display advertising campaign you should bear this in mind.  This is a low impact, low response format and you buying rates will need to reflect this. Consider that you may be seeking a £1.00 cost per click. If a standard banner format has a response rate of 0.05%, then you will need 2,000 impressions for every click. As you are budgeting £1 per click, you cannot afford to pay more than a £0.50 CPM if you are to generate your CPC target.

MPU – larger format ad

MPUs are a much higher impact, higher response format. An MPU can easily deliver a 1% click through rate. This means that you only need 100 impressions to generate every click. So if you are targeting a £1 CPC, you can still achieve this if you are paying a £10 CPM.

Online awareness advertising

If you are not seeking a pure click-based ROI but want to increase brand awareness or consideration amongst, for example, affluent business audiences, you will have to place your creative message on sites popular with these audiences. Typically more upscale and leading business sites have demand levels that are higher than supply which enables media owners to increase their CPMs regardless of factors like click performance.  Here you are investing on brand association with quality editorial content.  Whilst the payback to this type of activity is not measured as short-term clicks, a longer term objective to change brand attitudes can be delivered through this type of activity. Banner and MPU formats will be more expensive and you can expect to pay £5-£25 and £10-£40 for banners and MPUs respectively in these environments.

21
Oct
09

Digital media buying metrics

By Mr Media Leave a Comment
Categories: media buying
Tags: , , , ,

Digital media is traded on two key metrics: Cost per Thousand (CPM) and Cost Per Action (CPA).  CPM is based around audience delivery i.e. the number of people see the campaign, and is not therefore directly related to campaign performance. CPA is a measure of actions which can be defined as clicks, sign ups, sales, subscriptions or log-ins etc. This is directly related to campaign performance. Clearly the more budget that can be traded on CPA activity the more your commercial risk will be reduced. CPA as a form of media buying sounds great and in many ways, it is.  However, there are a couple of limiting factors that users need to be aware of. First, you are often bidding against other advertisers for CPA activity. In other words, they too are bidding for actions from the same target market.  You can bid as high as is economically sustainable for your business, but you may reach a point where the economics do not work  for your product. This is a key area and it’s important that you have understood how you are calculating ROI before commiting budget. A good revenune ROI does not mean a good profit ROI. You can read more about calculating online marketing ROI here. Second, volumes can be quite low, so you cannot usually depend on CPA activity to fully populate your sales funnel. You may need to use other online marketing techniques to drive traffic into your sales funnel.

20
Oct
09

Can online banner advertising work?

By Mr Media Leave a Comment
Categories: Online media planning
Tags: , ,

Yes, banner advertising can work but it depends on what effects you seek. Banner advertising does not always work on a cost per click basis – the most common form of online display evaluation. But online display may be having other effects that impact either directly or indirectly upon your business. If you’re wondering why many large advertisers seem to continually advertise online, the answer is that they understand the answers to the questions I have posed below.

If you are looking for response, think about these questions:

  • Do you fully understand your click path from initial source to last click?
  • Are you correctly attributing digital media cause and effect across the click path?
  • Are you over-reporting “last click” actions in your click path?
  • Are you tracking delayed response as well as direct response?

If you are looking for awareness and consideration shifts, think about these questions:

  • Do you have the correct research in place to accurately track awareness and consideration shifts?
  • Are you advertising at the correct weights?
  • Are you testing different messages and creative formats?
  • Are you researching the target audience you are planning to reach (as obvious as this may seem it is not always the case)

Measurement is key to effectiveness in online display. There are hurdles to cross, but the rewards can be significant if you plan and buy online media correctly, with an awareness of all the effects that can be driven by online display advertising.

19
Oct
09

Principles of media buying

By Mr Media Leave a Comment
Categories: media buying
Tags:

Media buying involves the implementation of media plans.   The media plan will cover the media channels that have been selected for use and the amount of budget that is to be invested in each channel. If the media planner has developed a direct response or online traffic driving plan, the media plan will detail the likely amount of response to be generated from the investment in each media channel.

The role of the media buyer is to turn the media plan into a reality that will be seen and heard by the target audience. This involves negotiating with media owners.  Both the media buyer and the media owner have similar and competing objectives. Both sides want a deal, but…

  1. The media buyer wants to secure as much weight of communication as possible  – this is usually measured as reach, size, impact or campaign duration.
  2. On the other hand, the media owner usually has a fixed amount of inventory to sell. Here’s an example: pages in a magazine for example are a bit like airline seats – there are a fixed number and the amount of revenue is driven by the amount of money generated from each page. If too little money is generated from each page in a magazine, the magazine risks running at a loss so the media owner’s objective is to maximise the amount of revenue from the medium.

So we have competing objectives – the media owners wants to maximise media revenue and the media buyer wants to minimise cost.  This means there has to be a negotiation.  It is this negotiation that is at the centre of the media buying process.

The different aspects of media buying

Because media buying involves negotiation, each side identifies area in the negotiation where they may be willing to compromise in order to reach a deal. In media buying, these areas are typically:

  • Price
  • Access
  • Timing
  • Format
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