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News From Audio Graphics:
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When Agencies Begin to Push the Internet |
It would do you good to read Dave Pasternack's article "Follow the money: inside the Publicis/Google deal" at iMEDIA Connection immediately after this. You'll see how the strings tie together. I mention this first because what's articulated there is a reflection of what's been chanted here dozens of times since 1999. There is no incentive for advertising agencies to place an online buy. Dave points to how this is about to change.
The background for this goes way back to when the radio industry first attempted to go online with Broadcast.com. Speculation then was how millions would be made selling banner ads, text ads, and pop ups. Audio Graphics was asking "how" because the basic incentive for getting agencies to purchase advertising online was not there. It's still not in place.
The ability for agencies to make more money buying local media was always a tilting factor in making sure dollars were spent with tradtional media.
1) Online advertising cost so much less, and 15% of a lesser figure is never desirable. 2) Agencies had no way of pulling their 15% out of the buy online (as they do with radio stations). You buy a banner ad and you pay full price for the slot, unless there's a separate deal (which is seldom done). Plus, you also pay for creating the banner ad.
Then came buying keywords on search engines, same rules applied. Though it was quite a bit easier for an agency to build a text ad than a graphics banner, the additional cost of managing a keyword campaign could get pricey. What agency wants to get involved with that when it's not getting its 15%? None. Which is why internet advertising is still only about 7.1% of overall ad spend. (Source: tns media intelligence)
Today we have a variety of additional online ad formats: audio, Flash, and video, presented in pre-rolls, on site, in stream, and on demand. All add to the extra costs an agency incurs if it decides to move a client's money online. Buy Yahoo!, MSN, or Google keyword search campaigns and there's still no agency discount. Buy a network campaign and there's no difference. Since first mentioned here in the late nineties, there's no monetary incentive for an advertising agency to push an online component for a client's ad campaign.
But, agencies are making the move today due to client insistence. That's why Publicis and Google are talking.
Dave Pasternack suggest to "follow the money." I'll ditto that.
If Publicis and Google unite to create a rate package that's universally accepted - where agencies pull their 15% out of the buy - you'll find another obstacle in selling radio spots to local advertisers.
Those small local advertising agencies that, until now, have found it comfortable to turn to local broadcast will finally see an incentive to move online with their advertisers. For a while it will be at the insistence of the advertiser, because of the internet's ability to track response. The agencies will not be so opposed if they get their share of the buy. When they see how response to the campaign is affected by adjustments made, the agencies will become thrilled at having such a useful tool. (That time is still a few years away, but it's coming.)
Radio may be offering agencies a discount when selling banner ads on station web sites; it's just not looking past counting exposures to the banner - impressions. Something prevents the radio industry from discussing how to analyze response to an online ad or campaign, and here lies a major problem: The internet ad commmunity is beginning to get deep into analysis and metrics, working campaigns to improve response and bring CPM down.
This is where it gets dicey for the newly-announced radio initiative at RAB 2008 - you know, the one that has all the troops going back with thoughts that the internet is going to save radio. The RAB sessions all mentioned internet opportunities. Yet none spoke in depth about the numbers, the analytics, or metrics required to make the internet a complement to radio's product. That's the "head in the sand" mentality which helped place the radio industry where it's at today.
Come to think of it, no session at RAB mentioned anything about the costs incurred creating banners or improving response. So it may be time to bring up this question, "How much is that banner in my Windows?" Or, "What's the charge when that banner ad is tested?"
With testing of campaigns becoming more understood by advertisers and agencies, anyone in the radio industry that believes he or she is just selling a hole on a web page to serve impressions isn't following where the money is going.
If Google finds success with Publicis, the radio industry will have to move much faster towards understanding all that's available online - much faster than it's done since 1999. If not, it will be left to follow the money from afar in the not too distant future.
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