In a major shift, media companies – including digital, social media and traditional broadcast and cable outlets – are changing how they sell ads. Instead of marketing squishy metrics such as clicks, impressions, reach or gross rating points (GRPs), they are deploying advanced analytics and tracking technology that allows them to sell clear and quantifiable results such as actual sales.
As a result, they can – for the first time – predict for advertisers just what ROI they can expect from an incremental investment in one or more channels (including competitor channels), and in some cases how that translates into actual revenue. It’s been a liberating endeavor that has allowed media giants such as Google, Twitter, Turner and others to recast the sales conversation from one based on eyeballs, to one based on outcomes and ROI.
As The Wall Street Journal’s CMO Today blog noted in a recent article, for all its sophistication, most digital advertising is still measured and purchased using proxy metrics. “It’s left up to clients and their agencies to figure out what value those impressions and actions actually provide,” said writer Jack Marshall. Today, however, advertisers want to know not only how their investments are paying off, but what precise actions they can take to optimize and improve those results.
Here are five reasons why publishers and other media companies are moving to performance-based selling and what it means for marketers:
- Advertisers are under greater scrutiny. Brand advertisers face increasing pressure from the C-suite to prove the value of their marketing investments. In the latest CMO Survey out of Duke University, 61% of CMOs report feeling pressure from their CEO or Board to prove the value of marketing. So for them, the shifting sensibility at media companies comes none-too-soon. Advertisers can no longer settle for soft metrics; nor can media companies or agencies.
- Brands are growing accustomed to analytics. As more companies deploy sophisticated analytics technology internally, they are becoming more data-driven. These companies have gained vast new insight into which channels work best and how to optimize their investments, both online and offline. In this new analytics-driven mindset, there’s increasingly less (if any) room for channels that can’t show a contribution to the customer journey. As cross-channel attribution gains ground, brands have a greater sense – from a consumer-centric, bottom-up point of view – of how to assign precise values to each customer touch point.
- The technology to accurately and cost-effectively predict advertiser outcomes is here. Publishers can input a client’s historical and proposed media plan, run scenarios on expected performance, compare performance against industry benchmarks, and generate summary reports for client presentations. And further improvements are just around the corner, including TV attribution that for the first time will track TV’s impact on consumer actions and purchases.
- Advertisers want more. They’re looking for “partners” who can help them achieve their business goals, not just “publishers” hawking space, time and digital real estate. And media companies in turn want to become those strategic partners.
- Better data and analysis brings greater credibility. Media companies – including digital, social media and traditional broadcast and cable outlets – have long faced questions about advertising effectiveness. But their sales teams now have transparent, data-driven apps they can use to show, for example, how simply changing the channel mix can generate more revenue for the same ad dollars. Because the technology is powered by third parties, media companies avoid the inherent conflict they often face when recommending advertiser investments.
These are some of the things media companies are starting to offer advertisers:
- Custom media plans: Publishers can input advertiser media plans to project incremental sales and performance metrics.
- Industry benchmark comparisons: Advertiser allocations and performance results can be compared to similar companies in their industry.
- Optimized allocations: Analytics apps provide data-driven recommendations for how advertisers can best allocate their budgets. Media companies can now identify where an advertiser may be over investing, and could get a better ROI by shifting allocations to another of the media company’s channels.
- Support for budget requests: Media companies are helping advertisers and agencies run “what-if” scenarios to predict results and build a business case for investment.
Marketers of all shapes and sizes stand to benefit from this trend as the sales conversation focuses more on measuring actual outcomes, and less on metrics with dubious impact. Related articles of interest include these in Broadcasting & Cable and AdExchanger.
This article was written by MarketShare from Forbes and was legally licensed through the NewsCred publisher network.