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When you’re in the business of measuring the effects of Marketing programs, certain patterns begin expressing themselves over and over. One of the oldest in the contribution to success of various parts of a Marketing effort, sometimes called the 60-30-10 rule:
60 percent of success is determined by the audience quality
30 percent of success is determined by the offer
10 percent of success is determined by the creative
Where do these stats come from? Continuous improvement testing. Over the years, if you run a lot of different tests, you just begin to see this pattern. And the pattern holds across a very wide variety of business models – online and offline.
The key takeaway here: audience quality is the most important component of success in a results-oriented Marketing campaign. This is why the CPM’s for niche Magazines, for example, are so high. These Magazines are tremendously efficient marketing vehicles because they have high audience quality, which drives end behavior – results.
And the primary reason the audience quality is so high?
People pay for these Magazines. When people pay for something, they value it with more Attention. Why? Simple.
In a magazine like Hot Rod or Concrete Decor or Vogue, the percentage of content that is interesting to the niche audience is very high. In fact, the Advertising is viewed as content.
Smaller audience, very high quality. Ads work like gangbusters.
Clearly, there are other ways to run a media model. At the opposite end of the media spectrum, there is free.
You produce content that appeals to a very wide, least common denominator audience, one where very few people are interested in the Marketer’s product at any particular time. But because the advertising is so cheap on a CPM basis, this media can be effective for products with extreme distribution and universal demand.
That’s why creative is more important in broadcast. Because in Broadcast, there’s a very small number in the success formula above where the 60% for audience quality used to be. All you have to work with is offer and creative, because the audience quality stinks by definition – it’s a broadcast, and Reach is the driving metric, not Quality – you have to turn over a lot of rocks.
Enter the Web. Just think about it for a second.
Given the two media models above, which model will most likely succeed in an environment like the web? Where the very nature of the usage is defined personally?
I don’t know about you, but the “Broadcast” model on the web just makes no sense to me; it’s anti-consumer behavior. And Behavioral Targeting is the right idea using the wrong tool – we should be creating platforms for customizing content, not advertising delivery. It’s back-asswords.
My old boss Barry Diller thinks a paid model will succeed, one more like magazines. And that makes a lot of sense to me. Not that there won’t be free content. You will always be able to read free content from:
* People who have opinions about a certain topic, whether very insightful or clueless
* People pitching you to buy something, whether the pitch is overt or “social” in nature
* People who are trying to build a reputation for themselves or a company, deserved or not
The real question for this free segment is, what advertisers will want to reach these audiences? The answer, if there exist paid content sources with quality audiences, is nobody but the CPA folks. And that will probably put a lot of the free content operations out of business.
Because the Brand folks, the ones with the big money, will go to where the (paid) audience quality is, because that model works for them. This is not about online or offline, the transmission mode of the content is irrelevant.
It’s about advertisers wanting a quality audience. Just like what happened (over time) with Cable TV versus Broadcast. Smaller, niche audiences dramatically improve advertising performance.
But for this paid content model to work, it will also have to be about people not wanting to waste so much time combing through the crap to look for quality content. It will be about the Net Meaningful Audience, the people who self-define their interest in a topic by their willingness to pay for it.
Meaning a much smaller, but much, much more profitable audience for many web sites. If the site-centric model survives. Vertical sites and networks seem like the right idea, but in practice people just go buy Reach, so they trash the model, turning it from Cable right back into Broadcast in terms of ads as content.
Or, someone like Google will finally make micropayments work.
If you can think past the tool to the behavior, I bet you might see why this could ultimately be the best idea for Display – essentially, the aggregation of a personal Magazine you pay for, article by article. A magazine like Hot Rod or Concrete Decor or Vogue. One where you get the best content on your topic from any source and you want to read every bit of it.
One where the Ads become content. Like they are in Search.
Kind of like the way people buy songs instead of albums, and create a personal collection of only songs they like?
Look, I know content wants to be free and all that.
The problem is, most of that content is worth very little from an advertising perspective, it lacks audience quality. And let’s face it, most of the real investigative reporting and expert commentary is generated by the offline media, which online simply passes on.
And that’s fine too, but this work has to be paid for somehow.
If online ever expects to get “its share” of the media budgets out there, what’s needed is a second tier for Display to pay for this work, whether the work is done by an offline or online entity.
One like Cable on top of Broadcast. One where you get access to high quality content before anybody else. One with a focused, high value audience advertisers will drool over.
One where people expect the ads and read them like content.
Then the market will bifurcate, just like Cable and Broadcast, and you choose which online tier to use based on your business model.
Micropayments are not just about paying for content, folks.
They’re about delivering a high quality audience that won’t have the slightest problems with also viewing ads – because for virtually the first time on the web, the ads will be content.
Jim, your blog is one of a kind and I wish I had the time to read it all back since I only started following you this year.
However, regarding behavioral targeting it can be used both on- and off-site so maybe you should better clarify what you meant?
Thanks,
Jiri
Jiri, thanks for the kind words. This blog doesn’t have a lot of Reach, but I’d like to think the audience is extremely targeted and of very high Quality, as they continually prove in their comments!
What I meant is this: Understanding the Behavioral aspects of a visitor is the most profitable mechanism to use to drive successful online Marketing efforts, but trying to implement this on the advertising side (ads following the visitor around) is a mistaken approach.
If you allow visitors to build targeted content for themselves, tbe visitor will draw the ads to them; this is essentially what happens in Search – and what happens with Magazines.
This would be so easy to implement with micropayments in Google Reader, for example. When you buy ads, you are buying the contextual Behavior of a User, not the specific content of a Site they are Reading, and the Site is compensated on a per view basis for producing Content the User desires. This would drive content *quality* instead of quantity, which flips the current web model over and aligns it with how people really use the web, as opposed to following the offline Broadcast model.
I’m not saying this approach would *replace* the mass-media-ish Display model because it has a place for some Sites and Markets, but it’s limited in application and already exists eleswhere. The web could and should do much better because it can!
It’s insane for the web to shout about how “it’s different” but then go ahead and copy the worst parts of the offline media model; this is the Paradox I frequently refer to.
Some may think the difference described above is semantics but just think about it; the context for the ads is completely different when they are Pulled rather than Pushed, and this is why magazines outperform most other media on a Productivity basis. If we are going to use Behavior as a Targeting mechanism, we should use it properly – in Pull mode, not Push. Push is for Broadcast – basically because you have no choice in that medium.
That does not mean Broadcast is bad, it’s just different; at least it does not pretend to be anything other than what it is. The web, on the other hand, spends a lot of time and energy trying to pretend it’s Broadcast (Demographics and Push) instead of feeling comfortable with what is the Natural model for the web – Behavior and Pull.
Meanwhile, the smart buyers of Display media (and I must emphasize the word smart here) know all this and that’s why they are not “all in”. If the web stopped trying to be Broadcast and went with its Natural model, the smart buyers of Display would be fighting each other to get in.
Smart buyers do not want media that’s the Same, they want media that is Different and they are more than willing to pay for it. This is why media don’t “die”, they simply (eventually) find their Natural place in the mix. It certainly is about time the web got on with it, and especially so when evidence of the correct model (Behavior – Pull) is so clear (Search).
The economics of the Behavior – Pull approach just make so much more sense for everybody online – visitor, publisher, media buyer.
Hmm, seems like the above ended up more like a Post than a Comment – hope it explains the idea more clearly!
Hi Jim,
Needless to say that what you are saying here can be linked to what you wrote in the past about how advertising can work in social media only under very special conditions.
Yes. And it appears we have the answer to the Paradox of social marketing performance courtesy of the journal Marketing Science:
http://www.webanalyticsassociation.org/en/art/712
Briefly, social marketing works best when it’s intrusive, like Advertising.
Houston, we have a problem.
Jetlagged, it’s 4:30am, and I’m really glad I found you. This is a high-quality blog.
Here’s my question.
As someone who’s worked in newspapers for a while, the idea of “ads being content” is… strange. I realize this is the Internet we’re talking about, and the rules are different. But really? Do you think people will be OK with it if content–free or not–transmogrifies into advertising?
Curious to hear your thoughts.
Cheers,
DK
Hi DK, thanks for the comment.
I was not suggesting a crossing of the advertorial Rubicon ;).
More, the *perception* by *readers* of highly targeted magazines that the advertising is as valuable to them as the content – not that the advertising *is* content. And the web would be much better off going with this highly targeted, narrowcast magazine model rather than a broader audience newspaper model. The web’s infrastructure is built for this approach; “braodcasting” goes against the behavior of the audience.
I have suggested before on this blog that the unique content asset of newspapers is local / state investigative reporting. That 60% or so of the content of a newspaper could be AP wire stuff and still be appealing to audiences other than the non-web savvy seems like a stretch. On the other hand, to give away this unique investigative content free on the web doesn’t make any sense either (though you could tease it?). So somewhere in all this is a hybrid, where newspapers bifurcate and become a bit more audience-centric.
Here in St Petersburg FL the Times has an interesting experiment going on called tbt:
http://www.tampabay.com/tbt/
This physical, offline paper is free distribution, targeted to youth. If you can believe what the Marketing folks over there say, advertisers love this paper. Content is brief and shallow, (sort of) like online. But – and this is the key – the advertising is very highly targeted to the people who read the paper, which rarely happens online with general news websites. They read it as much for the advertising as the content. Maybe *primarily* for the advertising – it’s convenient for them.
So tbt is different, it’s *better* than the Times newspaper or a news website for the demo, which is *local* youth – local being something tough to replicate as a web-only operation while maintaining content quality.
One has to wonder if the distribution mode has a lot to do with this – tbt is available at coffee shops, stores etc. – places young people want to be, not where they don’t want to be (home).
Conversely, this 50 year old guy looks forward to reading the Sunday paper at home, looking foward to what the investigative folks at the Times have uncovered this week.
Perhaps “one paper” simply cannot gross enough audience any longer, and that one paper needs to be 2. Or more.
“The ads will be content”
Yes. Exactly.
I’ll publish what I’ve been saying for years. I’m a male information working in the 21rst century. My attention span has been fragmenting ever since I was exposed to Nickolodeon. If you’re going to push content into my face – delight me. Just delight me.
To the root of your point, if I may Jim, we need to think more about the effects that we’re trying to have and then really examine whether or not the underlining causes are really what we think they are.
Your post has a ring of truth to it, so I’m inclined to agree with your bias here.
Thanks, Jim – here’s a considered reaction & question to
“10 percent of success is determined by the creative”…but isn’t interesting that a surprisingly large percentage of the Fortune 500 firms let their creative agencies (of record) define the overall campaign targeting/segmentation?
Any wonder why we see disconnects and/or friction between the paid search/display media targeting strategies which unfortunately result in finger pointing and/or conflicting analytical points of view presented to the VP of Marketing/Advertising.
While all too many large creative agencies promote their industry awards as supporting evidence they can build general purpose “bloatware” websites, consumers are voting (thru relevance) for distributed content & narrowly defined niche content needs directly proportional to their point in time requirements.
Is it any wonder why the traditional big creative agency model has recently been questioned in some corners of the industry as perhaps an obsolete business model when it comes to effectively understanding the targeting effectiveness of today’s online consumer.
I agree with all you’ve said above, and particularly the trend, with one exception pointed out in the post – creative is more important in mass media *because* the audience quality sucks. If all you really have to drive attention is the creative, that’s where you go.
Aside from that, and more importantly I think, is the trend towards more accountability for the spend, which in many ways is causing the effects you accurately point out above – the disconnects, hiding from relevance, questioning the business model.
The reality is each media does a pretty good job at something for some products. There’s nothing “wrong” with mass media or social media.
What’s wrong – and leads to the accountability problem – is people trying to solve problem X with a media whose strength is solving problem Y.
In the end, the optimal Marketing outcome is achieved by layering *and connecting* Awareness media, Intent / Desire media, Interface / Design media, and Action / Reaction media – and measuring each against the specific job they were designed to do.
If this idea is interesting to you and you want to know more, see the Marketing Bands Series for an example:
http://blog.jimnovo.com/marketing-bands-series/
Interesting post. I always like to see advertising and media problems represented as equations, not so that exact numbers can be assigned to the variables, but so that one can demonstrate the net effect that changes to various elements of marketing have on all the other elements.
For instance, I would venture a different “solution” to the problem of reconciling audience quality with ad creative: If you lower the cost (but not necessarily the quality) of the ad creative, you lower the level of audience quality necessary to achieve positive campaign ROI.
Here’s the longer explaination:
I agree that audience quality across the web is generally low due to the low (mostly non-existent) cost to consume content. But instead of trying to adjust audience quality upward, you could perhaps more easily adjust ad creative and campaign costs downward, without sacrificing too much in terms of ad quality. This can be done by bypassing the ad agencies (which, no matter what anyone thinks of their value, are inarguably expensive).
There are a multitude of self-service display ad solutions available now that allow advertisers to take direct control over their campaigns from start to finish. Naturally this is not appropriate for all ad campaigns, but it is a great way for advertisers to unburden themselves of the legions of agency staff that get directly or indirectly attached to campaigns (I’m talking about all the account reps, art directors, media planners, designers, producers, copywriters, and project managers…all of whom need to be paid).
And to be clear, this isn’t only applicable to agency relationships. If an advertiser doesn’t work with an agency, per se, there are plenty of ways to disintermediate other types of vendors (e.g., freelancers, consultants, etc).
So…not disagreeing with your post, just offering another viable way to “rebalance” the equation.