OPINION: What won't happen in 2014, part 1

John Miskelly
By John Miskelly | 13 December 2013
GroupM head of digital John Miskelly.

John Miskelly wanted to write a 'predictions for 2014' column. We asked him for the opposite instead. So here's his take on the non-death of the agency model, TV ad dollars and agency trading desks.

The year of mobile

I think people have stopped predicting the year of mobile but it will probably be another year that this channel doesn't fulfil the potential. We have all seen the user stats around mobile consumption and research on screen behaviour but lack of measurement will remain the Achilles heel.

Third-party ad serving is helping increase accountability but with most handsets not allowing third-party cookies causes issues measuring conversions and acquisitions. For brand-based advertisers it is even worse as there is no way of measuring the campaign reach.

It is a real shame as many of the various industry awards this year have some kind of mobile component that helps knit the campaign together. We have done a number of mobile brand-lift studies which has proved mobile to be around 10 times more effective at driving brand uplift of awareness, favourability and consideration than traditional desktop.

However until the measurement black holes are overcome it may well continue to take 2-3% share of media plans. Once a suitable measurement planning and reporting tool is launched this may be the tipping point but don’t expect this until back end of the year.

Machines will take over the world with all media traded programmatically

Some corners of the industry have whipped the market up into a frenzy of excitement over programmatic buying. I have read claims of 60-70% being traded by robots within three years (conjures up images of post-apocalyptic Terminator or Matrix media world).

The issue is that programmatic buying has various subsets and the lines have been blurred. The most familiar sub-set is real-time bidding (RTB) and is programmatic buying in its purest form. Advertisers access technology, such as DMPs and DSPs, and through them use of various data points to decide if they want to bid on web space based on an auction that happens in a fraction of a second.

There is no doubt RTB is a wonderful trading mechanism, has been a revolution for digital buying, and is ultimately where we want to get to across all media channels – but this is long term. To enable this function in traditional media would require a fundamental overhaul in consumer behaviour as well as the industry infrastructure. To illustrate, it would require everyone having a TV connected to the internet and each station having to work out to how to IP-stream ads into broadcast content to enable RTB for the TV market.

When people talk about programmatic in traditional media what they really mean is using web-based applications to allow buyers and sellers to transact in the cloud rather than faxing or emailing bookings orders back and forth. It would probably work like an eBay for advertising space where buyers can overlay some internal data and bid based on a human auction to try and secure airtime over rivals or 'buy now' on a fixed price.

This would all happen several weeks prior to transmission date. Even this mechanism would be difficult as it would require agreement on tech platforms to trade as well as industry-wide training and education. This type of programmatic buying will help reduce admin time for both buyers and sellers, but it isn’t necessarily the holy grail being touted in the trade press.

My prediction for 2014 is we will see increased digital buying through RTB but nothing will happen in traditional media with the exception of Val Morgan who may come closest in offering this type of trading through their CineTAM product.

The death of the agency trading desk

Probably one of the most talked-about topics in 2013. This has come to boiling point in UK with a very public spat between Dominic Mills of Mediatel and Marco Bertozzi, the head of Vivaki’s trading desk, Audience on Demand, on the role of the ATD. My prediction is that clients will continue to experiment taking digital buying in-house for 2014 but by the end of the year they will have come full circle back to the media agency as the long-term partner in this space.

Tech providers working directly with clients have overplayed the automation card. Grade A trade desk is not about logging in and pressing go, it is about scale, it is about cross-pollination, you need to have support and strength in depth.

The most important thing is to hire people to do the work who have the right skill set. At GroupM we have spent the last 12-18 months completely redefining our recruitment and retention strategy. Entry-level recruitment now focuses on graduates with qualifications in mathematics and economics rather than traditional marketing degrees. If you look round our Xaxis team some of them would not look out of place at NASA. The importance of recruiting, inspiring and mentoring these people can’t be underestimated as it plays a critical role in making this function work.

FMCG will drive growth in digital 2014

FMCG is a lucrative TV market with over $500 million annually spent by these advertisers. A number of a global CMOs representing multi-national companies have been very vocal about moving TV budgets into to lower-cost digital channels and in fact in the UK, FMCG is now the biggest category in terms of digital spend. However I don’t believe this going to happen in Australia in 2014. The easiest path to digital for a local brand manager is to convert TV dollars into online video. In Australia we are hamstrung by lack of quality video inventory. This means:

1) Brands are unable to build scalable reach in comparison to TV to generate enough awareness.

2) CPMs remain too high to justify spend. (Forget the effectiveness debate – this still is the primary focus for procurement departments.)

3) Computer hacking shysters are able to create false supply by engaging in fraudulent activity such as URL ghosting and masking. We saw this at work last week with a number of well known Australian brands appearing on illegal video sites. This only reduces confidence in the channel.

However, TV networks should not sleep too soundly as the $500 million pot of gold is only safe for now as clients ever-increasingly want to achieve efficiencies and value through cross-platform trading. While the networks have made improvements in agnostic trading, the TV sales director still wants to know their share and his/her digital counterpart want a volume deal.

This creates incompatible trading currencies and two different agendas at the negotiation table. YouTube now reaches nine million Australians a month (28% more than any of the TV networks) and is piped straight into the living room via devices such as Smart or Apple TV, making it as comparable to TV as it has ever been. Google is becoming match-fit in selling online video and with the recent change of guard in senior leadership on Pirrama Road you don’t need to be a rocket scientist to work out the prize it has its eye on.

John Miskelly
Head of Digital

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