Media Strategies Editor Jim Meskauskas talks about why making long-term purchase commitments online can be necessary.
Everyone who works in online media is aware of the annual ritual that traditional media buyers go through known as the upfront.
Like the mating dance of the blue-footed boobies, advertisers and broadcasters raise their feet one at a time and then swivel their heads away from their prospective mates and look into the skies as if not interested in one another.
Each year before the process begins, the trades fill with the requisite articles about how the process is broken, that it yields little in the way of advantage or value, or that the whole practice is for an earlier era and no longer adequate to the industry’s needs.
The upfront process forces advertisers to place their bets on inventory based on two speculations: first, the inventory considered may be worth more at a later date in the scatter market (the scatter market is what broadcast buyers and sellers call the purchasing of inventory outside of the upfront that are not restricted by required long-term commitments and are executed with shorter lead-times). Second, desirable inventory might be purchased by other advertisers, specifically competitors, effectively locking out a would-be buyer from getting that inventory at a later date.
Whatever your feelings may be about the upfront, one of the things it signifies for the media planning and buying community is a construction of long-term media plans.
For much of its history, the commercial web has not traditionally been one of advertisers laying down the long bets. With the short lead times and uncertain budgets that have typified online media planning, buys have been made on an almost ad hoc basis.
Short buys
For the last few years, most online advertising has taken place with one of two objectives.
- Awareness and branding -- getting the name out and driving some traffic with no sales or registration objectives
- Direct response -- an advertiser wanting to move widgets as efficiently and in as great a volume as they can manage
Out of the two, the direct response objective has been the most common. Almost all online advertisers want to see some tangible result. They want emails, registrations, demo downloads or products purchased.
Under either aegis, short media schedules were common. There was plenty of inventory to go around because desire for it was outstripped by availability and if the client didn’t sign off on a plan today, one could always buy tomorrow.
Given the market place at the time, where there was lots of inventory everywhere and sites and publishers were all fighting over the same nickel, an advertiser could sustain phases of long-term testing without ever having to commit to anything beyond the month of the buy.
Go long!
There is no question now that it is much harder, and makes much less strategic sense, for advertisers to jump into and out of the online ad market at a moment’s notice. There are still plenty of unsold inventories on the web that make it possible for planners to put together quick, short-term media buys, but that inventory is more often found in the “distressed” category. That means the inventory isn’t unsold because there is too much of it but rather because no one wants it. From fifty-thousand feet, all inventories may look the same, distinctions made indiscernible by distance, but we all know that all inventories are not created equal.
As more and more advertisers enter the marketplace, and as there is more and more competition for inventory, sites and their publishers are no longer as amenable to a constant state of short-term test buys. For tactical advantage, advertisers are willing to buy up inventory for longer schedules without testing -- just to be sure they can hold on to it if it looks like it's going to pay out, or for strategic advantage to be sure that no one else can have it.
The idea of online having an upfront market season has been advanced in the last couple of years, each time confronted by objections that have been made about the process in broadcast: it gives an advantage to the largest advertisers; marketing needs are less static then they once were; it stands in contrast to what market forces are supposed to accomplish, which is to ensure that an individual pays the "real" value for a particular product or service. Part of what informs value is time and place.
The upfront removes time and space from the equation for determining value. It takes the market and seals it off in a vacuum, letting value be set without influence by macroeconomic forces, quality of product, and most importantly, the whim of the masses.
Making the long-term buy
Long-term buying strategies have to become more and more a part of the planner and buyer's everyday consideration. With so much competition and slower growth of inventory, rates are going up and availability is going down. You have to be willing to look at long-term commitments as a rule rather than an exception.
More and more advertisers, particularly brand advertisers, are seeing the web as an indispensable component of their media plan. Increasingly, they realize that in order to achieve a certain level of synchronicity with the rest of the advertising effort, the web should be planned in coordination with the rest of the media. This means starting the online planning process further in advance, giving the planner more time to put together quality deals and enter into longer-term relationships.
However, the heat of the advertiser's category and the threat of scant availability should not drive you to enter too soon into a long-term commitment. Though having more time to plan means possibly getting a jump on the competition, the competition may not be moving very quickly or have the budgets to make a commitment to the inventory for which you are ostensibly competing. Instinct and fear, though necessary conditions for making long-terms buys, are hardly sufficient conditions for them.
Be sure you've developed a good relationship with the rep at the property under consideration. They can keep you abreast of developments with the property and even who might be cruising around for inventory that might interest you or your client.
In this era of flat communications with faceless progenitors of emails, RFPs and instant messages, the phone call and the face-to-face meeting may seem quaint, but they can also strengthen a relationship that could be a resource for helping you determine the best timing for the market.
And besides, a good relationship with a rep never hurt anyone.
Finally, if you do make a long-term buy, look to establish exit clauses in your contract. Not every deal can work out for the long term. Objectives may change; the client can cut the budget, or research may show that the placement isn’t accomplishing what the advertiser had hoped. Even broadcast upfront inventory is cancelable, under certain conditions and with certain stipulations. The IAB Standard Terms and Conditions version 2.0, which addresses online media buys of one year or less, has a clause that stipulates that an advertiser can cancel an IO without penalty by written notice to the publisher that is effective after the latter of a) 30 days from the serving of the first impression against the contract, or b) 14 days after the receipt of the notice of cancellation.
The industry is red hot and there doesn't seem to be any end in site for now. New advertisers come to the web daily with money to spend. The competition is only going to get tougher. Be prepared to get tough with it.