24 Hot Topic: The Fundamentals of Media Spend - Erik Martinez and Tim Curtis Jul 14 2022

Erik Martinez: [00:00:00] Hello, welcome to this episode of the Digital Velocity Podcast. I'm Erik Martinez from Blue Tangerine,

Tim Curtis: and I'm Tim Curtis from CohereOne.

Erik Martinez: Today, Tim and I decided that since we're in the middle of 2022, we decided that we're going to tackle one of Tim's hot-button topics. It's just Tim and I talking about something that he sees as a trend and an important topic for our marketing audience to understand. So, Tim, why don't you set the stage?

Tim Curtis: All right. So, as we started talking about some of these issues that we're seeing [00:01:00] really on the client-side percolating up across clients. So, it's sort of happening, I would call it maybe organically among clients. I would sort of encapsulate it as what we're beginning to see is perhaps a fluidity in media spend in that money flowing between different channels in a way that we typically don't see such large swings.

Most of the time, what you've seen historically, is media budgets that, you know, would have some alterations, some, you know, investments, some pullback divestment, whatever, based on performance, but what we're really beginning to see is some very large changes in the way that people are spending their money, and I think what is the hot button topic here because I think we need to take a step back and look at the fundamentals of media spend and really begin to underline the importance of understanding both incrementality and efficacy, tied to incrementality of channels. Maybe talk a little bit about that and how sometimes we're leapfrogging that for the [00:02:00] attribution of conversation. That's sort of where in my mind, we're seeing a lot of these challenges today.

Erik Martinez: Tim, when you talk about fluidity in media spend, specifically what types of things are you seeing?

Tim Curtis: One of the biggest changes is sort of result of the changing privacy landscape. Both the legislative aspect, which I think is driving a good deal of it, but there's also a sense of more concern related to privacy, and the two of those have been sort of happening organically and growing. So, you have the California Consumer Privacy Act, CPRA, which is the newest iteration of the CCPA. Some of those issues are really driving much more discussion and change across the country. As a result, things such as the degradation and elimination of the third-party cookie have made digital targeting more challenging.

Facebook, for example, has really been hit hard by these privacy changes. Brands, when they're seeing large pullback in areas like Facebook, where [00:03:00] they're just not getting the return, they once had, they're looking to invest those funds somewhere because they need to continue to hit growth metrics.

The largest swing I would say I'm seeing now is moving more towards the OTT, Over-the-top television. For those of you who are unfamiliar with OTT, it's really kind of related to those budgets that are shifting now more to the streaming content. Over-the-top represents a change in that its content that does not go through the traditional cable and satellite providers. In essence, it goes over the top of them to streaming services then directly to consumers.

So, it puts more flexibility for studios, for example, like NBC using their Peacock app to really get content in front of people by sidestepping or going over the traditional middlemen. That's what OTT is, and we are beginning to see quite a bit of budget put into OTT to test some top-of-funnel traffic. That's probably the biggest thing I'm seeing at [00:04:00] the moment.

Erik Martinez: We have some clients that do OTT as well, and one of the premises behind the technology is not only you're bypassing the middleman, but you should get more granularity and targeting. Can you talk a little bit, just to educate our audience, about what that looks like and what it's supposed to look like?

Tim Curtis: Yeah. So, that's sort of where I think people are trying to get their handle on the expectations for reporting on OTT versus traditional digital programs, or even offline programs, like direct mail. It does provide a lot of real-time reporting and data. It shows sort of the audience or the target demographics. It gives you a sense of who has completed, they've watched the full commercial if you will, and then that allows them to track, understanding demographics quote-unquote. Was the advertising effective?

They're adopting what they're calling a holistic model. Now, I think that's a little bit of a euphemism for an [00:05:00] inability to track one-to-one. You can't tie back an individual purchase necessarily to OTT advertising, and I think that's where some of the biggest challenges are, or you can't trace it back without doing some testing to understand that it truly came from the OTT.

So, it is a bit of a step back in terms of that direct tying in of transactions to a channel. Which, those of us in Ecommerce are used to being able to track the efficacy of our spending. This looks a little different. This is sort of your softer analytics. Maybe that's not a fair way to say it, but that's how I would respond to the questions about Over-the-top television.

Erik Martinez: I can't say I disagree. I have a client who has been working with a company that is providing OTT services and they put a lot of budget into this. When a client has asked me to look into the reporting, the metric, the KPI, so to speak, is video completion rate. Are you kidding me?[00:06:00]

By the way, just so everybody understands, I'm not a big-time onsite guy. If time on site is the metric of success on your website, I'm not that guy that buys into that metric. Now, there are some sites and some businesses where time on site is hugely important because it is a measure of engagement. It's not the most meaningful metric in engagement.

Video completion rate seems like, great. They liked the video you produced, whether it was 15 seconds or a 30-second ad, but did they actually take an action? That's what Tim is really alluding to is that there doesn't seem to be some direct correlation between seeing that ad and taking some kind of action.

What we're being told and what we're being sold on is the idea that this is top-of-funnel activity. I kind of consider this a little bit below the top of the funnel because of some of these targeting capabilities that we're [00:07:00] supposed to have with OTT technology. Even with that, it's still hard to draw the connection between the media spend and the result, and I think that's what you're driving at. Right, Tim?

Tim Curtis: It really is. You know, having sat in that chief marketing officer role myself, and chief executive officer, I know that there are things we spend money on. There are, for example, elements such as rebranding, or assets, or support services that support the brand. It's an intangible asset. It's not something that you're always gonna be able to drive back this investment causes return.

So, we understand there's some gray area, but where I think that shifts a little bit is when we're getting into media spend and the topic of OTT comes up, I think that's where we need to make sure that because the industry's saying we're gonna do this holistically, that that's not a euphemism for we're not going to track this because it's top of funnel, or we're not going to do the work to set up incrementality tests to really determine if any of these [00:08:00] things are moving the needle.

That's dangerous and that's ground that no chief marketing officer, no chief executive that's aware of it, should allow to occur. When you step into that area, you are really allowing the sales people from software platforms begin to dictate your media spend, and that's a dangerous place. I say that from the services side. I certainly get that, and that's where I think the visibility to that media spend and reporting on incrementality, and understanding organic percentages is foundational.

Certainly when you're running print campaigns. At CohereOne, when we run print campaigns, or we're reporting on digital, one of the things that we're always doing is determining what the organic percentage is. We do these tests in order to really understand the efficacy of those dollars.

If I'm watching something on Hulu, for example, and there are commercials that are coming up, I actually don't have the capability of fast-forwarding through those. Same on Paramount. I [00:09:00] don't think I have it on Discovery+ either. I don't know that I could tell you on HBO Max, but my point is if I'm watching something, that commercial's going to complete because I'm not gonna turn the television off. I want to finish watching the rest of the program. So, to me, that's a bit of a vanity metric.

I understand why we are reporting on that. That's one element, but is that really useful, and I think that's the concern here is OTT represents a big investment, and I've been a little surprised at the lack of cooperation in the OTT community to set up some of these tests. I think maybe it's a concern that it will undermine their value proposition, but I have a fiduciary responsibility, at least with clients, to say, hey, you have to set up these tests. You've got to determine whether or not the changes that you're making are gonna be effective to the bottom line.

Erik, maybe that's what's concerning me a little bit is on this media spend we are pulling it out of channels that are struggling. Facebook, no question. There's been a move out of Facebook. The [00:10:00] privacy changes have hit them hardest by far over everybody else. Who knows what's gonna happen next year when Google fully eliminates their third-party cookies. That can't be a good leg for Facebook Meta. I mean, Erik, am I just spinning here? Are you, are you kinda feeling the same thing?

Erik Martinez: No. I'm seeing the same thing. I can tell you that we have run some experiments and these aren't even very high-level experiments. Experiments of we're running a budget and then we turn it off, and then we start running it again, and we got at least some basic metrics.

So, one of the contexts I'm looking at is not only in terms of website traffic, which is certainly an important topic to our audience, but I've also got a client that has retail stores and we're measuring foot traffic and sales in the retail stores, and what I can tell you when we have turned off these budgets, which have been significant budgets, we've seen no difference. Zero.

We should see something. We should see a dip in foot traffic. We should [00:11:00] see a dip in website traffic, but we see neither gain nor decrease. You're talking about the fiduciary side of this. Which is hugely important, but I think the other piece of it is, we're not thinking through how fundamental elements of your marketing programs need to work in order to make that type of advertising effective.

We all know you're struggling on Facebook because of some of the privacy tools that have gone into the browsers, but you're also struggling in your Google Ads because costs are up significantly year over year. Even on, just on branded terms.

We were measuring on one client that we saw branded advertising go up almost a hundred percent, and these are the same terms that we run for this client all the time. So, there's more competition. Google's able to command a higher cost per click. It's getting [00:12:00] way more expensive to advertise. So, I think part of what's happening here is marketing executives are looking for alternatives

Tim Curtis: Absolutely.

Erik Martinez: to put their budget in. Right? That's one of the environmental factors. OTT is kind of new. It's cool. It's the shiny object, but if you're gonna put your money in places, then there's still some fundamental things that you need to do. Have you done a good job of optimizing your site with new content? Are you educating your clients with that content? Are your email programs as robust as they could possibly be?

Tim Curtis: Have you done any SEO audit and optimized your site in the last three years? That's a big one.

Erik Martinez: All of those things should come first. Now, I think from a societal standpoint, Tim, what's the statistic on the average tenure of a CMO today?

Tim Curtis: Last I saw was 18 months, but I feel like they've revised that down again.

Erik Martinez: In 18 months, you have to prove that [00:13:00] what you're doing is effective and valuable for your company, and either you're moving on because you can't get traction there, the culture doesn't allow you to, or you're really just not getting that business. I mean, all of those things could be true. In 18 months, what are your quick fixes? Well, I can put money into paid advertising. We know Google works. We do know Google works. It's getting more expensive, but it still works. You turn it off, you know immediately that you've got a problem. Right?

There is a halo effect to it that is probably underappreciated, but it's a quick fix, and so now we're looking for the other quick fix. I think companies need to start taking a longer view and say, hey, you know what? In today's environment with the amount of competition that there is for the products that we sell, we have some fundamental work to do that is harder and longer-term.

It's exactly what Tim was just talking about. We've gotta invest [00:14:00] in optimizing our site for SEO. We've gotta invest in developing content, and once we start putting in those foundational elements, then I think you can start layering on some higher funnel activities and make them more effective, but you have to have a good game plan. Fundamentally, we've just gotten into this very short-term, quick reaction, shiny object mentality because we know we're gonna be gone in a very short period of time.

Tim Curtis: Well, I think you're right, and I think there's the need to try to immediately do something, right? There's a reaction that someone in that share has to have. I think the danger here is, I sense it's something larger.

So, when I entered the industry, it was the middle of the digital revolution. So, traditional broadcast was already well in decline. That being said, there was still enough traditional broadcast being done that you, if you had any experience with it whatsoever, you began to really understand the lack of track and tracing and understanding how to set up analytics and, [00:15:00] you know, how to do some traditional tests.

What we're beginning to really see, if I could kind of paint this at a higher picture, is I see a marketing industry that has never really had to deal with accounting for that type of media spend, and there's a real amount of inexperience out there. I do a lot of coaching in my career. I coach a lot of CEOs and CMOs. It was not something that I set out to do. It just sort of happened, and we kind of had to formalize it because there was enough people asking for it. One of the things that I have coached in some of those private sessions is to say, hey, listen, professionally, you're playing with fire when you begin to go out and make large media changes without fully understanding the cascading effects.

For example, as I kind of interjected there with you, Erik, SEO. When have you done a real SEO effort? Show me what we're doing on an ongoing basis [00:16:00] that puts us at the top of the pack from an organic perspective. Show me also that we're running a strong conversion rate optimization program where we're testing the site to really boost the performance, to understand long-term impact, to always be ahead of the game. Those are two fundamental elements. That's like playing football and not having your right and left tackles. Right?

It's crazy to me that people would attempt to be the best at Ecommerce and not have those two areas buttoned down, and I just don't understand it. That's what I'm seeing. I'm seeing this jump, like you said, to shiny objects. It just so happens that OTT is one of the new shining objects, and I don't want to make today's session just about beating up on OTT.

I think some of the criticism is very, very justly deserved. Don't get me wrong, and I think the motivation is there for the sales people in OTT to do what they're going to do, and they're doing that because that's their role, right? That's their job. Our job is to make sure that we are understanding and setting the expectations to test into that to know, hey, is this worthy of our [00:17:00] brand to make an investment?

Listen, if you're seeing some things if you're seeing some new to file acquisition that's occurring within an OTT, fantastic. Fund it. Take it from the programs that aren't providing it, but you better certainly make sure that you're testing that to understand you cannot leapfrog and start OTT and plug it into an attribution model. The attribution is going to give it credit without understanding the organic percentage.

If you pull aside those attribution companies and you press them, in their quieter moments, I can tell you from many one on ones, some with clients, some without clients, they will admit the only way to do this is to test for the organic percentage in those channels. All of them, offline and online channels. That's why we're so adamant about that because once you establish that, then lifetime value, attribution, all of that can be accurately measured, but you gotta do the tough stuff first.

We are getting resistance from the OTT players on doing testing for organic, and the excuse is, hey, we want to go this holistic measurement. Well, that's not measurement. [00:18:00] For professionals who are staking their career on that, man, I wouldn't do it. No way in the world would I stake my professional reputation at a new company on listening to the salespeople.

Erik Martinez: It is interesting, Tim, this last point about listening to the salespeople. There has been, over the last 10 years, a shift. I remember coming up in the ranks in direct mail and I always held the philosophy that I never wanted to hand any of my vendors the keys to the kingdom. Right? I never wanted to hand one vendor, the keys to the kingdom. I wanted a network of partners who could provide value, do their jobs, bring ideas to the table, but the keys to the car were mine.

I do see in today's world, and I think part of it is because of the digital evolution, and there's so many vocations, even within the realm of paid search, there are numerous sub [00:19:00] vocations within the realm of paid search that people have to be knowledgeable at and you can't be knowledgeable at all of them. SEO's another great example where there's very specific sub vocations within the realm of SEO that you can develop expertise at, and nobody can develop expertise at all of them. Yeah. Maybe, you know, one out of every thousand people can do it, right? Maybe not that many.

My point is, nobody's an expert at everything, and so you do need to rely on partners, but what I've seen happen and what I hear from some of the younger generations, people who are now in decision-making capacities, is they go to their vendors and say, what should I do? How do I do it? The vendors are educating and that's always been the case. The vendors have always educated their clientele, but a lot of times we're locking into one supplier and just taking their word for it, particularly when new technologies come out.

The technology [00:20:00] company's goal is to get adoption as quickly as possible. So, the salespeople go out and beat that drum, and it is the new shining object without being able to look at case studies and examples. Sometimes you want to be on that bleeding edge of technology. I get that, but most of the time I've always taken kind of a middle road.

I don't wanna be the last person to the game, but I certainly do not want to be the first person cause that's where you get lots of cuts, but I think what's unique in this particular environment is that because of the costs associated with advertising in Google and the decline in performance in platforms like Facebook, that there's this mad rush of, like, where do we put our budget?

You're thinking, Hey, I'm gonna put it in a spot where there's not a lot of competition. It has some targeting capabilities. We feel good about it, and so we're gonna put a bunch of money, but as Tim pointed out, it [00:21:00] requires and consumes a ton of money to get those programs to the point where you can get any kind of meaningful data, and you're not really testing it. I won't even go into the execution of what some of these OTT campaigns look like. I've had some very interesting things come up in my ad feeds, and I don't use OTT a lot, but the key issue is, where do we put our budgets?

Tim's absolutely right. We need to go back to the basics and say, what are our fundamentals? What do we need to make sure that we have? Is our site completely operating? Not just an SEO audit, but even just a site audit. Like, are we really making that user experience as seamless as possible? Are we addressing their needs on our websites in a way that engages them to come back over and over and over again?

It's one of the things that Amazon does very well. Annoyingly so sometimes. They test the stuff, and they're relentless [00:22:00] about their testing processes and making it really, really, really easy to consume from Amazon. The downside of that is commoditization of product, and we've all seen that side of the equation. So, but as it comes back to the OTT, in any kind of media spend where you do not have a direct connection to the transaction, we have to put in mechanisms to measure the impact of those programs and those dollars.

That might mean you have to think a little bit outside the box and say, you know what? I may not be able to connect this directly to a transaction or an individual, but I might be able to connect to it geographically if I have a regional presence, or I might be able to measure the impact on this part of my product buying because I've focused on that. You have to be able to do those things in order to know where else do I need to invest?[00:23:00]

The holy grail of attribution is that the attribution model will tell you where to put your money, but everybody's gotta remember those attribution models are a set of assumptions. Hopefully, those assumptions have been validated by testing. Which is why they're in the model in the first place, but a lot of times I've seen in version one, version two attribution models, simple things.

Tim and I, before the show were talking about OTT, a paid ad, and an organic ad contributed to the transaction. Which one gets the most credit? Do we divide it by three, or do we let the last click attribution get 50%? That's a set of assumptions cause the answer is you don't really know. You might have enough data to lean one way or another, but it's probably what you're more comfortable with is how you're gonna set those assumptions.

Tim Curtis: There are very significant links between channels as well. When you stop promoting in one channel, you will see that impact in another [00:24:00] channel. Those relationships are all throughout the channels. So, you do have to be aware of that. You do have to plan for it. You do have to test for it. Now, a lot of times when we get into some of those scenarios, you know, I don't wanna share what we know about the organic. If an attribution company, I'd like to hear what their thought of it is first, and usually there's quite a bit of daylight between what we see as actual organic percentages and the assumptions to which has caused me pause for concern to take on any assumptions that are coming without being rooted in fact.

Some of them are hugely inaccurate and as a brand, I guess I'm feeling the same way, Erik. How can you turn over the keys on that without testing it? It's so ingrained in me. I'm a test and control kind of guy. It doesn't matter if it's traditional AB multivariate, you just have to test these things.

Erik Martinez: And you have to be methodical about it. Tim and I are sitting here and I think we have a challenge for those of you listening to this podcast, and if you're a supplier of some of these services, we'd love to have you come on and talk to us about what [00:25:00] you're doing and why you're doing it that way, and the advances in technology that can help. Or if you're doing it a different way that is showing sustained results, we'd love to have that conversation.

Part of what we're trying to do here is ensure that all of you are successful and have the tools and ammunition that you need, but we are cautioning you be careful. Be careful when you do these things. Be intentional about setting up your testing. Be methodical about how you evaluate performance of your programs. I can honestly say, cause I've been doing this in the direct mail world for a long, long time, is you've got to be constantly be testing something, to keep learning and adapting to the environment as it changes and it's changing rapidly.

Tim Curtis: I certainly agree. I guess I've just been alarmed at the type of conversations and the willingness for people in authority [00:26:00] to potentially sign something and invest solely on the expectation of what a salesman has told them. The economy has turned hard. We're not seeing a lot of good economic news. We're actually seeing it kind of grow darker and darker, and so there's pressure on those people to make some of those decisions. So, I sort of get where that's coming from. Like you said, Erik, I think it's we're just to the point now where this is sort of the crucible. This is where characters framed and characters refined and there will be people who will make it through the crucible and there will be people who won't.

In order to give yourself the best shot professionally, as either you're a CMO, you're a director of Ecommerce, VP, whatever your title, understanding that in order to weather some of these kind of things, we better do a couple of things and do our homework. If the concept of testing is something that you're unfamiliar with or you're, I understand it conceptually, but I need to understand how we would execute that test. That's where I would say, reach out. Erik and I can talk to you about that, potentially how something could be set up. There is help available to [00:27:00] you to conduct some of these things. At the end of the day, I hope that as an industry, we're learning a little bit from this.

I did spend time on the SAS vendor side, Software's a Service vendor side. It was a very uncomfortable period for me because everything was driven by sales. There were very, very aggressive growth metrics. All of these companies are backed by venture capitalists, angel investors, whatever. There is an environment of sell, sell, sell, and it's a different environment when you are working with people who are more media-agnostic and who are trying to help determine the efficacy of those channels. So, just a reminder that this is the time for us as we're heading into this crucible of an economic downturn, this is the time really for us all to button up and get back to the fundamentals on this.

Erik, while you were sitting there talking about fundamentals, I was reminded of a buddy of mine who grew up and was neighbors with Tiger Woods, and they talk about when Tiger was young, would be out there practicing putting. I wanna say it was like hundreds of putts a day or something. It was [00:28:00] crazy number, and it was he and his dad out there just doing strokes. Strokes after strokes, after strokes, and then people have commented about this with Tiger over the years, that it was his absolute relentless focus, and I think his dad helped shape that, on the fundamentals, that really sort of set the foundation for Tiger to be so great. I don't know that he had an extraordinary physical ability to play golf. I think he was just so disciplined that he developed into an incredible player as a result of a combination of the physical plus the training. I think we need to kinda step back and kinda learn from that. It's about those fundamentals.

Erik Martinez: I totally agree. I think that sometimes we like to make these really complicated, intricate plans, but at the end of the day, you have to have the ability to execute. When you go into a downturn, the companies that come out on the other side are the companies who execute extremely well. All the elaborate plans and all that stuff doesn't matter if they can't execute those plans.

So, [00:29:00] as you're prepping for this fall, this holiday season, and the beginning of 2023, really focus on those fundamentals. Do those SEO audits, do the website audit, do some AB testing and conversion rate optimization projects. Button up your systems so that when your customer comes and they have less dollars to spend that you get their share of wallet because not only do you have the right product at the right time, but you're also providing the right experience.

That's today's hot topic, really focusing on those media spends and making sure that they're not getting outta whack, that you're not wasting your dollars. We're really headed into a period where every dollar is gonna matter more and more as our economy shifts into a little bit of a slower gear. It won't be permanent, and the good times will come back.

Tim Curtis: It never is. Yep.

Erik Martinez: You just need to stay the course, be proactive. Be [00:30:00] ready, lay your plans down, and you guys will come out on the other side. Tim, any last thoughts?

Tim Curtis: No, just thanks for letting me kinda share what I'm seeing. I'm in a position where I get to see these trends unfolding. You know, I kind of have a chance to look over the horizon and see what's coming. So, just felt like today it was one of those days where we wanna share and talk about that.

Erik Martinez: Awesome. Well, everybody, this is Erik Martinez from Blue Tangerine,

Tim Curtis: and this is Tim Curtis with Cohere One.