Feb 21, 2020

Explaining the CPM Increase in Media. An Interview with SQAD’s Marc Krigsman

Image result for marc Krigsman squadMarc Krigsman has a deep background in TV from Fox Cable Network to Turner Networks Group, Cadent and Cross MediaWorks to becoming CEO of SQAD in 2015. 

“I have seen and been involved with many significant changes and advancements in television advertising,” he explained. So who better to assess the strength, opportunities, trends and challenges in pricing the media marketplace in 2020?

Charlene Weisler: What data does SQAD collect and what do you report?
Marc Krigsman: For more than four decades, SQAD has served as the industry source for ad cost data, processing more than $1 trillion in real transaction ad costs from advertising housekeeping system. This data is available through our MediaCosts platform and includes costs for national broadcast, cable, and syndicated television, as well as local broadcast, cable, and Hispanic TV, radio, and out-of-home advertising. We also provide audience analytics research tools for Nielsen data through our MediaLogic platform and provide advertisers and agencies with the industry’s leading media planning software, MediaTools.  

Weisler: How has audience fragmentation due to streaming, OTT, SVOD and cord-cutting impacted average unit ad costs on broadcast and cable if at all? Where do you see the trend?

Krigsman: It’s an interesting conundrum that we are in right now because as fragmentation occurs and audiences become more scattered there is still a revenue target outlets need to achieve for their inventory. So what is actually occurring is a CPM increase. That is because it is costing more to reach the same audience. As fragmentation happens, we’re seeing CPMs and rates go up.  Most in the industry thought that would not be the case, but in fact we are seeing an increase in prices. That also happens when you sell less inventory - CPMs go up. It’s a supply and demand issue. Fragmentation does not equate to a sale or reduction in prices. It is actually the opposite.

Weisler: What will the effect of increased audience based buying and impression based measurement be on unit ad costs and on advertising budgets?

Krigsman: The more focused and targeted you get, the more you are going to pay for that targeting. For some advertisers that makes sense. They will pay a premium to reach the audience they want to reach and only that audience. But other advertisers, CPG for example, don’t really care about pinpointing audiences. So for them addressable is not as efficient a buy.

The reality is that even with targeting you are still going to have waste. You have to be 100 percent clear about who the audience is you want to reach. You have to have a lot of audiences in your data to understand who your ideal customer is but when you do that the extras it takes to buy those segments will result in a higher price point.

For the seller, an advertiser using a targeted campaign to reach a limited HH, that means that they will have to fill their other inventory with other types of advertising if they can. The media outlet has to have confidence that the revenue they are getting from the targeted buy will be enough. They have to take into consideration that if it goes for a lower price, this will open an opportunity for bargain hunters looking for a bucket of impressions, not specific ones. Targeted buying could create opportunities for people who are looking for the opposite.

Weisler: What are the programming types that continue to command the highest CPMs?

Krigsman: Live shows, special events, news and sports – these are premier events that always command high CPMs because of their unique selling proposition in general. Overall you still have huge prices for traditional TV– sitcoms and other first run programming. But clearly live and special events are unique.

Weisler: How are live programs such as sports and awards shows faring in an environment where audiences are gravitating to watching highlights on-line? Does the data support this assumption? Press seems to infer that live programming delivers the most engaged audiences. Do you agree?

Krigsman: Programming that promote itself as unique or “watch it now” has the specialness of motivating viewers to want to watch it while it is happening, which always makes for an engaged audience.

Weisler: What can we expect for the CPMs of news programming as the presidential campaign season heats up? And how will data be best used to target independent voters? How is the tight inventory in local markets due to campaign buying impacting CPMs for advertisers?

Krigsman: History has shown that when there is a lot of pressure on inventory prices go up. From a national inventory perspective there will be a lot of pressure from PACs and other entities looking to support various issues and candidates. But most presidential advertising will be local rather than national. This will put pressure on local inventory and we will see an increase in those markets, but for only for a period of time, What traditionally happens is that those markets will go through to a period of  time and some of their core advertisers may not have available to them what they have had before.  But those local stations will then look to make goods following this period to offer to their bread and butter advertisers.

Weisler: How would you rate the TV ad market overall as we head into 2020?

Krigsman: The market is pretty healthy.  We are seeing a lot of increased pressure from other platforms but overall the ad market is healthy. People have a high level of confidence in the economy and when they do marketers spend against that confidence…that will reflect well in the ad market moving forward.

This article first appeared in Mediapost.com

Feb 14, 2020

The Best of Charlene Weisler in MediaVillage

I am thrilled to see a "Best Of" email blast of my top articles in MediaVillage from 2019.

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Feb 11, 2020

Nielsen’s Lana Busignani on Navigating the Age of Dissonance

Image result for lana busignaniAccording to Nielsen’s 2nd Annual Marketing study, marketers are living in the Age of Dissonance, where consumer preferences and behaviors are changing at such a rapid pace that the advertising, marketing, and media industry is struggling to keep pace. The result is uncertainty and transformation; legacy ways of doing business are under greater scrutiny than ever before and changes in business processes, as uncomfortable as they may feel, are mandatory.
The Annual Marketing study sheds light on a confusing and somewhat perilous time in advertising, marketing, and media. “We talk [generally] about the rapid pace of change, but we are really talking about how the world will change and where it will go,” said Lana Busignani, executive vice president, global analytics, at Nielsen. She added that it is important to fully understand how marketers are responding to these changes and modifying long-established guidelines and best practices to better engage with consumers. “Marketers are faced with a proliferation of options and channels, as well as how to best engage consumers,” she added.

Busignani explained that the purpose of the Annual Marketing study is to learn what is actually happening on the day-to-day level among marketers and advertisers; for example, what impacts their ability to measure outcomes and how they’re adapting and leaning into change. She knows firsthand how vital these actions are to marketers. Busignani is charged with working with them to help measure how well their marketing efforts are delivering ROI.

The study asked how more than 350 marketers across the globe perceive the effectiveness of using specific channels and the resulting actions, whether or not ROI measurement is clear, how they feel about specific channels, and whether the changes they’re seeing are also changing their role as marketers, Busignani explained. Additionally, the study explored how the role of the marketer has changed, with digital becoming a far bigger portion of spend and rivaling traditional channels.
One key finding confirmed how extensively the CMO role is changing. “The CMO is becoming a more technical role as the balance shifts [from traditional to digital spend],” Busignani said.
Perception Versus Reality?
The study also found that marketers tended to give digital, “the benefit of the doubt,” in terms of investing more money into a platform regardless of the efficacy and clarity of the measurement. “New channels, new ad vehicles, new ways of engaging consumers, tend to spur investment without necessarily understanding resulting performance,” Busignani said. “There is a willingness to invest in advance of true measurement and accountability because they are new channels.” But, she warned, a day of reckoning is coming, where marketers realize that they need more accountability to justify their investments.

Busignani saw the related disconnect between spend and results in the study’s finding. She explained that marketers often rely on a particular, familiar channel — such as email or search — without actually having metrics that accurately assesses whether it is delivering on the goal. The report revealed that marketers sometimes assess the effectiveness of the media mix by relying on their perceptions alone for performance success. And, she added, marketers are increasing these investments despite the lack of adequate measurement.

With digital now representing more than half of all ad spend in the U.S., basing results on perception alone is a risky venture. “Accountability has arrived. Digital publishers are interested in measurement to increase the value of their audience,” Busignani said.

Traditional channels are also interested in proving their value to marketers in this increasingly fragmented ecosystem. “As the fight for ad dollars continues, data and concrete measurement are a battleground for both digital and traditional,” she said. “And, consumers need to benefit in a privacy-compliant way.”
Surprising Findings
One of the unexpected results from the study is that marketers are shifting their priorities. Forty-one percent of marketers said that acquiring new customers is the most important goal. “Marketers are focused on acquiring new customers, rather than focusing on retention and reducing churn,” Busignani said. Compared to last year’s study, she added, the pendulum has not yet swung back to a balance between acquisition and “ensuring engagement with your existing client base and preventing churn.” But she is confident that the priorities will, “start to shift back, with more balance between customer acquisition and retention and engagement with current customers.”

At the same time, brand awareness also was a lower priority than customer acquisition. The risk, she warned, is that “we have neglected brand building and brand engagement.” Busignani recommends that advertisers and marketers take the time to fully understand the long-term effects of brand building on both acquisition and retention.

Nielsen is committed to helping the industry navigate these changes, supporting and informing all priorities, Busignani pointed out. “We have a rich history in measurement,” she said, “serving a role in the marketplace around understanding audiences, as well as helping advertisers understand what they are getting for their investment and helping media demonstrate the value of their audiences.” When you can offer all of those solutions, it is only a matter of time before the Age of Dissonance becomes the Age of Harmony.

The full report on Nielsen's Annual Marketing study is available here.