Tuesday, March 02, 2010

Better Results At Lower Costs? How Dare They?

Marc Goldstein, Chair of the 4A’s Media Policy Committee and outgoing North American CEO of Group M seemed perplexed in his speech at the 4A’s Leadership and Media Conference in San Francisco yesterday.

He wondered how marketers could have the nerve to expect better results at a lower price.

Mr. Goldstein referred to it as “schizophrenia.”

Which means I’m schizophrenic.   After all, the other day I was asking the contractor who is putting a new roof on my house for better results at a lower price.   In my opinion, I was asking for ways in which he could be “smarter” or “more creative” in doing what he was doing.

In Mr. Goldstein’s opinion, I’m exhibiting signs of schizophrenia.

I don’t agree with Mr. Goldstein on that account.  But, I do agree with one thing he said.   That we need to consider new benchmarks for return on investment because CPM is constantly evolving.

As information becomes more precise, we can continue to target more precisely.  To put it another way, there are fewer wasted impressions.

According to Mr. Goldstein, “reducing waste means we’re lowering the absolute number of people who see our ad, thus increasing CPM.”  In other words, better targeting costs more.

That’s true.  But what Mr. Goldstein failed to mention was that media agencies have historically made their fortunes on wasted impressions.

Advertisers have always recognized this.  But there was little they could do about it.

Now they can.  And, now they are.

Which means that for the first time in a long time, media agencies can be paid for results rather than waste.

And that could indeed lead to schizophrenia.

Not for the advertisers mind you.

But rather, for the media agencies.

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