Most media plans are centered on criteria such as target audience, placement pricing, audience reach, and creative strategy. However, there are times, especially in cases when the advertiser needs to reach a very broad audience, when ad inventory is treated as a commodity (as Jim Meskauskas wrote on November 7), and pricing obtained becomes the No. 1 determining factor for ad placement selection.
Long-term buying strategies can work in a similar manner. More often than not, the two factors that help reduce prices in most industries are the total dollars being spent and the length of the commitment. Of course, the more spent, the better the pricing, but making long-term commitments also helps get costs down.
Why the Long-Term Deal Looks Good
Everyone loves the big long-term deal. Proposals are negotiated once, and if accepted, deals run for months or even a few years at a time. Of course, there are the regular optimization efforts and creative changes. But the work involved after the initial setup is minimal, and both parties are often happy. The publisher has locked up inventory sales for a while, and the buyer has allocated a large part of his or her budget for some time to come.
But have you necessarily maximized your budget’s potential by tying up ad dollars in one place for so long?
When ad budgets are tied up with specific sites and networks for long periods, potential audience reach can be sacrificed. True, pricing is important. But it is also important to maximize your audience reach, especially in the start-up phase when building a quality unique user base is so crucial.
Imagine you are an advertiser with a large, general potential audience (e.g., one interested in sports, search engines, travel, etc.) and will be spending $150,000 monthly for six months. A substantial part of the media placements will likely involve low-cost, untargeted network buys, at least in the early months. Suppose a network offers to commit $30,000 monthly over the period, with the best pricing possible.
It may seem like a no-brainer: Grab it. The price is great, the sites are decent, and the potential audience reach is acceptable. You were likely going to make a buy here anyhow for a month or two, so why not extend it and take full advantage of the deal? But if you really think it over, the deal may not be conducive to your immediate goals of maximizing audience reach and acquisition. You would likely be advertising to the same audience over and over again, although there will be some audience growth over time.
Keep Sight of Short-Term Goals
Although the dynamics of ad networks change regularly, from the sites they represent to the unique user base of each individual site, the change in audience reach is fairly minimal over the short term. For this reason, it is often more effective to make shorter commitment buys (one to two months long) at slightly higher prices, if need be. Then, once you have reached the majority of a network’s potential viewer base, allocate these dollars where there will be fresh eyeballs for your ads.
Once you have hit most of the placements you originally wanted, go back to the placements where you started out (five to six months ago, a year ago, whatever your company’s cycle might be). Chances are, networks will have added (and lost) a fair number of sites represented, and the overall number of sites will have grown over this period. Furthermore, the sites that have remained a part of the network have likely grown substantially since you first advertised there.
There are many options available to buyers, and restricting yourself to placements for a long time can hurt your reach and growth in many cases. Of course, advertisers with highly defined, niche audiences don’t always have the luxury of employing these different buying strategies, and long-term ad agreements and sponsorships (often confused with partnerships) are solid deals that do work well.
This buy cycling (not bicycling!) strategy can be compared with strategic investment approaches. At one end of the spectrum, there is the “buy and hold” long-term strategy, with the short-term day trader representing the other extreme. The buy cycling strategy mimics more of a day-trading approach (although far more risk averse), trying to maximize the potential daily (in our case, slightly longer) and moving on from there. Long-term investors buy and hold long term.
Dot-com start-ups generally don’t have the time to wait for a deal to turn around; they need to show results in their infancy stages. A buy cycling strategy is another technique to add to your arsenal, especially at start-up, that can help maximize an advertiser’s reach and acquisition.
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