This is my first in a series of new columns geared to provide the basic processes and step-by-step instruction for online media buyers. Think Media Buying 101. Think boot camp.
Necessarily, we’ll address some of the thornier issues media buyers face in the monthly grind of executing campaigns.
First, some background: I’m an ad agency guy, and I have agency biases, having run some of the industry’s largest interactive divisions. I started out at Leo Burnett, joined J. Walter Thompson to run its interactive division out of San Francisco, and wound up building Anderson & Lembke’s interactive group as well.
Site folks may not agree with a lot of my more opinion-oriented assertions, but they’re certainly welcome to chime in. I hope to include many perspectives.
The column will start off with a review of the basic mechanics of online and offline media. Future columns will include topics such as technical nuances, rich media buying and measurement, the cast of characters in the industry, conflicts of interests present in the media markets, and other controversial topics that all require some methodology and practical advice. Note that I’ve italicized basic terms.
The Philosophy of the Ad Markets
Online advertising differs significantly from the processes and, frequently, purposes of traditional media. But you can’t really explain online advertising fully without comprehending and comparing the basic traditional media terms and methods. Here we run through the media markets both online and traditional looking at how and why they work. This is not just for folks new to the ad business. Taking this basic breakdown view of our industry reveals the very philosophical underpinnings of what we do.
While online and offline advertisers may differ enormously in form and function, the philosophy of advertising remains the same: A buyer with both a message and a competitive amount of money may buy the opportunity to air the message. This is about as capitalist as you can get.
Even for the liberal arts students out there like me, it’s pretty simple: It’s the essence of supply and demand. The more supply out there, the cheaper the media must be priced to sell. The more demand out there, the higher the media may be priced to sell.
Implicit in this philosophy is the presumption that buyers with the most money should win the media opportunities for their message versus buyers with a more compelling message but fewer dollars. Looking from the other side, media sellers should allow their goods to be sold to the highest bidder, regardless of message.
We’ve set up a marketplace of media much like a stock market where participants can become respected players based on two factors: the capital they have and the cleverness with which they invest it. As a buyer or seller, you can’t ignore either of these factors. The “invisible hand” of Adam Smith, the guy who first theorized about market principles, is ready to lift you up via your intelligent media buying or slap you down to the degree that you spend too much for less valuable exposure.
|Boom Boxes and Character Assassination
The philosophy of ad markets may seem obvious nowadays, but the consequences of it are not. If you apply this philosophy to political advertising, for instance, you can make several interesting conclusions about the role of messages, media, and money in our society.
Back in the early ’80s, New York City and other major metro areas created laws against the carrying of loud radios called “boom boxes.” The reasoning went that while folks have a right to listen to the music they enjoy, they do not have the right to inflict that music on others.
A couple decades later, we have millionaires sponsoring their own negative advertising campaigns against candidates who compete against their interests. It is perfectly legal, for instance, for the Bass brothers to run ads in support of the Bush Republican nomination campaign.
The difference? The Bass brothers had the money to justify their ownership of the people’s attention. If they had stood in the town common of San Antonio and shouted their message for free, they probably would have eventually been arrested as nuisances.
If you think that this political side to advertising is exceptional or irrelevant, you would do well to understand that these are the very considerations that will be used to form any online advertising regulation. It belies the very essence our society assigns to money and media, and the likely manner our society will treat it and regulate it in the future.
Traditional Advertising Mechanics
In the past, we’ve measured these media marketplaces with several different types of numbers. The most basic measure of a media buy is the number of impressions purchased the number of all the times all individuals see an ad. This number often will get broken up into two other numbers: reach and frequency. These define how many individuals actually saw an ad and the average number of times they saw it.
For example, to advertise my bird-dog training service, I might purchase an ad in two magazines: Bird Dog Monthly and Point. If both of these magazines have 50 subscribers, and these happen to be the very same 50 people, I can say that I purchased 100 impressions, with a reach of 50 and a frequency of 2.
In the print media, we’ve hewed to the circulation figures the number of people who eventually receive a copy of a publication. Some print reps try to weasel some additional impressions to sell by claiming that multiple people read the publication. These additional impressions are called pass-through. Ad agencies almost universally ignore these pass-though numbers. My own belief is that things tend to even out. Maybe it’s true that a couple of additional people see each magazine, but it’s also true that perhaps only one in three of them ever sees a particular ad anyway.
Generally, when a magazine sells media to a buyer, it is always selling a number of impressions equal to that of the circulation. Unless the publication does something fancy, like selective binding or regional editions, the sellers are limited to the circulation figures as the ad package. This is why circulation figures are so important in print.
In fact, most publications selling media go ahead and pay a lot of money to have special third-party organizations conduct circulation audits, which are, essentially, verification studies to ensure that the publication does indeed have the audience it claims to have. The audience level a site claims to have is called the guaranteed circulation.
Buyers generally purchase this media based on the thousands of impressions. Buyers will ask various sites the cost of an ad, then figure out the cost per thousand impressions (CPM) to determine the relative rates.
They will select some media to purchase after some negotiation then codify the deal with a contract called an insertion order. If the seller fails to deliver the right number of impressions, the seller is usually bound by the terms of that insertion order to provide a makegood to account for the discrepancy.
In the broadcast media, we use some more complicated measures, namely ratings. But we’ve already bitten off enough to chew on for this week. The next column will step back and look at how these terms do and, sometimes, do not apply to the online media.