Unilever

Ford, P&G And Others In Full-Scale Revolt Against Ad Price ‘Arbitrage’

Source: http://www.businessinsider.com/ford-pg-and-others-in-full-scale-revolt-against-ad-price-arbitrage-2013-4

Arbitrage

Half a dozen major advertisers — Procter & Gamble, Ford, Citibank, Unilever, Kimberly-Clark, and AT&T — have pulled their ad dollars from online ad agency trading desks because those agencies can’t explain how their money is actually being spent, according to a must-read, in-depth report from Adweek’s Mike Shields.

The agency trading desk issue is complicated and obscure, but it involves millions of dollars in web advertising placed by blue-chip brands.

We recently reported on the growing unrest on Madison Avenue over the way some web ad agencies decline to tell their clients the original price of the web ad inventory they’re buying. Agencies buy the media upfront with their own money. They then slice and dice it, according to data they’ve gathered themselves, making it more targetable and thus more valuable. the media is then sold at a premium to clients.

Clients don’t know what the original price was — and thus, nor do they know what the agency’s markup is.

Critics call this practice “arbitrage” or “frontrunning.”

In their defense, agencies say they ad value to the inventory by generating their own analstics and data. They take the risk of not selling the data when they pay for it with their own money. Clients aren’t forced to buy it — they can take it or leave it. And the practice should be judged on a performance basis, as most clients use trading desks as but one part of a larger strategy. The fact that the original pricing is undisclosed is written into contracts upfront, ! too. GroupM CEO Rob Norman told us many of his clients are on a “non-disclosed basis” when it comes to pricing.

But the problem is that where there is a lack of transparency, there’s a lack of trust. Adweek writes (emphasis added):

One tech vendor … described a recent conference call during which a client grew exasperated with its agency, which was unable to provide even basic details about where its ads were being run — since they were being purchased via an agency trading desk.

For example, according to sources, Kimberly-Clark has insisted that its digital agency of record, Mindshare, handle all of its audience buying, rather than Xaxis. AT&T has made the same request of its GroupM shop MEC. Bob Arnold, Kellogg’s global digital strategy director,

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Wednesday, April 10th, 2013 news No Comments

ClickZ articles by Augustine Fou, PhD

Dr. Augustine Fou is Group Chief Digital Officer of Omnicom’s Healthcare Consultancy Group. He has nearly 15 years of digital strategy consulting experience and is an expert in data mining, analytics, and consumer insights research, with specific knowledge in the consumer payments, packaged goods, food/beverage, retail/apparel, and healthcare sectors.

Dr. Fou has provided strategic counsel on the use and integration of online marketing to clients such as AT&T, IBM, Intel, ExxonMobil, MasterCard, Unilever, Pepsi, DrPepper, Frito Lay, Taco Bell. KFC. Atari, Conde Nast, Hachette Filipacchi, Victoria’s Secret, Liz Claiborne, and others. He has served as expert witness on online payments for the Federal Reserve Bank of New York, and advised government agencies such as the Norwegian Trade Counsel, the Gouvernement du Quebec, Invest in Sweden Agency, and the Canadian Consulate.

Dr. Fou is an Adjunct Professor at New York University in the Integrated Marketing Department of the School for Continuing and Professional Studies. He also writes a monthly column for ClickZ’s Experts Columns on Integrated Marketing and is a frequent speaker and panelist at online and advertising industry conferences.

He started his career with McKinsey & Company and recently served as SVP, Digital Lead at McCann/MRM Worldwide. Dr. Fou completed his PhD at MIT at the age of 23 in the Department of Materials Science and Chemical Engineering.

Recent articles by Augustine Fou

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Why the laws of duality, the opposite, and others no longer hold true. Second in a three-part (1 comments) Mar 4, 2010

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Is Believing in Behavioral Targeting Like Believing in Santa?
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What’s Wrong With the Net Promoter Score
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How to Do Social Marketing in Heavily Regulated Industries
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A New Definition of ‘Digital’
Defining ‘digital’ as the collection of habits and expectations of today’s consumers — and what that means to (7 comments) Sep 24, 2009

Metrics, Metrics Everywhere
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Sunday, April 4th, 2010 digital No Comments

Branding is still a useful activity? Reach and frequency is still a useful metric?

Source: http://community.microsoftadvertising.com/blogs/analytics/archive/2009/07/06/getting-back-to-basics-why-web-advertising-needs-traditional-media-metrics.aspx

Getting Back to Basics – Why Web Advertising Needs Traditional Media Metrics

posted Mon, Jul 06 2009

by Young Bean Song MSFT

Trying to build a brand marketing campaign without traditional target reach and Gross Rating Points (GRP) estimates is like trying to diet without the concept of calories. The analogy of dieting and advertising works on many levels.

continue reading Young Bean Song…

My response…

RE: “Patty Wakeling, an industry veteran who leads Unilever’s Global Media Insights Group, recently reminded me that in today’s retail environment, the choice between the branded versus the generic option are separated by less than an inch on the shelf. It was a sobering reminder of the power of branding, and why so many companies are willing to spend so much to build their brand equity.” But in the case of Whole Foods’ own store brand, 365, many people perceive it to be better than branded options (or at least equivalent). So they tend to choose to buy the 365 product instead. In other cases, what used to be brand equity/value is now perceived as an undesirable premium. Take another example — the rise and popularity of Trader Joe’s where 80% of the products sold are house brands. Consumers care about the product and its quality and value; consumers no longer care (as much) about the brand that is slapped on the package if the contents inside suck.

A brand used to be a mark or symbol burned onto a cow’s butt to signify what ranch it came from. And if people knew the ranch had a good reputation for raising healthy cows, they would buy the cow. The brand helped simplify the purchase decision. These days, advertisers carefully manicure “brand messages” and shout them at target consumers using various one-way channels such as TV, print, radio, and banner ads. But like Scott Cook, Intuit, said, “A brand is no longer wht we tell the consumer its – its what the consumers tell each other it is.” So branding as we know it (advertisers shouting claims at target customers) is less relevant or even unwanted entirely by modern consumers. And brand equity, which used to be a large, fungible item on the balance sheet (technically known as “good will”) may be far less valuable today. Consumers don’t just take the advertisers’ word for it; they will do their own research and buy what is actually valuable and useful.

Companies that actually develop useful and valueable products or services that consistently deliver on their promise — Apple, Drobo, Zappos, JetBlue, etc. — can even cut out their brand advertsing entirely because their brand IS their consistent delivery on the promise of value and usefulness. For example, has Apple EVER claimed they have awesome design and are easy to use? NEVER! But their products consistently deliver on those 2 attributes. So that’s how modern users would describe Apple’s brand to their friends.

A “brand” is earned over time. “Branding” is no longer a useful activity (and furthermore it is damned expensive — media costs — and ineffective — because it is the advertiser making claims that modern consumers don’t believe, assuming they saw the ad in the first place).

From AdAge — people buying private label, generics, or store brands (quality of which are pretty comparable to name brands)

Private Labels winning the battle of the brands
http://adage.com/article?article_id=134791

What do you think?

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Wednesday, July 8th, 2009 digital 3 Comments

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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