AAAA Conference 2010

Advertisers' Conflicting Demands Squeeze Media Shops

Group M's Marc Goldstein Tells 4A's Conference There Are Solutions for Conflict Between Results, Spending

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SAN FRANCISCO (AdAge.com) -- The top challenge, or perhaps the top threat, to media agencies right now is the conflict between advertisers' simultaneous demands for ever-better results and ever-lower costs, Marc Goldstein told the 4A's leadership and media conference in San Francisco today.

Marc Goldstein
Marc Goldstein Credit: Kipp Cheng
"We're here today to talk about schizophrenia," Mr. Goldstein, chair of the 4A's Media Policy Committee and the outgoing North American CEO of Group M, said before reviewing a definition of the disorder.

What may have seemed like a head-scratching moment was actually Mr. Goldstein's entry to an issue that media shops have been struggling with, particularly in the past 18 months or so: How do agencies successfully handle their clients' disparate but insistent demands?

"How many times have you had a conversation with a client about saving money, lowering their CPMs, changing the mix of elements or programs, all with the objective of getting better pricing for the same thing?" Mr. Goldstein asked. "And how many times have you had a conversation, five minutes later, with perhaps that same person or, more likely, a brand manager at the same company, about a special opportunity, or branded content play, or a tie-in with a network series -- maybe 'Survivor,' 'Apprentice' or 'Dancing with the Stars' -- that will be priced at a rate higher than the average, dare I say it, priced at a premium?"

One of the ways he said agencies could address this challenge was to start considering new benchmarks for return on investment because the current one -- the cost per thousand impressions, or CPM -- is constantly evolving.

"This benchmark has changed on at least two occasions for no other reason than Nielsen's change in methodology," he said. "And in both instances when the CPM went up, we accepted the result because we acknowledged that the information was better, the rating better reflected reality and gave us a better sense that what we bought was actually being delivered."

The explosion of data still to come will allow for even better targeting via digital media and less advertising wasted on the wrong audiences, Mr. Goldstein said. "But reducing waste also means we're lowering the absolute number of people who see our ad, thus increasing the CPM," Mr. Goldstein said. "Sounds like we're back in that schizophrenic mode."

In reality, however, a higher price to reach a thousand consumers can be worthwhile when advertisers can reach just the consumers they want, he argued. "All the benchmarks are being redefined," he said. "The availability of data and the pace of technology that allows us to utilize this in our decision-making is changing the game."

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