I learned very quickly, furniture shopping, there is a real difference between price and cost. The price of the sofa was attractive; not so much the cost, when, six months later the cushions sagged and fabric faded.

As media strategists, we quite often are asked, “What does it cost?” That answer is actually quite longer than time generally allows. Sort of like asking a local sports radio station, “How did the Patriots do Sunday?”

One standard consideration unit is CPM, or cost per thousand. Perhaps we’ll rename that to PPM, or Price Per Thousand. Local media ranges from $.50 CPM (online) to $45 CPM (print). That’s the price. But the cost is dependent on audience qualitative & audience scale necessary for the product being sold, along with other ROI factors. If you need tens of thousands of customers in foot traffic, it’s really hard to achieve that with a $.50 CPM online banner campaign.

Another example: We’re often faced with a choice between two different TV spots, both in the same prime daypart, one with a higher cost per point (CPP) than the other. And our selection, sometimes, is the higher CPP. Why? Well, we know which one is priced better. But which one actually costs more? That depends on the client’s appetite for preemption; the qualitative of the audience; the age and gender composition of the audience; the amount of spots in the break; the content environment; the likelihood of DVR against each program, etc.

Like any good relationship, determining cost requires communication. Your agency should ask a lot of followup questions, when you ask “What does it cost?” Otherwise, the conversation devolves to “What’s its price” and you risk a race to the bottom.

I was a huge fan of Candid Camera. It’s deliciously silly & voyeuristic, watching people in unexpected situations. One episode had people standing outside a building, picketing, holding white signs with the word “protest.” Nothing else. They would ask passers-by to march with them, against some unknown complaint, and a surprising number of folks agreed. Those in on the prank had determined, irritated looks on their faces and marched intently. The Candid Camera “marks” looked befuddled.. One of the innocent participants never asked why they were marching, but did have one burning question: “Do we have to march in such a tight circle?”

Kind of like “Occupy.” Everything that’s good and challenging about social media can be summed up in “Occupy.”

The good? Huge groups of people can be mobilized quickly, from tweets no more than 140 characters. The challenge? Why are they marching?

The Occupy movement is a reflecting pool. Whatever ticks you off today is its meaning. It’s a rally against: Wall Street greed and deregulation; job outsourcing; diminishment of unions; high cost of health insurance; university president salaries; corporatization of farms; animal abuse; environmental abuse; foreclosure practices; shrinking middle class. I’m quite confident I’ve forgotten one or two others.

[Video: Occupy Boston Day 3]

Personally, I can get behind at least one of those complaints. But here’s the problem - I’m too damned pragmatic to protest solely for an opportunity to vent. I actually want something to happen. And that’s what makes social media so challenging. How do you put together a platform, a mantra, a focused list of demands? That will require old-school planning, discussion and vision. Which will take a slight bit more deliberation than the rapid dissemination of messaging that social media fosters.

It will be interesting to see how this movement evolves.

I guess not everything in business can be solved with football analogies. I won’t let that stop me.

My alma mater, LSU, hosted a scandal early this season when its starting quarterback, Jordan Jefferson, was arrested for involvement in a barroom brawl. He and other team members broke curfew, apparently a 40-year tradition this particular night. They enjoyed a few adult beverages at the local watering hole, Shady’s. Yep, that’s really the name. A brawl ensued in the wee morning hours. When the dust settled there remained a head-injury victim and an investigation of Jefferson’s 33 pairs of sneakers.

Several weeks later, with a misdemeanor charge and even as the backup quarterback was winning games, Jefferson was reinstated. His appearance in the stadium was met with boos.

Later that night a lively dinner conversation among family and friends ensued. The attorney at the table made arguments as to Jefferson’s misdemeanor charge, the alleged victim being rather infamous locally and the strength of the team with a 2-quarterback strategy. The social worker at the table wondered about the message his reinstatement sent to the other players, about Jefferson’s roles in previous fights and even about whether this was life skill/lesson-learning for Jefferson himself.

The thing is, they’re both right.

Or both wrong.

It depends on what you want to happen.

Is the university’s mission statement to win games and drive revenue? Or is the university’s mission statement to produce responsible adults, and drive a better society? Can it accomplish both? The former mission is an easier, faster decision; the latter a much slower bake with non-immediate results. Will the university have the patience and courage for a tougher decision?

As difficult as that question is to answer, we find ourselves and clients quite often in the same dilemma. What is it we hope to happen? What are we willing to sacrifice to get there? Do we have the patience for the slower bake?

The biggest questions are too often the most difficult to address and the last, if ever, answered.

I read this week that since June of 2009, women have lost 218,000 jobs while men have actually gained 768,000 jobs. Which made me think of the extinct secretarial pool, which made me realize why Facebook is so good but just so damn hard.

Let’s just accept that marketers must embrace social media, and since Facebook is the largest social media portal, by far, marketers must be in the game. The profile targeting of Facebook advertising is seductive. The recent added tools of real-time targeting, where ads appear against terms as they are posted on users’ status updates; and the imminent integration of Skype and community chat will make the Facebook experience even more robust AND more attractive to advertisers.

We’re talking over 500 million users, half of whom log in daily. This is THEIR small-town, town hall and they need to know all the latest news. So marketers must think of Facebook as different from any type of marketing they’ve done in the past. It’s intimate, it can expose ugly truths and be nasty, it can tick you off, melt your heart and coax you to tears. And I’m talking in a commercial space. I’m saying this because the first rule of Facebook is that it’s as much a listening tool as a speaking tool. Even when you’re speaking, it needs to be an intimate voice. Not a broadcast announcer.

That approach takes talent. It takes subtlety, it takes time. But businesses now live in an automated world, with little subtlety and certainly minimal time. When was the last time anyone nurtured an SEO campaign? Many banner campaigns are worked on trading desks, with automated, real-time bidding. We outsource services to India. Executives now handle their own administrative tasks.

The thing is, managing Facebook is, for a marketer, like hiring a secretary. You want a community manager with social and organizational skills, with genuine enthusiasm for your brand; with the time to organize a company party on a shoestring budget and do it well.

But the thing is, nobody hires a secretary anymore.

Forrester Research says companies must now be “customer obsessed” due to the disruptive power of technology-enabled consumers. It’s a simple laundry list of consumer needs, according to Forrester, that looks something like this:

• I want my stuff faster
• I want it better & cheaper
• I demand customer service, to a high degree
• I want transparency and technology-enabled information about your product

According to Forrester, previous sources of competitive dominance, like brand advertising, distribution and manufacturing, are now just “table stakes.”

I’m curious how marketers will respond in the corresponding environment of:

• Decreasing customer service talent
• Product commoditization causing decreasing margins to pay for said customer service talent
• Several generations of “me-llennials,” responsible for replacing the boomer talent pool.
• Increasing costs in transportation and health-care

If we think of this scenario in terms of a line chart, where the X axis is “consumer demands” and the Y axis is “company response tools” are we headed for a flatline?

As a consumer and small agency, I love the idea that companies must realize they are not talking to consumers anymore. They are wooing consumers and nurturing a healthy relationship. Companies must be nimble, able to react to consumer demand quickly; they must provide consumers with the information they want, when they want it, in an engaging manner.

Easier said than done. If companies are obliged to put resources behind engaging and mutually satisfying customer experiences (like mobile apps, social media, associate training and incentivization) in a market that is evolving exponentially fast, then consumers may need to understand their stuff may come better & faster, but it won’t come cheap.

Best Laid Plans of Mice and Men

As much as this sounds like false logic, I foresee the end of planning.

Here are some clues:

•Geo-locator services like 4-square lead to “planned serendipity.” Why make social plans, when you can log on and see who’s in your area? Then you can make a spontaneous decision whether to play or not. I’m part Baby Boomer and Gen X, so I’m not completely comfortable with this, but ask any 20 year old.

•Planned obsolescence is accelerating. Owning a cell phone, laptop or even washing machine longer than two years is becoming a rarity. Lenovo no longer makes a battery for my two-year old laptop. The cost of repair for most appliances is half the cost of a new one. Because of the rapid rate of technology change, there exists a status of diminishing manufacturing sources & shortages. “Fast-cycle” products = accelerated obsolescence.

•Some of the most efficient online inventory we purchase cannot be planned. We put a budget into an account, and draw it down as needed. For example, search terms, pay-per-click (PPC) inventory, behavioral targeting and cost per acquisition (CPA) inventory is bought with algorithms having to do with price bids and relevance. We don’t know in advance how many ad serves we’ll obtain. In traditional, planned, media, we pay for the placement, not its relevance to the audience.

•Then there’s the interesting employment status of many middle agers, who are finding themselves suddenly in a professional existential crisis. Their job is obsolete, and they’re stuck wondering “what’s my next act?” As quickly as technology is evolving, its impact on employment, and the evolution of business models, cannot be ignored. Thirty years ago Dolly Parton and Jane Fonda, in the movie “Nine to Five,” worked in a secretarial pool.

•In terms of the economy, credit is tight. So for many businesses, including retail, there’s a “pay as you go” environment, making it tricky to speculatively stock inventory, hire or plan an appropriate advertising budget.

If there is no planning, I guess we, media agencies, simply plan for the unplanned. We must work smarter, efficient, fast. In other words, as an agency, we stay nimble. But here’s the catch, are advertisers ready to change protocol, streamline decision-making and move fast too?

If 2010 is the year of optimizing media, 2011 will be the year of optimizing data.

There now exists a newlywed marriage of cookie technology with machine-learn modeling so that our online preferences are tracked , bucketed and sold. (audience targeting) There exist publishers and advertisers and a whole motherload of complicated frienemies in-between, trying to help you sell goods to people looking to buy your goods. Only the motherload of frienemies, with overlapping services, creates – God bless America – good old-fashioned competition, driving down costs, and squeezing margins. This is good news and bad.

The good is that advertisers can execute, track and optimize campaigns, proving ROI. The bad is that if publishers, agencies and third-party facilitators can’t make money, the web will not grow to scale needed by many.

Some other industry futuristic musings:

-Eventually, the online media industry’s transparency will equal that which it demands from consumers. Joe American’s IP address discloses his web preferences to a scary degree, but some ad networks still won’t divulge its list of publishers, obstensively because the publishers don’t want media buyers knowing how low their CPMs will really go.

- Data management will become the apex of any marketing team. Analyzing and overlaying in-house customer database with social media “friends” with purchased acquisitional lists with conversion lists and retargeting lists – both online and offline will be crucial because…

- Ad creative won’t be so much about a fully-baked iteration as assets, which can be combined in myriad combinations, dynamically, to serve the right ad at the right time to the right recipient.

- And if we can keep margins profitable, if we can consolidate all those in-betweeners, if we can develop smart industry protocol, then online media targeting won’t just be online anymore. (Think Google TV’s debut.)

I have a sweet Labrador retriever, who sometimes loses his mind, and annoyingly follows me so closely underfoot, I swear it’s like white on rice.

It usually happens when I’ve skipped a few days running him. Or thrown the ball or done any of the activities that make a Labrador happy.

And, at times, my children are the same way. Ever notice how children seem to be on their worst behavior when you’re sick or stressed? A recent psychological study said that the way to have well-behaved children, is to spend time doing things you enjoy together. Ensure that you have a satisfying relationship, one which the child values, and he will want to please you.

Raising happy children and happy pets is an evolution. It involves trust building, reward, consistency and time. It doesn’t happen in one conversation.

Let’s call this “successful relating.”

Even the internet is evolving toward successful relating, giving the market what it demands, a individualized, productive, fast, satisfying experience. Chris Anderson, of Wired Magazine, says the World Wide Web, or using your browser to find content, is in decline because simpler, sleeker devices – think apps – are more about getting than searching.

Why should brand building be any different? Forget brand building, think business building.

Business building no longer solely happens in broadcast, in a one-way monologue, or a single conversation. It happens when your customer values the relationship, refers friends and family, spreads the good word, which can now happen via a plethora of new platforms. These relationships involve trust building, reward, consistency and time.

Facebook, Yelp, and other crowd-sourcing, social-media outlets are super examples of how successful relating is important to business building. Will you see an overnight behavior change? Probably not. Will you develop happy customers, assuming you’ve put in the time and energy to provide them a reward? Good chance.

The tricky part is that many opportunities to successfully relate to customers don’t produce immediate results. And that, my friends, is a tough sell to CMOs and business owners. Companies are accustomed to approving media expenses in an economy of scale. One to one tactics, innovation without ROI measures don’t read well on spreadsheets.

But here’s my point: Can you afford to skip the opportunity to successfully relate, just because you can’t measure the immediate effect? If that were the case, then my children should be seen, not heard, and spend their weekends happily cleaning their rooms. Funny that doesn’t seem to be working at my house.

Only a select few people in the world get irony. The rest think they do. And that’s ironic. Possibly.
It is in this context that I mull the irony of stakeholders’ reaction to the media industry’s evolution.
For example:
Media departments now think in terms of purchasing “audiences” rather than outlets. Yet broadcast negotiations still invariably involve discussions of share, as if buyers concentrate on volume.
Or,
Marketers need ad campaigns to provide ROI with smaller budgets. I get that. There is no money tree. Credit to companies is tight. Companies stockpile cash to hedge an uncertain economy. This stockpiling hinders their ability to expand, to experiment in marketing, to hire more staff. Putting more people to work and generating more sales through marketing stabilizes the economy. A stabilized economy frees more credit. Ironic, hunh?
ROI demand has fueled the growth of targeted tactics. A few examples:
- Facial recognition billboards are in beta. Yep, Minority Report has arrived. As you walk past an electronic billboard, the board will recognize you, not just in terms of age or gender, but as an individual. Hello, Ms. Snowman, check out the latest sale on gilt.com
- Google has teamed with DirecTV and EchoStar to profile viewers
- Behavioral targeting and retargeting grows more sophisticated thanks to cookies, flash cookies and beacons.
- Google AdWords and affiliated tactics serve ads against relevant searches.
The small to mid-size marketers we represent want ROI and effective 1:1 tactics. Yet few do the research needed to really know their constituents. If you spend any money in advertising, you should first spend the time and investment in audience data analysis. Otherwise you’re holding a fishing pole in the desert. Which, come to think of it, may be a better example of imprudence than irony.

There is a phenomenon psychologists call “hindsight bias.” It’s the irrational belief that a past outcome was predictable. For example, you watch Daniel Nava hit a pitch at Fenway and you get that momentary “feeling” that it’s going out of the park. What you’re actually doing is confusing your visual processing with higher-order judgments. Your sense that “you saw it coming” is hindsight bias.
As a hindsight-bias victim, I’ve started thinking about other biases, especially those confusing processing for higher thinking.
For instance, I wonder if we in the media industry and our clients, the marketers, have value bias.
If there’s one thing digital advertising provides , is the knowledge of which ads or key words create conversions . And if you sell products online, tagging a “thank you for your purchase” confirmation for conversions – allows great ROI analytics. Search terms or ad inventory that is more costly upfront may actually be the best value, lending to more conversions or higher profit conversions.
However, other media is not so neat. Other media is where we’re stuck in Wanamaker’s paradox: half of advertising works, we just don’t know what half. For those areas we, the agencies, have created value in how low we can price media.
Here’s a dirty little secret: Buyers who are pressured to outbid their predecessors in CPPs (cost per rating point) or CPM (cost per thousand), can either inflate anticipated GRPs, package a bunch of garbage to make the buy look good, or perform any number of other circus acts. They can deliver lower cost per points, but it may be at the expense of brand context, eroding long-term value.
Recently I had lunch with a TV LSM who spoke about CPPs. He said many agencies were taught to use an industry guide to CPP, SQAD, utilizing the lowest CPP and assume there is an additional 10-20% margin. But, he said, determining CPP, from the station’s perspective, is not that clandestine. It’s simply a supply-and-demand calculation based on spending and available GRPs in any given daypart.
Here’s where I wonder if both buy and sell side have their own value biases. The sell side determines value on supply and demand. Marketers are placing value on upfront cost. We agencies fall trap to both value determinations, rather than another, based on engagement, context and environment.
Meanwhile, Google is testing a new value proposition in TV, as it has in digital. We predict Google will soon put Nielsen out of business by applying machine-learn modeling technology to television viewing. This modeling will synthesize viewing habits at the settop box level, allowing marketers to deliver individualized messages . Settop Box A watches a lot of Animal Planet and National Geography, they’d likely appreciate a PetCo commercial. This could create a new value paradigm, away from CPPs or CPMs.
Here’s my point: Agencies, media sellers, marketers all have a value bias. Ensuring your marketing efforts are optimized requires a conversation, strategy and tactics beyond price.