Ad Execs Excited by Digital Media Networks

Author: Bill Gerba on 2005-07-11 19:45:51

When Sir Martin Sorrell (founder and chairman of marketing mega-conglomerate WPP) speaks, I listen. Especially when he's saying all sorts of interesting things about the future of the advertising industry and digital media networks, as recently happened when he and a number of the marketing cognoscenti got together at the 2005 Marketing Innovation Summit. As reported by Broadcast Engineering, "[Sorrell] said that TV's relative power is declining, despite rising cost-per-thousand (CPM), prompting greater experimentation. Fast changing market demographics and consumer behaviors, Sorrell added, necessitate a major shift in how and where marketers communicate with consumers." (Broadcast Engineering: "Digital signage will eclipse network TV ads").

There are a number of reasons why TV and radio spots are losing their performance edge. Among the most frequently cited are declining viewership, increased use of digital video recorders like TiVo to skip commercials (which I've mentioned in the past, in "TiVo Users Have Advertisers Thinking"), and rising costs that drive up the average CPM. But I think that Trish Wheaton, president of Wunderman Canada, hit the nail on the head with her analysis. She said that, "the marketing industry needs to move from cost per thousand (CPM) to return on investment (ROI) and investment effectiveness metrics. The shift from 'mass' marketing to 'measurable' marketing is part and parcel of the shift from network TV to digital signage and purchase location signage.... A key benefit of digital signage is the digital component. An assurance that ads are posted as and when planned, reducing the costs of ad production and display logistics, leveraging production costs, increasing speed-to-display and the cycle time of test-refinement are inherent benefits of digital display networks."(ibid)

Imagine that... accountable advertising. But just saying that it's time to shift to an ROI model isn't going to be enough. Calculating ROI can take a lot of work, as evidenced by my 5-part series that just barely scratches the surface of calculating ROI for digital media networks:

1: Calculating Digital Signage ROI: The Ground Rules
2: Calculating Digital Signage ROI: Understanding the Limits of Your Data
3: Calculating Digital Signage ROI: 3 Metrics that Matter
4: Calculating Digital Signage ROI: Methods to Gather your Data
5: Calculating Digital Signage ROI: Managing Expectations

And with a digital media network, a lot of the necessary infrastructure for calculating ROI is already in place. Not so with most forms of traditional advertising. Plus, while a lot of ad firms are great at producing, selling and distributing content, they're not always bulked up with the analytical tools and skills needed to do a proper ROI analysis.

Still, it's obviously exciting to watch the big agencies start to mobilize and turn their attention towards accountable digital media networks, utilizing tools like digital signs and self-service kiosk terminals. There's a race going on between the big three of the marketing world -- WPP, Omnicom Group and Interpublic. The winner will be the one that best capitalizes on the growing trends in digital retailing and dynamic merchandising by delivering strong accountable results to their clients -- while still providing the top-notch creative content and brand marketing that made them the leaders they are today.