May 07, 2008

Benchmarking the Online Magic Every CEO and CFO wants their marketers to benchmark and measure the magic. And with the publication of MarketingSherpa's first ever Online Advertising Handbook + Benchmarks marketers will have a fighting chance. The lovable geeks, zods and nerds at Sherpa, led by Research Director Stephan Tornquist, have collected 211 pages of data from across the advertising industry including survey data from 577 online advertisers at a wide range of companies of many sizes and sectors. Anyone who needs numbers to sell in ideas or to justify a campaign or to learn from others' mistakes ought to have a copy of this book. At $497 this fact book is a steal. If you hired a consulting firm to get you this information, it would cost 50 times more and be half as good and much less candid. These guys aren't afraid of the truth. They write, "online there's a great deal of bad advertising...Where there could be genuine stimulation through interaction there are bad static ads. In a medium that allows micro targeting, there is still mass advertising." They know that only by sharing ideas and information can we collectively harness the real potential of this evolving medium. Recognizing the infancy of online advertising they have the balls to remind us that online advertising still adheres to the fundamental principles of. advertising. In the executive summary they remind us that branding, placement, frequency, content, targeting plus sight and sound are the critical variables for effective communication and persuasion. And they display, in pedestrian charts, the data to prove it. Within the extensive data sets there is subtle and not-so-subtle guidance on issues affecting everything from creative units to targeting to media tactics. If I haven't sold you the book yet, consider these tidbits: No more than 28% of viewers ever see an ad below the fold Display ads earn half the ad revenues of search ads 30% of online marketers don't spend a time on behaviorally or contextually targeted ads while another 30% believe these tactics yield the greatest ROI Almost 70% online ad analysts say A/B tests yield the best improvements in ad effectiveness 53% of marketers think adding pictures make online ads more effective 300x250 pixel banners have the best click-thru rates 46% of heavy gamers see in-game ads an inevitable Without frequency capping you blow your ad exposure too fast on the wrong prospects
Agency Pricing & Fees -- Benchmarks Revealed Money makes everybody crazy. Money makes agency executives especially crazy because they are under constant pressure to close business at double digit margins in a marketplace that undervalues agency services. The magic that agencies make is often considered and bought as a commodity. In a world where clients buy marketing, advertising and PR services using the same criteria and the same purchasing professionals as they do for buying raw materials and office supplies, setting prices and extracting fees that have any relationship to value delivered is a source of continuing anxiety. Managing competitive pricing while simultaneously managing doubts about the perceived value of agency brands, agency negotiating skills and agency lead generation and selling skills is the target for the newly released Fees & Pricing Benchmark Report produced by RainToday and the Wellesley Hills Group. This 80+ page book incorporates survey data from 343 professional services firms in the marketing, advertising, and PR industry mixed with analysis from RainToday, a leading sales consultant to professional services companies. It is loaded with data on rates, pricing, fee formulas and selling tactics. The data shows that the truths agencies tell their clients are equally true for them. Brand awareness and perception drive demand. Brand leaders can charge more, discount less, earn better margins and more frequently manipulate the pricing/billing models. But accomplishing these things isn't easy even for firms with household names. The report documents an industry-wide insecurity about what clients will pay for services, what is the genuine business value agencies deliver to clients and the worry that agencies leave too much money on the table because they aren't good salesman or negotiators. As you might imagine, the topics on everyone's mind -- those cobbler's son issues that agency executives whine about at the 4As and other venues -- get thorough coverage in this report. Here are some of the key take-aways: Almost everybody pays attention to the "going rates." Clients always give away competitive prices during pitches. Many firms actively scout and watch their competitors Fixed Fees are very popular because it gives clients predictability and to a certain extent finesses client's questions and arguments about time/rate/skill/margin mix. Everybody discounts. The average variance from the rate card is 25%. Brand leaders discount less frequently and fewer dollars. Bigger firms discount more because they can. There is significant experimentation with value-based pricing. But there isn't common definitions of how to do it and no consensus on how clients measure the business value delivered from agency services. Only a third of firms use contingency or success fees in their billing formulas. Amid the countless charts and verbatim quotes, the emergent prescription for agencies is: 1. Invest in business development. Get serious about lead generation and pipeline management. Aggressively target clients who you know will be right for your firm. 2. Invest in your brand. Make it different and distinctive to attract new business and substantiate better prices and margins. 3. Learn how to sell and negotiate. Get over yourselves. Stop bellyaching about the encroachment of consulting firms and others. Know when to walk away from a global brand with an inadequate budget. Don't let the bean counters push you around.

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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