Media Buyers or Stock Market Traders?

Jason Dille – Executive Vice President, Media

 

 

Have you ever watched the stock market ticker?  Biting your nails as the value of your shares in Sears Holdings Corp plummets and you wonder what the hell your financial advisor is doing?

 

This is the visual manifestation of a supply & demand marketplace.  The media buying landscape is well on its way to becoming a much more dynamic and instantaneous version of the Dow or Nasdaq.  Except, for a key difference: In the stock market a share is a share.  Its value may represent a larger portion of the company, but they all are a common product (the share).  Media, however, does not.  Some sell impressions, clicks, # of boards, packages, spots, likes, engagements, or sponsorships.  Each of those sold under different currency models.  CPM, CPC, CPP, Column Inches, FSI Tabs, :30, :60…and the list goes on.  This complexity has certainly slowed the full adoption of all media types to a 1-source inventory repository, but at Chemistry we know the end game is programmatic inventory access across all media types.

 

Historically media time or placement has been purchased in a variety of ways: Cash, Barter, Trade, Credit, etc.  Each of those determined based upon a perceived value of goods received. For example, Station XZY’s 1 million viewers are more important to me than station EFG’s. We can imagine the billboard on the busiest highway in the city is worth more than the poster above that dive-bar urinal.

 

Media buyers and planners have recently been charged with determining that value by establishing benchmarks in an increasingly volatile marketplace. Buyers and planners have used many 3rd party studies, research, and analysis to find the right audience for the right price.  That is what they do best, and now their roles are evolving to less negotiation and more data analysis within digital media & traditional media inventory sources programmatically.

 

To be successful, they must understand a myriad of platforms, bid types, and payment scenarios, all revolving around a new media currency that is less about mass and more about micro.  Micro demographics, micro geographies, and many times micro budgets.  Many job titles on the vendor side in DSP’s and SSP’s have evolved into “traders”, and it is an apt description for their role.

 

The good news? Chemistry invested in programmatic media purchase during its infancy knowing that the future of media would transact without the traditional phone call, email, or, now implausible, fax.  Today we can access digital, tv, audio, and OHH insertions programmatically and it has proven beyond beneficial for our client’s campaigns.  At Chemistry there are media planners, media buyers, strategists, analysts, and specialists, but ALL of them are equipped with the training & tools to be media TRADERS in this crazy media marketplace.

 

One of the most recent developments in the media marketplace is the shift of media auction methodology. There are still several ways of securing the media: contract, insertion order, preferred deal, second-price auction, and more recently a resurgence in the first-price auction.

 

You are probably familiar with the second-price auction because it is what most online auctions use (Ebay).  If your bid wins, you pay $0.01 above the second highest bid in the auction. In this type of auction, it is best to bid the highest amount you are willing to pay, knowing that you likely will end up paying less than that amount.

 

Google recently announced that their long-standing second-price auction format for some media types will be transitioning to a first-price auction model.  For the novice, that may seem inconsequential, but it could cost advertisers millions if their media teams are not prepared.  For instance, in an auction where you bid $4.00 Cost Per Click (CPC) on a second-price auction model and the next bidder was at $3.00, you would have paid $3.01 CPC.  In a first-price auction, if you win the bid of $4.00 CPC you pay $4.00.

 

Let’s make that real for you. If your brand’s budget was $400,000, you would have received 132,890 clicks on second-price, but on first-price you only get 100,000.

 

Those 32,000 clicks/visitors/potential sales can dramatically affect the success of your campaign.

 

It is subtle changes like these, that skilled traders must be aware of in order to invest their client’s budget appropriately. We are proud of the trust we have garnered from our clients to be stewards for their brand investments.  Chemistry is perfectly positioned for the next evolution in media purchase/management, and we look forward to the challenges it will bring!

 

Time to hustle.