Friday, June 4, 2010

The Death Of CPM, The Birth Of CRM Media Planning

This article confirms an earlier post from Nick Copley, CEO of The Sherpa Report, that ads have been marginalized to basically free due to the plethora of content providers (think blogs, websites, struggling newspapers and magazines). CPM (Cost per Million) is also going out the window, but as market niches get smaller and smaller and more and more precise, new opportunities are emerging as well ... "For media companies, they can now price their inventory on the value they deliver to advertisers -- e.g. customers or inquiries --versus audience size alone."

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by Chris Wilson , Friday, June 4, 2010

No doubt, cost per thousand (CPM) had a great run. As a common method for measuring media reach, it helped place billions upon billions of ads. Generations of media buyers learned to embrace CPM as "the" way to do business.

But CPM's days may be numbered. Technology is fueling the consumer's desire for personalized media content, while also driving fragmentation among traditional media channels. Thousands of cable networks, publications, websites, catalogs, social networks, blogs and more are serving up content specifically targeted for audiences that are small, but highly engaged. Audiences are shrinking, but at the same time they are becoming increasingly relevant to advertisers who want to target those specific groups. Without a doubt, mass media is evolving into a much more targeted advertising choice.

Given this monumental shift, how does the traditional method to value inventory, CPM, stack up? It doesn't, because it puts the focus only on audience size, not audience relevance. And while the concept of using large amounts of actual customer data in media planning has been discussed in the industry for years, only a few, very expensive proprietary systems have been built that combine an advertiser's business strategy with media planning. It is time for a new way.

CRM Media Planning is a new approach that leverages large amounts of actual customer data to create traditional advertising, marketing and communications programs designed to target customers through mass media channels.The approach takes the traditional customer relationship management (CRM) principles and applies them to mass media advertising channels. By inserting personalized customer information into the media buying process for cross-channel advertising campaigns, CRM Media Planning allows agencies and advertisers to evaluate media on the relevance of the message to their most valuable customers, not only on audience size. Additionally, agencies and advertisers can begin to value media based on results using metrics - such as cost per customer (CPC) or customer lifetime value (LTV) -- that have primarily only been available in the direct response world.

But what does this mean to media buyers and advertisers everywhere? A lot. Let's take a look at some of the major areas this new approach will have an impact on:

Results measurement. The ability to demonstrate measurable results and ROI on media spend has long been the Holy Grail in advertising. CRM Media Planning takes much of the guesswork out of determining ROI, because it incorporates customer response data into the evaluation process. Sound nearly impossible? It once was, but thanks to new technology and analytic approaches, advertisers are now starting to get measurable results on their media spend. For media companies, they can now price their inventory on the value they deliver to advertisers -- e.g. customers or inquiries --versus audience size alone.

No more guesswork. Determining the best placement for ad spend was once a time-consuming task that required pouring over large quantities of third-party and compiled audience panel data. To make matters worse, it was often difficult to compare different data sets in any meaningful way. In contrast, CRM Media Planning combines thousands of variables across the entire U.S. population, advertiser's customer data, syndicated research and media audience files into one integrated system. This means that media planners can more quickly, easily and cost efficiently evaluate which media plan is the best fit.

Today, everyone is working with fewer resources and expected to do more. CRM Media Planning helps make that an achievable goal.

No strings attached. Let's face it: Media owners want advertisers to make a buy. But to achieve the best results, buyers should consider a variety of media channels of all shapes and sizes. Thousands of specialty media properties exist that may be the ideal vehicle for advertisers' ad dollars. CRM Media Planning makes it possible to consider thousands of previously unmeasured media. Additionally, this approach is data- and media-agnostic, meaning that it sources data from across many media channels, properties, and sources. Ultimately, it is about selecting the best placement for your requirements.

Audience fragmentation, the dramatic increase in the number of media and the rising demand for marketing accountability are permanently changing the fundamental principles and long-held practices of media planning and buying. The most successful practitioners will be the ones who can use data, technology and analytics to make the best ad recommendations possible and demonstrate results from each media buy.

So long, CPM. It's been fun.

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