Wunderman CEO Daniel Morel: “Not Enough Ad Dollars To Support Everything Out There.”

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daniel morel wundermanA financial injustice plagues the marketing world.

“Media outlets have proliferated over the past 10 years,” said Daniel Morel, chairman and CEO of WPP-owned digital agency Wunderman. “But somehow, the purse size of the CMO hasn’t changed that much. If you measure the size of the growth of media outlets and the money available for communication, maybe that growth is 5% a year? Measure 5% growth over the past 10 years compared to the size of media growth and you’ll find there’s a huge gap.”

That gap, Morel said, must inevitably close. This is both good news and bad news. Good, because marketers will smarten up and begin investing in marketing channels that truly matter. Bad, because of supply and demand: There’s more content with ad inventory than there are ad dollars to support it all.

“I see this as a big danger looming on the horizon,” Morel told AdExchanger. “People are all excited right now, but I’ve been in the business for 37 years, so I have a slightly different perspective.”

AdExchanger: Is this also the case for premium ad spots?

DANIEL MOREL: If you have nothing much to say, the advertising will be just like the advertising from your previous piece. If you have something that’s radically different or you have good creative, you can create a dramatic break, something where you need a storytelling piece of content.

For that, you need favorable positioning with as little clutter as possible. Brands want to create monopolistic environments where their brand can be seen, and nothing else. You want to create for your client a virtual monopoly where the viewers, the spectators, the consumers, will see that and only that for a long period of time, with no distractions.

But how many times do you need that? Very few times will you have a brilliant piece of creative that will reset the category. Most of the business is humdrum. A new flavor of Dannon, a new carbonated drink. It’s business as usual, with incremental improvements in an existing product.

The humdrum brands, the high yield performance brands, which are the bulk of the business, are competing for space.

But that space, as you said, is becoming unlimited.

We’re facing a time where you have an infinite, infinite, infinite amount of media space.

Remember the days ... when you had three TV channels and a limited number of newspapers? Advertising space was at a premium and media owners were in the driving seat. Now with the proliferation of media outlets, if you don’t get that, you’ll get something else.

The media owner is no longer in the driving seat because there’s an infinite amount of space where you as a brand can put your product. Maybe Facebook can offer to one or two brands premium positioning. But I can find that premium positioning on 60 or 70 different properties where I know I’ll corner those 5,000, 10,000, 20,000, 1 million people in my behavioral target.

There’s not enough advertising dollars to support everything that’s out there.

How about the advent of new channels – addressable TV, connected devices, etc. Do those present new venues for advertising dollars?

Yes, yes. But how many advertising dollars do we have? You have a bowl of sugar and a bowl of strawberries. Now you can eat only one strawberry and put all the sugar on it. Or you can put the sugar on all of them.

Many of our clients don’t know what to do because we don’t have enough historical data. If you ask me about TV, we have 50 years of data on TV. But I don’t have that set of data for many of the new outlets. I only have the performance of the past five seconds.

They’re testing every (channel), putting sugar on all of them, to get some sense of where they can get the best flavor, the best yield. Right now we’re in a period where they all exist because they all get a little bit of sugar. At one point, a few (channels) will surface because (brands will) realize what’s most valuable. They’ll realize what’s the best. But what happens to all the other channels? Do they not get any sugar anymore? Will they be left aside?

So marketers make decisions based partly on performance of these various channels?

No, the owners make decisions based on the declared performance. Declared. Facebook will give you measurement data from two sources: Datalogix and Nielsen. They’ll give you the performance, 2x or 3x, vs. nonviewed ads. It’s a very simplistic thing. It’s direct marketing 1980, just to be nice. We used to do that decades ago. It’s a little different right now because you have to look at the long-term perspective.

For instance?

I bought a car, three weeks ago, for my daughter. Facebook is going to take full credit, because my daughter saw the ad on Facebook and sent it to me. But you know what happened? When I was 7 years old, I saw a magazine. There was a nicely dressed man with a nice woman and a beautiful car in it. I said, “When I grow up, I’m going to buy myself one of those cars.” When I was 14 years old, I saw a movie not too far from here, and there was this car going around the Grande Corniche. And I said, “One day I’m going to make so much money I’m going to buy myself one of those cars.”

A few weeks ago, I got a special deal from my dealer in New Jersey, and I bought the car. So. When you get that instant-messaging new media offer, it doesn’t take into account all the other factors that come into play. You have to be careful how you measure performance. When I see Facebook measuring performance – and it’s not just Facebook – based on what happened in the last five seconds (and I’m happy to get the credit if I’m on the last wave), but who gets credit to the magazine I saw years ago? Who gives credit to the ad I saw on TV?

I’m a marketing person. I want to give credit where credit is due. I have a finite amount of dollars and I want to place it where I have the best yield, not just for the past five seconds. My role as a marketing person is to give lifetime value for a brand, not just the past five minutes of a promotion.

So solving for the 20-year path to purchase is the holy grail?

That’s what a good marketing person should aim to do with the high salary they’re receiving from the shareholder.

Will technology solve this problem?

It will give them part of one answer to the many questions they have.

What part?

Speed. When people write the history of marketing, I hope they won’t forget one thing: Something dramatically changed in 1995. People suddenly expected an immediate response. The velocity started to increase in 1995. Technology has solved the immediacy of the information. The readily available performance of an asset, the choice being made in real time of one thing vs. another. Technology has been hugely helpful in giving us that speed and immediacy.

Other than that? What else?

There’s got to be more than just speed.

Well, you tell me.

Identifying who you’re talking to. Measuring.

I could do that before. When I send a catalog with a coupon, I know exactly what I’m sending, the rate of response on that target, and what product they would have ordered, depending on whether it’s placed on page one, page two, page five.

We’ve been interactive since 1958. You’re not talking to an advertiser who does one-way TV with no response. For me, the response aspect hasn’t changed. I used to do it on the telephone, direct-response television, on coupons, on mailers, there’s nothing new to me.

Does speed change your approach?

Speed gives you the when. In the old days, I knew everything about (the consumers). Where they live, how many children they have. All that demographic behavioral data, I knew. Media consumption data, I knew a little of it, not much. Transactional data? Depending on the sector I knew some transactional element. Real-time behavioral data? No, because it didn’t exist.

So I didn’t know when to connect with (consumers). I had to solicit them again and again and again. I had to send them one catalog, then two catalogs. I had to call them three or four times, do 16 direct-response television spots. Because of speed and the available information, I don’t have to do that anymore. I know who they are, where they are, are they in the mood to buy? And I can immediately get to them.

What’s your biggest challenge going forward?

Remember the ratio: (Budget) from the brand for advertising and broadcast is about 80%. Digital and interactive, about 20%. Somehow, media doesn’t follow eyeballs. 30% of the eyeballs are on (connected device). But only 20% of the media dollars are getting there. There’s a gap of 15%.

That gap is being filled at an accelerated pace and at one point, the media dollars will follow the eyeballs.

Why are we not there yet?

I was talking to Martin Sorrell and there are two reasons. One is that we have aging CMOs that haven’t got grandchildren yet. So they don’t know we’re in the 21st century sometimes.

They rely on data on TV – we have tons of data on TV – so the safe model is to do TV. So we haven’t yet gotten all the dollars. I haven’t received all of the dollars I should in my neck of the woods. I should receive at least a third of the dollars, when in fact I receive between 10-15%.

So how do I move more dollars from the traditional way of connecting to the people, to the one where people are currently transacting or searching for information?

That’s an interesting point. When people are online, they want to be informed; when they are watching television, they want to be entertained.

Remember, we’ve been riding on the coattail of entertainment. Television used to be about information. Weather report, the news. In the '60s, entertainment started to arrive and advertising went through the roof, because people are lazy and like to be entertained.

So advertising on the back of entertainment is fabulous. Advertising on the back of the news? Meh. Because people have to make an effort for the news.

When you go to the platform where you’re searching for information, now you’re associating content and advertising with information.

What are the disadvantages of advertising that follows entertainment?

When you have advertising associated with entertainment, you’ll find viewership decreasing because people will spend more time looking at the entertainment than the ad. When I go to Amazon.com, I don’t want to be entertained. I want to look at reviews when I’m buying a product.

My predicament right now is the fact that I cannot properly address the consumer in the place where they are.

There’s 15% of empty space being filled with things that people don’t watch. TV is running empty. You go to a room? The TV is running, but nobody is watching TV because they’re (on their devices).

Do you have a strategy to move TV dollars to interactive and digital channels?

Most conversations I have with CMOs is around how they organize. They get technology, Facebook, all that stuff. They get (reports) from IBM Consulting, Accenture, you name it. They get it, but want to know how to put all that in place. How to execute.

It’s like the military. People don’t win battles based on strategy, they win battles by engaging in the battlefield. How do they engage in the battlefield?

Why don’t they know how to execute?

Because of that 80-20 ratio, most have a lot of cognition of the traditional channels, but know less about what they can do with the new channels of communication.

There isn’t a big enough team to know (digital channels) in depth. You might have a few brand managers that know Twitter or Facebook, but few that have the whole knowledge of marketing in this new world.

The most senior guys have knowledge of marketing. The younger guys have knowledge of the platform. One is not knowledgeable enough about the technology. The other isn’t knowledgeable enough about marketing. So they don’t connect.

Why are younger marketers struggling at marketing?

It takes a while to practice marketing. Not knowing about it, or studying it, but actually practicing it. They know less about the whole strategic aspect of marketing because it takes failure and experience.

Will the transition to programmatic change the way brands invest in advertising?

I was talking about this to Martin yesterday, and my mind isn’t set on this. The creatives are a bit worried. On the (programmatic) aspect of the business, I need to react quickly and with volume and to do it cheaply enough – because the shelf life of a digital asset is 10-15 seconds. I have to produce tons of assets if I want to be true to the promise of infinite customization that the Web allows me. I need that production engine. That’s your programmatic stuff right there, which includes buying, fabrication, translation, automatic tagging, research.

On the other hand – back to the beginning of our conversation – is the storytelling. The break from the past, the product introduction.

Right now, the two are co-existing. The talented, creative guy on the storytelling part of the business shouldn’t have to worry. After all, 80% (of advertiser budget) goes there, so they’ll have enough money to produce.

Programmatic is really tiny and most of the brand is still about big TV, big outdoors. I have those two things co-existing and co-existing well. How long we keep this balance? Will it shift?

Zach Rodgers contributed

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