Experts

01 June 2023

Sometimes a Cog Blog post fits neatly with pieces I come across over the following couple of weeks, more by luck then judgement. I like to put it down to great minds thinking alike. A Media Leader article by Nick Manning, and a thought-leadership piece from McKinsey happen to coincide with this recent Cog Blog. Or vice-versa.

The McKinsey piece was entitled ‘Unleashing the Power of Retail Media’, dated May 18^th 2023. I should add that as I don’t subscribe to McKinsey’s reports, I’ve only read the publicly available executive summary. There’s no doubt more detail in the full report.

I agree that retail media is a fast growth, high potential channel. But I wonder about the efficacy of the support on what advertisers are looking for and expect, as quoted by McKinsey.

The report asks advertisers to rank channels (presumably from amongst a pre-coded list of retail media options) that deliver the highest return on advertising spend and then suggests that the best course of action is to ‘know what works and then double down’.

No kidding!

The idea that you should do more of what works is clearly good advice, but asking advertisers to rank channels is flawed especially if, as I suspect might be the case here the answers rely more on gut feel than empirical evidence. Plus, surely respondents would tend to rank whatever they do as best – to suggest otherwise would be to infer that they’ve done the wrong thing which whilst quite probably true would never do.

Elsewhere McKinsey tells us that advertising dollars ‘flow towards transparency and performance’. Up to a point, Lord Copper, and yes you would like to think so. But if advertisers really cared that much about transparency and performance, would they have spent the last decade investing so much in platforms whose data is both unvalidated and hidden from objective investigation?

But again, if you were asked the question I imagine ‘transparency and performance’ would be well up there on the wish list, even if your actions suggested something different.

Last week I cautioned against badly thought-out survey questions leading to misleading conclusions. It’s always a good idea to go back to the source.

When I worked in media agencies, we all wanted to be McKinsey. How, we asked ourselves could they charge so much, and gain such privileged access to the top of organisations?

No doubt they’re geniuses but even geniuses can learn from subject experts, in this case researchers expert in building questionnaires.

Media agencies used to be subject experts. Their leaders were forever popping up in the national press, on broadcast TV, in the trades pontificating about this or that media topic.

Maybe I read the wrong titles, follow the wrong sites and watch the wrong video channels but the current crop of agency leaders seem to be rather more bashful, more wary of upsetting a vendor or ad tech supplier than in impressing with their expertise.

Heaven forbid it’s because there are holding company deals at stake somewhere.

Nick Manning’s Media Leader piece makes the point that “advertising as a basis for the funding of many internet-led businesses, including ad tech, may … prove unsustainable”.

In other words, some people responsible for spending money may have made some bad bets.

Ad spend is not elastic; it doesn’t miraculously expand to fill the options available. Yet many ‘experts’, especially those from outside the industry seem to believe the opposite.

Management consultancies, VC’s, private equity funds do sometimes seem to support ad funded businesses which anyone with a few years in the ad business would tell them won’t work.

Advertising can never fund everything – budgets are finite and as a rule of thumb if a new thing comes along requiring funding from advertising that money will have to come from an existing channel.

One example of this sort of narrow thinking is that the only thing that matters is big numbers.

Some years ago, a well-known media industry investment advisor tried to convince me that embedding a paid-for message within a telco service was a great idea. If I called you, and you didn’t pick up immediately I would be played an audio ad.

Think of the millions of calls not answered immediately, he said. You should be recommending this to all clients, immediately.

My argument, that this would be a massive source of ad invasion and irritation, didn’t wash. Think of the numbers, he kept repeating.

As far as I know it never happened, but I would be prepared to bet that that was nothing to do with the argument that context matters at least as much as gross numbers.

Media professionals are by no means immune from making mistakes; but I like to think that if I was advising someone to invest in a sector in which neither I nor the investor had any direct experience I would have the humility and self-awareness to seek out those with direct experience.

Mind you, where to find them is a whole other question.