An excellent overview of the Romanian online advertising market:
“In 1997-1999, those who were good at doing things on the Internet could be counted on your own fingers. Their focus was clearly on connectivity. In 2003-2004, the online advertising market started to matter. Back then, there were also a few people that were good at this, most of them being active in the online advertising sales business. How does 2009 look like?
2009 is a crisis year. It is the year in which all advertisers will wake up with their feet (and some with their behinds) in the not so warm water around them. From here came everyone’s expectation that online with be the “crisis weapon” or the spoon with which they will take out the water from their boat.
The questions is: are we ready as a market to take maximum advantage from the Internet and all the other digital media?
At this week’s Webclub there was a lot of discussion about who’s to blame. Of course, the crisis is to blame, the lack of strategy is to blame, SEO spam is to blame, poor agency know how and the clients are also to blame.
I believe that the situation in 2009 will be the following, step by step:
Inventory. Online publishers reached an acceptable development level. There is some Romanian content on the Internet and there is also an audience for it. But:
– A lot of sites want traffic no matter what and walk on corpses to achieve it. SEO spam, content theft, unverified materials, “me-too” attitude, the “nice to have a law” principle, poorly done and maintained ad servers, mentioned only at sales pitches. Of course, the value range from sucky publisher to premium publisher is pretty big, but over all, the people in the publishing business are prepared best.
– There are also very big publishers that are stii asleep or they woke up pretty late. They either internalized sales without the necessary human resources or they didn’t do it yet and still feed the specialized sales people, thus having to recover this lost field in the next couple of years.
– The market has fragmented a lot and there are signs of consolidations this year. There are more than 20 publishers that demand slices from the big clients budgets. For this reason (plus the general strategy of “let’s build a website to get some more money from clients”) the audience overlapping is huge. This puts a lot of pressure on agencies, but does the client know how to take advantage of this? It remains to be seen.
Sales Houses. Although the market is fragmented, the specialized sales houses (brokers and agencies) are not that many. However, there are a lot more of them as compared to 2008 (about 5 general sales houses, a few niche ones focused on yahoo, external traffic, blogging or contextual solutions plus two or three one stop shop agencies). They’re also well prepared, sometimes even better than medium sized publishers and on par with large publishers.
Agencies. These are of three types:
– Media agencies. These (partially) came to being by developing new media departments (max 2-4 people) or externalized through a spin-off (interactive/digital division) tightly connected with the headquarters, the clients and the policy of the mother ship. They are trying not to lose the budgets shifted from various media into online and can benefit from network training (at least the large ones). Dedicated to the rebate system, they distribute the client’s money based on the deals they have with their suppliers and redo the client media plan based on these. For a lot of them, having their own ad server is considered a big cost and they have no problem using their suppliers, allowing for huge audience overlapping or even the lack of campaign reports, which allows the publishers and unscrupulous sales houses to “cheat” them at measurements.
– Classical agencies. Be them communication, PR or full-service, they have smaller accounts that they cling on with their teeth. They don’t usually have specialized resources and are extremely inertial. They still move requests for online towards print, outdoor, radio or other media they do not understand. If they will not adapt or reorient, they will slowly die.
– Pure breed interactive agencies. They come from either web development or from abroad with a huge load of know how, and are thus the young hope for the market. With good digital skills but lacking media focus, they have big expectations and frustrations in relation with the large client spenders. Some of them adjusted their position, getting close to media agencies that do not have an interactive division or a spin-off (because they lacked human resources). Other agencies throw their mace all around the market. In general, they get involved in projects with mechanics closer to what an interactive campaign should be like and usually have better results (ROI and such).
Clients. There are also a few types of these:”
– Large and very large clients, with agency. These are still silent when they hear words such as GRP (Gross Rating Point) and TRP (Target Rating Point) and accept a significant reallocation of their media budget for TV without complaining too much. For them, 2009 won’t be much different. They still believe that all Romanians are watching TV and can hardly wait for the advertising break to begin. If something is not working, they blame logistics, the client service, creation, just not the stupid and inertial TV budget allocation. They are willing to pay for any kind of strategy or training and they follow the principle: I’m big so give me a big discount. They still believe that if they pull out 10,000 Euros from a PR budget they could buy the entire Romanian Internet if they see an online media plan, they look for the sites they personally use, ignoring communities or audience groups that actually match their product. There are notable exceptions to this rule, of course.
– Clients with preferences. In telecoms, auto, banking, IT and other specific areas there are brands that pump a lot of money on the Internet. Some have external know-how, others feel the pressure of their competition. However, this forrest has its own rotting trees as well, who distribute money inappropriately. This year, they should analyse for at least a month what they did and what went well in the past three or four years and then get to work.
– Knowledgeable clients who sometimes go past the agency. This is not typical Romanian, since it happens abroad as well that “digital presence & communication” budgets are given from the start to an interactive media agency. And this happens quite often. However, these guys are not a lot, but they’re good to have around. They are open to new challenges and accept unconventional campaigns much easier.
– Long tal clients. Some of these are also good at creating wonderful campaigns, while some of them swallow the first morsel that entered their door, just so that they can later say that “the Internet is not efficient and cannot be measured, I don’t wanna hear about it anymore.”
As a general trend: clients are not willing to spend their money on:
– Strategy (and there are strategic agencies on the market)
– Training (and there are these types of entities here as well)
– Efficiency measurement (they mistake the site logs with the trafic.ro, SATI data with campaign reports, click-through-rate with TV reach)
– People. Good people cost money. And I’ve seen a lot of cases in which the management fired specialists to bring in juniors, for the mere cost cut in their P&L sheet. Please stop throwing the paddles to make your boat lighter. They help you reach the shore.
Do we have solutions? I think there are solutions because publishers and agencies know pretty good what needs to be done, I will only list a few recommendations for **clients **(marketing directors and business owners that only survive if they promote themselves):
– Revise what you currently have, with a very critical eye. If it’s not critical enough, I can help you (free of charge). An independent bird’s eye view won’t hurt you.
– Pay for strategy. Don’t go into the market with your request for offer without knowing what you want to achieve this year. Since it will be a difficult year and you won’t have money to waste. It is easy to do marketing with a lot of money. It’s not so easy to do marketing with limited money. You will wonder: how do I realize if it is a good strategy? It’s easy: find strategists that are paid separately for research, analysis and strategy and additional as success fee. They will be interested to accept this so that they can counsel you in the following years as well.
– Pay for training. Nobody was born already educated. I had a client whose telemarketing team I trained. After the first four classes, the boss came to tell me that during that time his people closed four contracts. They haven’t managed to close a single one before. A training is not only about information. It is also about trust in sales and account people, the business’ engines. In the end, this is the essence of every business.
– Pay for measurement systems. SATI for publishers, 3rd party ad serving solutions for clients and agencies. An adserver can eliminate unnecessary expenses with ads poorly placed or simply inefficient (for reasons that escape you). A pre or post campaign analysis can save a lot of your planned budget. You won’t hit the budget only if you spend 10% on advertising. The algorithm is a bit more complex. Stop wondering if you should allocate money for online advertising, but rather how you should do it.
– Pay for good people. They are hard to find (and cost accordingly). I have no other arguments here, I saw people that knew how to sell themselves but didn’t do much in their job.
I know two things. With this post I will get some people chasing me around (publishers, sales houses, agencies and clients). I also know that there will be people who will accuse me of generalization and not offering concrete solutions. Thus:
I take responsibility for the “scandal.” I did not give names, but anyone who suspects that they find themselves in any of the above descriptions can contact me and will receive my honest opinion about their business (if I know it, of course). Or details about whatever caused them to frown.
I will give you below concrete solutions for what you should do:
– Strategy. I know good strategy agencies, drop me an email and I can represent you to make sure you receive what you need from the specialized agencies.
– Training. Except the training I do for publishers, sales houses, agencies and clients (and I can provide here enough recommendations), I can send you to one of the other four trainers in the online business that I trust they do a good job (for areas that exceed my personal abilities).
– Measurement systems. As I said, SATI for publishers, ad serving solutions (can recommend you three to choose from, all with their pluses and minuses, based on the specifics of your business and the volumes you run).
People. I know people who know people. And this is free of charge on my blog, I made a special category for this. Please don’t abuse it.
PS I keep hearing all sorts of words from the market: that I am Splendid Interactive consultant, that I am Inform Media consultant, that I am Yellow Pages consultant, that I am Intact Interactive consultant, and so on. People: I am the consultant of anyone who pays me. And sometimes, when I have time, I feel like it or I like someone’s business, I can even be the consultant of someone who doesn’t pay me. Clear? :)”
(source: Doru Panaitescu)
With Doru’s approval, I will translated his material in English here soon.