Ask A Buyer: Most Pressing Upfront Questions Answered

As the upfront markets approach, the media landscape has never been more complex.

There are many questions surrounding the long-term future of the television business and the short-terms decisions advertisers will make. Answers at this time of year can be in short supply.

B&C has arranged to get some questions answered by one of most knowledgeable and well-regarded people on the buying side of the negotiating table, Dave Penski, CEO of Publicis Media Exchange, among the largest spenders of the giant media agencies.

In this final installment, Penski fields questions from B&C business editor Jon Lafayette on the eve of the upfront. An edited transcript follows.

There’s been a great deal of debate over how to measure and value the media you’re buying. Are you more comfortable paying for the number of people who see a commercial or paying for the sales that resulted from running that ad? Which do you think the industry is more capable of gauging accurately?

It’s a little bit of a trick question because of course the answer could be both. I would say that when clients have a really easy metric that proves out sales and it isn’t an algorithmic challenge then of course you want to pay on sales.

But most likely that is not exactly the case. It’s hard to measure. In almost any attribution model media at most accounts for about 14% of the model, so it’s not as easy, especially for someone running brand advertising that is going to directly link to sales tomorrow and I want to pay on that.

So I think the answer is we’d love to pay on sales. But in the absence of that, we want to be comfortable with the number of people who actually were exposed and watched, engaged with the commercial. That would be the optimal model.

A lot of it has to do with the brand request. So if you’re a new car brand and you’re trying to get someone to do a test drive tomorrow, you can measure up sales. But if you’re a financial company trying to improve your reputation, it’s not always going to be immediately attributable to sales.

On the other hand we have some clients that are very much direct response oriented and we already pay on sales. I think there’s a lot of vendors, specifically digital, that are able to charge that way and we’re able to do that.

In order to create a better user experience while connecting advertisers to their content, many TV companies have formed branded content creation units. Have you found these help keep viewers tuned in and does that improve the impact of your clients’ campaigns?

I think that what we’re seeing more and more is advertisers are challenged from a creative content standpoint. There’s just so much creative that needs to be produced. And I think we’re seeing these studios as a way for the ad agencies and the clients and the media to be involved in that process. I look at it as more of a positive thing versus competition [with ad agencies].

I think Snapchat’s done a good job here, I think Fox has done a good job here, I think a number of our partners have done a strong job in trying to create theses. Viacom is another one that got involved here.

So I look at these as more of a complement. I don’t think clients are turning over their creative business to this yet. But what you’re seeing is it’s been very much a nod by those vendors that they need to help. If you give someone research that says you should create 13 different types of commercials for their audience, you’ve got to help them do that. You can’t just tell them that.

There’s not one silver bullet to this. If you look at what YouTube does in their Brand Labs, or what Snapchat and Viacom Velocity have done, there are a lot of examples of where they’re trying to do this. Vice is another one that’s really pushing on these things.

I think we have seen when it’s done really well that it helps tune-in, it absolutely helps the clients’ campaigns. And if this is something that can help us get there, to have a better consumer experience, that’s good for everyone in the food chain.

Is it something you pay extra for or something that ought to be built into the price of media?

I think it’s something that’s on a case-by-case basis. A lot of it now is built in, and a lot of it is added on.

We’d always prefer it be built in, but it depends on what’s happening between the advertiser, the agency and the vendor and what they’re really asking for. If someone’s spending $100 million with a partner already, then it’s probably included. If someone’s doing a $3 million test, it’s probably not included. So these are all things that would be part of an overall negotiation.

That is a complicated answer to what would seem to be a simple question.

The amount of data available to buyers, sellers and clients has mushroomed. How has that changed the skill sets needed to make sure that this new information is being capitalized as media plans are created and executed?

At Publicis, I think we’re pretty far ahead of the industry. We started a training program seven years ago. We hire classes twice a year, so it’s once in June and then once in January.

We’re going to hire about 400 people a year this way between Chicago, New York and Los Angeles, and what they do is they do 120 days. They do a 60-day rotation in a traditional job and they do a 60-day rotation in either a digital or a performance job.

And then after they finish the 120-day rotation, they then get put into a job of their choosing. We guarantee if you make it through, you get one of your top three jobs.

We’ve seen retention rates have dramatically improved. When we first started, the average turnover at this age was approaching 35%-40%. We’re now seeing it down around the 10% range. So we’ve had a dramatic improvement.

And what we’ve done with the program is two things. We’ve been able to recruit diverse talent. In the last two years, we’ve made sure we have at least 50% diversity candidates, and we have now people from a STEM [science, technology, engineering and mathematics] background. So we’ve really been able to supercharge our organizations by doing this.

The other thing we’ve done is IQ Academy. We looked at all the things we were doing well at certain agencies and how they could be expanded.

The industry has high turnover. In a good year we’re turning over 20% of our population on a yearly basis. We always have an opportunity to change our business. That’s much different than a lot of other industries. We’ve had a huge shift from traditional jobs into programmatic over the past year. That’s part of our program.

Now more than 60% of the people in the last seven years have gone through the training programs. Over 80% have participated either as a mentor, a buddy, a coach or teacher.

I feel good about where we are. If you look at the amount of data that goes into a media plan today versus 10 or 15 year ago, it’s incredible. I think it’s also great what clients are willing to share with their media agency from a first-party data standpoint. From their own learnings, their own segmentations, it’s incredible. I think it’s really helped both the media agencies and the client businesses.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.