Clarifying your attitude to risk
How do brands balance their use of the tried-and-true media with the new and never-been-done channels that are now being developed? Jana Eisenstein, UK managing director at Videology explains how to view risk in an era of constant change…
In times of austerity humans naturally become more cautious. But marketers can’t simply continue to do more of the same because alongside tightening budgets they also have to deal with structural change, new technology and new information.
Each of these factors is pushing them in a different direction. Structural change in the way that corporations police their marketing budgets has increased the demand for like for like performance data before investments can be justified. This keeps advertisers with the devils they know.
At the same time, the rise of the PVR and other technology makes media placements with the channels that can provide this data less effective. That pushes advertisers into the more mercurial realms, for example branded content.
Finally digital advertising has allowed a more data-driven approach to media planning and buying that delivers great accountability.
The use of ad technology firms such as Videology could be viewed one way to reduce risk as smart use of data ensures messages only reach the consumers that brands want to reach.
Ironically, however, despite the fact that our technology is based around the concept of delivering increased accountability (and reducing risk) for advertisers, because we’re still the new player in the market, we’ve still got something to prove.
The paralyzing fear of risk means that some marketers are not investing in a channel that actually reduces the risk of investment wastage.
In finding the right balance between risk and tried and tested, brands and agencies need to answer a few key questions to ensure they don’t end up with a mentality of fear and paralysis. In short they need to be able to answer the following questions:
- What happens when a new and different approach doesn’t work? Do those involved get points for trying?
- What happens to “safe” spend if a publisher/media owner offers untried solutions to advertisers who demand something new and different?
- Is fear of risk minimising your creativity? Or is the push for new and different diverting your agency suppliers from perfecting their core competencies?
- What process or systems do you have in place for determining whether a particular risk is worth it?
We believe that a little bit of courage, paired with sound business rational, seems the surest way to find the right risk balance. Some will try to quantify this as the 70:20:10 formula for media investment, with 70% of spend in tried and tested channels, 20% in extensions of these media and 10% used for more experimental strategies.
Ultimately, however, encouraging advertisers and their agencies to accept greater risk requires a base level of trust between all parties involved – agencies, advertisers, media companies and technology partners.
For us, this means providing complete transparency into our business so that investors understand and trust our process.
For the agency and marketers it means understanding and accepting upfront what media partners can and cannot guarantee when testing innovation – be that an emerging technology or a new creative execution.
There’s a lot of exciting new territory ahead but we will only be able to take proper advantage if everyone gets their approach to risk right.