Media Value Investing
The world of media buying borrows a lot of terminology from the world of finance. At many agencies, for instance, the Media Buying Teams have rebranded themselves as “Digital Investment Teams.” And this got us thinking – if we’re going to borrow vocabulary from the bankers, maybe we should also borrow some of their ideas. After all, for better or for worse, many of the smartest people on our fair planet work in financial services.
So, where to start? Well, why don’t we start with the smartest investor of all time, Warren Buffet. Have you ever wondered how Mr. Buffet has gotten so fantastically rich?
Warren Buffet earned $81 billion dollars with a very simple idea called “value investing.” What is value investing?
We’re probably not the best people to explain it to you, but here goes: Value investing means buying assets that are undervalued by the market. Warren Buffet buys companies or stocks that he believes are underpriced according to his analysis, and then he waits for the market to realize its mistake, sells at a higher price, and makes oodles of money.
In the world of advertising, we don’t buy companies or stocks --- we buy audiences. So if Warren Buffet were a media buyer, he’d be asking himself: Are there are any under-valued audiences? We’re so glad you asked, Warren, because the answer is YES.
Individual Contributors (aka ICs) are the most under-valued audience in all of media. By Individual Contributors, we mean “junior” professionals in an organization. Think IT Specialists, Account Executives, Software Engineers. These are the foot soldiers of Corporate America, the ones who don’t manage big teams but end up doing a lot of the actual work.
The vast majority of B2B marketers are hell-bent on never reaching Individual Contributors. Most of our clients go to great lengths to exclude these types of audiences from their media buys, focusing instead on the C-Suite or Senior Managers. Among all the impressions served by our enterprise technology clients, for example, only 24% of ads are served to ICs.
But this relentless focus on senior professionals is a catastrophic mistake.
Junior professionals are hugely undervalued, for two reasons.
First of all, Individual Contributors are undervalued based on their present revenue potential. If you look at the latest research on “buying committees,” you’ll find that junior professionals actually play a critical role in most buying decisions. In IT, for instance, 55% of the professionals on the buying committee are Individual Contributors.
And if you don’t believe the research, just think of your own every-day experience in advertising. Junior media buyers might not write the final check, but they’re the ones meeting with all the vendors, putting together the original draft of the media plan, and handling the implementation post-purchase.
In other words, Individual Contributors are not nearly as useless as marketers seem to think.
And if ICs are valuable today, they’ll be even more valuable tomorrow. Because guess what? Today’s “useless” junior professionals are tomorrow’s “useful” senior professionals, and they become so much faster than you might think.
As you can imagine, LinkedIn has the most reliable data on career development, and this is what our data shows us: It takes only three years for a junior professional to become a senior manager. The number of years varies by industry, but it's never far from three – in IT, it takes three years; in finance, it takes four years; in HR, five.
How’s this for a revolutionary consumer insight: Young people eventually become old people.
Meanwhile, are B2B sales cycles long or short? The correct answer is LONG. We talked to a seller the other day who just closed a deal that started three years ago. So, by the time someone is ready to sign that multi-million dollar cloud computing contract, it might just be that same Individual Contributor who you’ve been deliberately excluding from all of your marketing.
As an added bonus, junior professionals have “impressionable minds” and higher lifetime customer value. That’s why in B2C, 18-25 year-olds are the most in-demand audience segment. Junior procurement specialists don’t know if they should buy wind turbines from General Electric or Siemens. These folks are open-minded and willing to consider new vendors.
All we’re really saying is this: Consider making a “value investment” in Individual Contributors. You can either stop explicitly targeting by seniority, or you can explicitly target junior audiences. Either tactic is fine by us.
Remember, you’re not just trying to close deals today; you’re trying to close deals many years from now, so take a long-term view with your media plans.
Warren Buffet will be proud of you, and so will we.