Will Voice Search Resurrect Broad Match?

Is Voice Search Resurrecting Broad Match?

For Search Marketers, unmodified broad match has long been the lowest “don’t go there” option in targeted, profitable search campaigns.  For those unfamiliar with keyword match types, broad match means that the designated keyword can appear anywhere in any user search string, or maybe not at all if Google or Bing’s algorithms deem that there is a “match”. Broad match can be “modified” by insisting that one or more words are included, but unmodified broad match is something of a dumping ground for random, long, or even untargeted queries.

We used to joke that Google threw everything but the kitchen sink into unmodified broad match traffic, so you can imagine our laughter (and tears) the day we found the query “kitchen sink” in a query report on an enterprise software keyword. As data-driven marketers it is this type of example that has trained us to hate, fear, and loathe unmodified broad match.

Until lately…

Before unmodified broad match became a dumping ground for unloved (or unsellable) traffic, it had a real role to play in search campaigns. It was a match type that could be used in “harvest mode” to understand query behavior and mine both new queries to move to phrase and exact match as well as negative keywords to block from campaigns.  In the heyday of short searches and high volume keywords, broad match helped in sculpting keyword mixes for effective search campaigns.  But when broad match modifiers were released, less risky options became available and unmodified broad match fell by the wayside. It made sense to abandon unmodified broad match since modified broad captured most of the relevant queries in most campaigns. Unmodified broad match wasn’t particularly useful any more.

But then voice search came along.

Broad match wasn’t as useful prior to voice search because typed search queries enforced a more limited range of query behaviors.  Voice search changed that.  Natural language is richer than typed search queries and therefore more nuanced and more varied. Add in Google’s developments in contextual understanding of threaded voice queries and suddenly the query range isn’t just long tail, it’s hyper-long tail. Tools are needed to capture this incredibly varied source of targeted searchers. And it turns out there is just such a tool: unmodified broad match.

Hopefully, the ad networks will carve voice search into a unique addressable audience where we can target and optimize separately, but for now old tricks might be the best for a new dog.

Why Agile Works for Us

Working Planet is an Agile shop. This doesn’t mean we’re sprightly and nimble, although we generally are those things too. It means we adhere to strict Agile methodologies in how we prioritize and execute our work. We are very routinely told by clients who have worked with multiple agencies that we’re the best they have ever worked with, and we credit Agile with helping us to be the secret weapon our clients want in a digital media buying partner.

So I am often astounded when I hear marketers say Agile doesn’t work.

“Oh we tried that Agile thing” some say. “We gave it a shot, it didn’t really work for us” say others. “I think it’s a fad” you can hear whispered on social media, if whispering on social media were a thing, which it isn’t.

Agile is so critical to our work, I thought I would take a moment to try to dissect why it works so well for us and hypothesize why it might not for others.

1. Agile doesn’t work without clear goals

We optimize digital campaigns for financial results. The financial KPIs are unambiguous goals for us to pursue. As a measure of business success, profit is unequaled and unarguable, which makes it an excellent KPI. Agile, whether you are in the Scrum or Kanban camps (we’re proud Scrumban fence-sitters) works for three different reasons, one of which is the continual prioritization of what you are working on in the moment. This implies you have something meaningful to prioritize against. Our financial lens and using profit as a KPI gives us clarity for prioritization in a way other agencies might lack.

2. Agile works best when marketing is a team sport

Many agencies are set up as specialists working independently on work for the same client.  It is not at all unusual for agencies to have a unique expert for Facebook, Twitter, or data analytics.  Or they might have all work for one account done by a single person. Accomplishing any one thing when it can only be done by one person can absolutely benefit from Agile (one of my favorite books on this is Jim Benson’s Personal Kanban) but Agile really kicks into high gear for effectiveness when you have a cross-functional team. Team-based Agile Marketing is better for two reasons. The first is that teams lend strength and flexibility to client work, making deadlines attainable and vacations possible even if they happen to coincide. The second is that a team of smart people who all have intimate knowledge of the workings of the client’s campaign and finances are unmatched in effective prioritization.

The second and third reasons Agile works are through visualization of the work and the limiting of context shifting. The multiples of effectiveness in these gains at the team level cannot be overstated.

3. Agile rituals can’t be done ritualistically

Agile, and particularly Scrum, is full of rituals. The fact that they are commonly called “rituals” instead of, say, “building blocks” or “improvement checkpoints” makes them too easily bucketed into the “I have to do this because it is in my calendar” zone of things we hate but are forced to do at work. This is a shame, as Agile rituals exist for a purpose. At Working Planet we don’t stand for our daily standups (gasp) and they are more often held at the end of the day than the start (more gasp), but we do make sure the daily meeting involves a hard look at current priorities and whether reality has shifted since those priorities were made. Our Retrospectives are always held, and are always about how we continually improve as an organization. If a Retrospective is just a recap of what you did or a social chat, it doesn’t move you forward towards your goals.

Often when I read about Agile experimentation it feels like the Agile rituals are done ritualistically, by which I mean without purpose. I am guessing this might not doom an Agile migration to failure, but it won’t help anything improve quickly, or rapidly show the power of Agile processes.

4. Agile isn’t something you “try”.

As Yoda famously exhorted, “No! Try not! Do or do not. There is no try. I know of no better place to apply this Jedi maxim than with Agile. When we first started Agile seven years ago, it was hard. It was different, it felt weird. It wasn’t always easy to voice to a team how you as an individual prioritize tasks. We wanted to just get on with the work. It feels easier to just go do something than talk about it. Like most firms starting Agile, we started with Scrum and all those meetings! It was only with time that we realized how much control it gave us. How the frequent fires became a lot less frequent. How it was easier to know what to do when everyone agreed on why to do it in the first place.

You have to see it through for a longer period of time than you might think before it becomes habit, and you will likely need everyone to do it all at once. If everyone is not doing it, it will be very hard to protect the Sprint or Kanban or process of those who are doing it. It also has to be viewed as permanent or no one will commit to it, because they know they don’t need to. Lastly, Agile also needs a champion, and (at least in the beginning) that person needs to have the power of Yoda to repeatedly hammer home that there is only “Do”, and the seniority to apply the Do Hammer to everyone.

Early last summer we switched from Scrum to Scrumban, although we call it Kanban internally to highlight the differences from our old practices. Our learning curve was much easier and within a few weeks our teams were hitting a new stride. We found it worked well, and I believe Scrumban might be the superior flavor of Agile for those delivering ongoing services vs. creating a product. With its focus on finishing over starting and softly enforced collaboration, it is a good fit for us. Our teams credit it for their being able to easily achieve some seemingly hard goals with more ease than was expected. We’re an even better agency for migrating to Scrumban. Once again, we can’t understand not doing it when the benefits of doing it are so clear.

When you have something that works, it is hard to let it go. And I think that might also be the power of Agile as a methodology of continuous improvement. Before we moved to Agile we had embedded best practices that worked for us as all agencies have practices that work for them. But Agile was better. And then the Scrumban version of Agile was better than that. Now we are testing layering on personal Kanbans, incorporating DevOps concepts, and other experiments. With Agile we test new things all the time. And maybe this is the most powerful reason I wouldn’t let Agile go. Agile won’t let you be complacent. If you embrace the purpose of Agile, embrace continuous improvement, don’t fall into ruts, and prioritize towards goals that are lofty and measurable then you simply cannot be complacent. And maybe that is Agile’s hidden strength.

Dogs in the Office: Delightful or Distracting?

Dogs are said to be (wo)man’s best friend, but are they best for the workplace?

What could be better than having a loving, little furry friend run up to greet you every morning when you step foot in the office? Receiving such unconditional love is guaranteed to start your day off on the right foot, kick starting your motivation.

Personally, I love being able to bring my dog (featured above) to the office. I think that it creates a more welcoming environment and can even be enticing to potential new hires. It also saves me from having to worry about what he’s doing home alone all day, as well as saves me money from having him go to doggy day care or with a dog walker.

Being around dogs has shown to lower the levels of stress in your life and increase your levels of serotonin, so if you are having a bad day just call that adorable pup over to your desk and take a few minutes to pet him/her and enjoy the love that they radiate.

Having a dog in the office that wanders from desk to desk increases the possibility of employees who don’t normally connect to interact with one another on a more consistent basis. This can get ideas flowing and improve employee relationships.

As much as I would love to believe that there are only pros to having a dog around while you work, there are definitely a few cons to be on the lookout for.

Dogs can sometimes become unnecessary distractions; between any barking and whining that occurs, having to be walked periodically during the day and distracting employees from their work. The dog’s owner should be able to control their dog and make sure that he/she is acting like a mini four legged employee should. Dogs playing with each other can be extremely entertaining, but can also disrupt the flow of work.

Some dogs resort to chewing and destroying items when left alone or feel anxious in new situations, causing damage to office equipment. Accidents do happen (and need to be taken care of immediately and thoroughly by the owner), but some people prefer to just avoid the possibility of it occurring altogether.

Making sure that the dog is up to date on all vaccines, house trained and well behaved are just a few requirements for owners before allow their dogs to enter the office on a regular basis. Some companies may want to include some clauses in their pet policies, such as some consequences the dog would face if it acted out in an a, b, or c manner. There could be legal and insurance worries that would come along with having a dog in the office. In the case that someone is injured by the animal, the company’s owners should have their bases covered.

Here at Working Planet, we have found that the pros more than outweigh the cons, and happily share our office with our four-footed friends. If you have dogs in the office, be clear with owners about the expectations for dog behavior in the office. Address the fact that dogs are in the office with potential employees to surface allergy (or even fear) issues. In the end, it’s up to you whether you believe that the positives outweigh the negatives, which can be a ruff decision (Ba-Dum Pa).

Top Five Digital Marketing Trends to Look For in 2019

As a paid digital optimization firm we saw 2018 as a year of innovation in the industry. The rapid pace of change with both new and existing players is setting the stage for 2019 to be exciting, dynamic, and fast-paced. There is a lot of change in the air, but here are five big trends that we think will impact most advertisers in 2019:

1. Rise of Amazon

Amazon took steps in 2018 to consolidate their advertising options for retailers, manufacturers, and (most excitingly) for people not selling through Amazon because they are not a fit for the Amazon marketplace. In particular, the launch of a platform-based way to manage Amazon programmatic through “Amazon DSP” will likely ensure the rise of Amazon into the top three advertising networks in 2019. If you divide programmatic providers along data lines, Amazon completes the triumvirate of Google (owning search and web behavioral data), Facebook (owning personal and social engagement data) with a massive player owning the world’s biggest treasure trove of consumer interest and behavior data.

2. Video, video, everywhere

It wasn’t that long ago that when you said “video advertising” it was a solid euphemism for YouTube. Not anymore. Video content is everywhere from Instagram stories, to Facebook feeds to classic display inventory, to Connected TV. Video content is riveting, engaging, unrivalled for storytelling and is emerging as compelling content across digital advertising. Combine that with fast and easy content creation tools and 2019 will likely see a massive increase in video advertising content. If you spent the last few years solving for mobile, the next question is solving for video content creation.

3. Programmatic transparency in display

The land rush of display inventory moving to programmatic exchanges is essentially over with the frontier now booming with virtually all the traditional display ad inventory that exists. As we move into the next phase of maturing programmatic advertising there is a push for increased transparency of the underlying data in the exchanges. While viewability was a key focus in 2018 that will continue in 2019, we are also likely to see dollars shift to exchanges that provide the most data and controls over performance KPIs such as per-user viewthrough information. Some claim that blockchain is the solution, but some DSPs, such as Acuity and Dstillery are already closing these gaps with existing technologies.

4. Rush migration of remaining traditional media to programmatic

While display has almost all moved into the Programmatic mansion, the new rush is with traditional OOT and network Cable/TV inventory. In 2019 expect to see much more traditional TV inventory move into the programmatic exchanges allowing digital marketers to target OOT, Connected TV and maybe direct even more traditional TV inventory. With the explosion of independent content delivery services being announced (Disney, NBC Universal, etc.) expect some of these to explore programmatic advertising as well as subscriptions as alternate revenue models.

5. Embracing of AI tools

In 2019 virtually all digital advertising will utilize Artificial Intelligence tools for ad placement and delivery. This is not a bold prediction, but a reality check reflecting the state of digital at the end of 2018. Whether it is Google’s ad-serving algorithms, the proliferation of Lookalike audience building, or conversion-based bidding algorithms, the face of digital is AI. Marketers need to be looking for ways to test, adapt, and restructure best practices to take advantage of the new world of AI-driven marketing as well as to proactively look for ways to push the use of AI-based tools in new directions. AI is no longer what is coming, it’s here.

It is impossible to make a short list like this without missing big trends (Podcasts? The death of Snapchat? Facebook Search Advertising?). By distilling this to a Top Five we think we’ve identified large trends that are so far advanced already that they cannot help but influence digital marketing in 2019. Have a different idea? Let us know!

When KPIs are Blinders: The Dangers of Local Optima

Recently we encountered a strange situation.  One of our clients had a top of the funnel KPI that looked like it was going sideways with regards to efficiency, but their revenues were going gangbusters. We use this metric for optimization and it is the core number by which everyone from their Board of Directors on down judge the efficiency and success of the digital campaigns.

Suffice it to say, this was not good.

Interestingly enough, the revenue numbers were setting new records, which made us question what was happening with our long standing and go-to KPI. So we started checking off the boxes. Was the revenue coming from the current marketing investment? Check. Were we paying what our financial models said was appropriate to the audiences? Again check. Was the top of the funnel KPI consistent over time and audiences?

Hmm. No, no it wasn’t. Aha! Changes to user engagement paths had affected the top of the funnel over time, and the average KPI from the past was no longer aligned with revenue and profit.

Our go-to KPI had become a Local Optimum, and we needed to address it quickly.

I first came across the term Local Optima in Eliyahu Goldratt’s classic novel on business optimization The Goal.  Essentially, a local optimum is a metric that may apply to a “neighborhood” of criteria, but is uncorrelated with the entire system. Goldratt used the uptime of a single machine in a factory as his example, where running any machine at 100% capacity other than the one machine that throttles throughput for the entire factory will cause inefficiencies and losses for the entire system.

Goldratt and his Theory of Constraints thinking dictate that “Measurements of local optimum behavior should be abolished and replaced with holistic measurements.”  If we had a Local Optimum on our hands, attempts to “correct” for this KPI would not be mildly bad, it would almost assuredly hurt the profitability of the entire company.

So we threw out the KPI and went back to first principles: “Marketing is a financial investment in a financial outcome”. What could we look at that would be correlated to revenue production over time?

It turned out that slightly down-funnel was another metric that turned out to be 100% correlated to revenue production and, in fact, was the one to which we calibrated our bid models.  We were able to show that the sideways direction of the top-of-funnel KPI wasn’t a problem, but was actually a natural side-effect of using the “true” KPI to back-calculate to the top of the funnel. By shifting the conversation from our most visible KPI, the conversation then quickly shifted to how to take advantage of this knowledge. How could we change our reporting, conversation, and client-side metrics to align? We lucked out. Our client is extremely savvy in understanding their own cohort data and financial targets and rapidly escalated the conversation to the C-suite and their Board.

We talk consistently about using Profit as a KPI. In reality, as digital marketers we often have to use early engagement numbers as proxies for true Profit. It is always good to step back and assess the relationship to Profit in case a Local Optimum has snuck into the room as it did in this situation.

Why We Are Focused on Amazon Advertising

Last month, Fortune reported that Amazon is rapidly becoming one of the world’s largest ad networks, with over $2 billion USD in advertising revenues in Q2 2018 alone.  Their rapid appearance on the world advertising stage is only one of the reasons that we’ve been putting our sights on Amazon for some time now.  Here are our three main reasons to be all about Amazon:

1. Amazon Has Something for Everyone.

In the past, Amazon advertising has largely been focused on on-site internal advertising on Amazon.com.  Amazon has long been a go-to source for feed-based promoted product advertising. This type of internal Amazon advertising has been great for retailers and manufacturers looking to build Amazon as a channel partner. It is also highly effective as long as you watch the math as Amazon charges both for the advertising as well as their platform fees for each sale. Recently, however, Amazon has matured their offerings with the rollout of Amazon DSP to a wider audience.  I’ll speak more about Amazon DSP below, but one strength compared to other Amazon offerings is that you don’t have to sell on Amazon to use Amazon DSP.  In fact, all kinds of companies selling products, services and more are using Amazon DSP, Amazon’s programmatic solution, to profitably acquire customers from advertising delivered in programmatic exchanges across the Internet.

2. Amazon is Investing in Their Platforms

There is nothing like a few billion in revenue to attract resources, and Amazon is no exception.  Amazon is in the midst of a significant platform consolidation. Amazon’s previously disparate solutions for products, manufacturer solutions, and programmatic, and that encompass display, product, video, and store advertising have been combined into a single-login platform. This makes it far easier to know about potential offerings, to leverage knowledge across offerings, and to track and report on Amazon Advertising as a whole (well, maybe someday) We’re quickly on the road to agencies and advertisers taking full advantage of Amazon as a professionally executed network alongside Google and Facebook. This is still in the very early stages, but with hints that other Amazon platforms like Twitch advertising might follow, we are bullish.  For example, billing solutions are not yet integrated across offerings but we hope that the recent addition of single sign-on is a sign that further integration is to come.

3. Amazon DSP is Unique (as a DMP)

Programmatic is evolving faster than any other segment of Digital Marketing.  We have largely moved from the main trend being web publisher migration to exchanges. While this is mature in display, migration to programmatic it is still in early stages in traditional media like TV. Some of the newer programmatic trends involve access to data through DMP (Data Management Platform) integration in the advertiser DSP (Demand Side Platform). This and the use of AI are on the cutting edge of developments we are seeing in programmatic.  Amazon DSP (formerly Amazon AAP in a long line of product name changes) utilizes Amazon’s massive warehouse of customer demographic, product interest, and shopping data to inform targeting for ads delivered in other exchanges. Unique data for targeting is the currency of the new world of Digital Marketing. And since the abuse of social media data has curtailed targeting options in Facebook, Amazon has the ability to leverage tremendous personal data without violating the privacy protections of their users. We’re bullish on the data Amazon can bring to the table for advertising far outside of products sold on Amazon.com.


Amazon is changing the Digital Marketing landscape. Because of this we actively sought partnership as a firm capable of in-house programmatic management of all the Amazon platforms including Amazon DSP. We’ve invested in external and internal tools to bridge gaps in Amazon’s still-evolving reporting and to bring our deep financial optimization to Amazon’s advertising products. We’re excited about these opportunities and fully expect that Amazon advertising will be our biggest single growth network in 2019.

What Magritte Has to Tell Us About Marketing Data

In the winter of 1928-29 a Belgian painter living in Paris painted what looked like an advertisement for pipe tobacco. The painter, René Magritte, painted a caption below the large pipe stating “This is not a pipe” creating confusion for viewers and a bit of a stir in the Paris art scene at  the time.

The title of the painting is “The Treachery of Images” and Magritte intended it as a reminder that representational art is a reflection of the artist’s view of the object,  not the object itself. His interpretation was that  the painting of the pipe is not actually a pipe. You can’t smoke it, fill it with tobacco, or put it in your pocket; it is a representation of reality.

Magritte’s message is particularly apt in our view of marketing data. As marketers, we use our marketing data all the time in measuring and assessing user behavior related to digital advertising and engagement. But it is extremely important to remember that marketing data is an imperfect representation of user behavior and not a perfect simulation.

There are three main reasons that marketing data is imperfect. The first is in the nature of tracking. Tracking is technically limited in its scope and reach.  At best, tracking can measure engagement from the same device over time, or the same multi-device account over time. This only works if the tracking is implemented correctly in the first place and is not disabled by the end user. Because of the technical limitations of tracking there will always be engagement that is not tracked because of multi-device use, the amount of time for which the tracking is active (cookie window), or because of personal opt-out at the user level either by choice or by browser pre-set settings.

The second main source of imperfection in marketing data is in user behavior.  As humans we have a wide variety of choices and methods of interacting with advertising. Some of us choose to avoid interacting with advertising as much as possible while some of us behave in the opposite fashion. Some of us will choose not to click on ads at all, some of us don’t hesitate. Some of us need to heavily research purchases, some don’t. There is not one engagement path that is adhered to by all users yet often our data is interpreted through a “single funnel” lens that introduces inaccuracies in interpreting data.

The last main source of data imperfection is in data integrity. The cleaning and analyzing of data must align with the knowledge being sought. De-duping rules will differ by business model. Attribution will vary based on external factors such as affiliate payment rules (and will still never tell a 100% accurate story). Data dropout can cause interpretation issues.

So what is a marketer to do?

The best thing you can do is to fully utilize data to test your own model of reality.  The best data firms don’t blindly use data but instead use it to inform their perception of reality.  For example, if you know that a percentage of social users engage with your brand without clicking on ads and instead show up as brand search or No Referrer traffic, you should try to assess: how much, how can that magnitude be assessed and what impact does it have on my decisions as a marketer if I can hypothesize about non-measured (but real!) activity.

Magritte’s point  is well-made. Our data is not reality, but an imperfect reflection of reality biased by user behavior, technical limitations, and process. Our best response is to acknowledge and accept this and use it to our advantage.

5 Hidden Dangers in Annual Budgets for Marketing

Ah, the smell of the end of the Fiscal Year! Budget Planning for Marketing is in the air and the smell of burning remaining budgets lingers, backed by the sound of inter-departmental standoffs.

It doesn’t have to be like that.

Annual Budgeting is a time-honored process, but I’d argue that in today’s world annual budgets for marketing do more harm than good. Flexible budgeting based on hitting financial KPIs and working within cash-flow limits is a much better way to go.  So roll up your sleeves and get that coffee, because today we’re talking about the five main reasons Annual Budgeting can harm your marketing program!

1. Cost vs. Profit

Annual budgeting attempts to control costs while managing resources for the continued profitable execution of the business. Unfortunately, the two common tools for reviewing financial performance, the P&L (past-looking) and pro forma (forward looking) are poorly equipped to understand marketing’s direct contribution to bottom-line growth as they both separate cause (investment in marketing) from effect (profit realized from marketing).  This is solely because marketing has always been treated as a fixed cost, along with salaries and rent. But quantitative marketing, and particularly quantitative digital marketing has changed that.  Done right, data-driven marketing creates a clear and predictable relationship between investment and return, often optimizing to financial KPI’s such as Contribution Margin (post-marketing gross profit) that, if scaled, will improve the profitability of the company. Annual budgets, by definition, cap the potential upside of profitable opportunities that might exceed the estimates of the company at the time of budgeting.

The Better Way: Utilize strict measurements on the generation of profit from marketing where marketing is expected to increase Contribution Margin over time (how much time is predictable, but is based on sales/evaluation cycles and will vary widely by company). Combine these with cash flow controls so as not to overspend in advance of revenue. For example, in a SaaS company we might be able to predictably increase future Monthly Recurring Revenue (MRR) in an acceptable payback period with a greater ad spend, but monthly spend would still be capped as a percentage of current MRR for cash management reasons.

2. Limits on Course Correction

Budgets are a plan for the future, but the more detailed they are, the more difficult it will be to change course, even in the face of compelling evidence that you should do so. Budgets are often difficult to change on purpose, as the control inherent in the budget planning process is one way that leadership executes the course for the company.

The problem is that detailed knowledge of opportunities doesn’t live at the top of the organization, it often lives deep inside, at the levels of tactical decision making. As opportunities surface, the entire budget planning process, people, and leadership control needs to be challenged even to make a minor change. It sounds crazy, but is extremely common to hear “We know we should make this change and doing so will increase profit, but it just isn’t in the budget.”

In a recent example, one of our clients realized that they had given us the wrong remarketing budget and that they had no more budget for the remainder of the fiscal year. And even though we have clear data illustrating the profitable results of the investment in remarketing, the line managers decided they would rather forfeit that profit than challenge the budget process. This does not help their company’s bottom line.

The Better Way: Put money behind goals with limits on expenditures. Educate line managers on P&L level financial KPIs and enable them to move resources to improve those financial KPIs within cash flow limits. This often means addressing local optima, KPIs that don’t correlate well with financial outcomes but are intended as measures of performance separate from revenue and profit. In marketing, most traditional measures (Bounce Rate, Time-on-Site, etc,) are local optima. Local optima are blinders to good prioritization of activities that improve the business and should be viewed with caution.

3. Arbitrary Channel Blindness

Marketing is complex. Actually, that isn’t nearly as true as the fact that the human interaction with marketing is complex. Yet internally we fall in love with single-source attribution to evaluate marketing channels. Nothing feels better than knowing that this one customer came from this single source. It makes us confident in crediting programs and teams, and makes it easy to allocate budgets.

Of course, it’s dead wrong.

We know from our own behaviors that people engage in interactions with marketing campaigns that are far more complex than our tracking can fully capture. We see ads in multiple locations over a period of time. We are remarketed to. We see an ad, don’t click on it, and then later do a brand search. We switch devices before engaging with a web site. We’re human and so are our customers.

Single source reporting creates a false sense of security, and like the CEO who exclaimed, “This Brand traffic is great! Let’s move all our budget to that!” it often masks cause and effect within the complexity of real human behavior. (If it is not clear what the issue is with that comment, please reach out to me.)

Budgets, of course, make this worse the more granular they get. In addition to making my last point worse in that they can limit course corrections to better performing areas, channel budgets reinforce the false view that channels act independently of one another, and that all channels act in similar fashion with similar functions.

The Better Way: Have your financial KPIs be holistic, evaluating black/white success only when looking at the whole picture of paid, unpaid, earned, unearned customer acquisition. The channel numbers are directional and need to be evaluated carefully. Your Cost-Per-Acquisition numbers in Search and Social shouldn’t be the same, as Social typically drives 5x to 10x more out-of-channel activity that breaks source tracking. Data needs to be used to its fullest extent, but with thoughtfulness, experimentation, and a constant understanding that data collection is limited with regard to user intent. When changes need to be made, or experiments run, the budgets should easily and flexibly accommodate those changes.

4. Slow Learning

In the Mad Men days of traditional media, learning about campaign performance was slow, when it could be measured at all. Annual budgeting caused no significant harm, because annual budgets often aligned with annual media buying.  In a world where success was often obtained by the most demographically-correct eyeballs for the lowest price, demographic targeting and price negotiation were everything.

No wonder people had time for all those martini lunches!

Modern digital advertising is a world of constant measurement and constant experimentation. The limits of the budget process in slowing change and limiting complex understanding have one extremely dangerous but often overlooked effect: They slow learning. Gains in digital media are often discovered through testing (certainly this is the financially responsible approach), so how many test cycles you engage in is one control over success. A process that by nature limits the speed of testing can have a highly detrimental effect on performance that is likely completely invisible to those engaged in the budgeting process.

The Better Way: Create the freedom for testing within the budgeting process. 10% of the marketing budget that is solely for experimentation and is not held to financial KPIs will pay off dramatically in rapidly finding ways to scale profits.

5. Incorrect Time-Frames for Budget Evaluation

Fundamentally, annual budgets operate at an arbitrary time frame that is out of sync with marketing decisions that need to be made in a financially optimized, highly data-driven campaign. Quarterly budgets are not much better but will be closer to the learning cycles in most campaigns.

While the longer the budgeting cycle, the worse the problem is, the fundamental problem is that line-item budgeting for marketing is an inherently bad practice. In a world of 24/7 live auctions, shifting competition, constant learning and improvement, budgets are sub-optimal.

The Better Way: There is a better way, and many organizations already do it this way. Financial KPIs tied to cash flow-based caps given to engaged teams with line-level decision making work far better than a classic budgeting process. The best, most nimble companies we work with work off of pro formas that are not set in stone but that are live working documents, recast constantly based on evolving data.

When done right, digital marketing contains an amazing set of tools for the predictable scaling of profits. What is required is for companies to support the financial practices that allow this to happen as quickly as possible, provide financial transparency and clear financial KPIs to their marketing teams, challenge their teams to be thoughtful about complex data and behaviors, and stand back. Maybe it is simple after all.

15 Years of Profit-Driven Marketing

In 2003, Google was still a scrappy startup, digital marketing largely meant Search or un-tracked banner ads, and Working Planet co-founders Soren Ryherd and Vida Jakabhazy had an idea that paid digital advertising could be optimized to financial KPIs.

We were a little early.

While Working Planet began rapidly building and optimizing digital campaigns it wasn’t until the economic downturn of 2007-2008 that CMOs really began being tasked with the financial performance of their digital campaigns. And as hindsight clearly shows, digital quickly became the safe haven for investment in marketing because it had three things that companies loved: trackability, the ability to easily change budget allocations, and a platform for rapid testing.

But we pushed it further from Day One. We stated that, done right, financial KPIs were not only an outcome of marketing, but a key INPUT into the optimization to profitability. If you knew the value of an audience as measured in real profitability, then you could pay only what an audience is worth. Of all the amazing transformations in digital over the last decade and a half, the thing that amazes us the most is that people still talk about “The ROI of digital” as if it were fixed, when the ROI from digital is 100% based on the choices you make in the execution and optimization of digital campaigns.

Throughout the last 15 years, we’ve been quietly pushing the curve, developing new practices to apply financially-based optimization to all digital marketing. What started in Search has evolved as the industry has evolved, and we now manage substantial ad spend in Search, Social, Display, Retargeting, Programmatic, Video, and more. We’re excited about the ongoing rapid migration of radio and television to the Programmatic exchanges and are managing campaigns in those areas as well.

We are exceedingly proud of our history. We have been part of so many success stories. From small companies that have become large significant players in their industry, to clients that have been acquired after we achieved successful results for their founders (and investors), to our serial entrepreneurs who have brought us along for the ride in their subsequent ventures, we have been privileged to work with a wide variety of amazing people and organizations. And we cannot overlook the increasing number of professional marketers and business executives we have now worked with at multiple companies. We’re very happy to be their secret weapon.

We are also very proud of our team, the Working Planet family of current and former Planeteers who have worked to create something special in the industry: a marketing agency whose teams see the tangible results of their work every day as measured in the real financial success of their clients. The Working Planet teams bring passion, enthusiasm, and curiosity every single day and working with a talented and curious group of smart individuals is as satisfying an experience as one can have as marketers and business owners.

So what is next for Working Planet? Expect to see more from us. We want to share more about what we firmly believe is the right way to do marketing. We continue to grow and have big plans on that front, both in growing the size of our firm and growing the scope and success of our clients. And we continue to keep a close eye on the industry, using our embedded approaches to innovation and measurement to find new opportunities as all of digital marketing continues to evolve. Holographic advertising you say? Bring it.

Soren Ryherd & Vida Jakabhazy July 2018

Profit: The Only Marketing Metric that Matters

I recently wrote about the limitations of one of the most widely-held marketing KPIs: ROAS (Return on Ad Spend). The main limitations with ROAS are that it is a measure of efficiency and not magnitude and that the efficiency it measures is revenue generation, not profit generation.

Yet creating revenues without profit, or efficiency without magnitude is not creating success, and we want KPIs that are tightly aligned with success. In fact, that is the sole purpose of a KPI.

So if ROAS sucks at being an indicator of the magnitude of profit, what KPI does work?

I’m going to go out on a limb here and say all marketing metrics are poorly aligned with business success. Which is why your marketing KPI shouldn’t, in fact, be a marketing KPI at all.

It should be a business KPI.

In fact, it should be a really specific business KPI and that is a form of profit measurement called “Contribution Margin”. Contribution Margin is pretty simple to calculate, it is just Revenue – Variable Costs. In this respect it’s a close relative of a metric we like a lot: Gross Profit (Revenue – Cost of Goods). But the key to a good Contribution Margin calculation is what’s included in the variable costs. For us, the biggest variable cost is Ad Spend. But in actuality, we also add in cost of goods and any other per-unit costs if they exist.

If it sounds complicated, you can probably simplify it. If you want to call it Post-Marketing Gross Profit that works, and in many cases may be close to the same number as Contribution Margin, depending on what other Variable Costs exist. Frankly, we find the hardest part is to get this information from clients, as it’s unusual for Marketing to know these numbers and Finance may need an explanation on why it’s important to share them.

So why is Contribution Margin a good KPI? Well, first, it doesn’t just align with the magnitude of profit, it IS the magnitude of profit. Second, if you’re looking at actual profit, a false read on efficiency can’t cause you to make bad decisions in the name of efficiency (this is called the local optima effect and I’ll post about this in the future). If you use Contribution Margin as a KPI, you actually see the drop in profit. And lastly, it lets you do two very exciting things in growing a business, and those are that the investment in marketing becomes a profit center and not a cost, AND it allows you to have a business metric that transcends channel complexity, but how that works is a topic for another time.