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Think BR: In the digital world, 'test and learn' strategies are crucial

The media landscape is changing faster than ever, and brands need to have strategies in place to assess new options. Christian Schmalzl, global investment director at MediaCom, shows how to survey new digital territory.

Christian Schmalzl, global investment director at MediaCom

Christian Schmalzl, global investment director at MediaCom

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The pace of media change is increasing. Everyday there’s a new platform, a new way for brands to communicate their messages. Not only that but new platforms are going from small start-up to big news and significant advertiser investment increasingly rapidly.

Take Foursquare, the social networking platform that lets users 'check-in' using their mobile and is growing at 15,000 new users a day, faster than Twitter at the same stage of its evolution. Launched in 2009, it has already secured significant funding, as well as a number of big name advertisers, including History Channel, VH1, Nike and Coca Cola.

Other new platforms showing rapid growth include Groupon, Gowalla and Friendticker.

For brand communications to thrive in such an environment, advertisers need to adopt a systematic approach to testing and learning about new channels.

This is crucially important because all these platforms are reducing the time consumers spend with tried and trusted advertising media such as TV, print and radio.

In the UK, MediaCom clients spend up to 5% of their budgets testing and learning. Indeed some global advertisers set minimum investment levels for digital platforms – 10% for example – encouraging local marketers to acquire learnings that can be passed around the company.

To be successful, the ideal 'test and learn' strategy has three elements:

A comparable media currency: You have to know how this new opportunity compares to what you might have been doing before. If you’re using a video platform, for example, is there a valid comparison with TV ratings?

A methodology for assessing the impact of your message: Do you have relevant key performance indicators that you can use to assess the change in consumer behaviour?

Finally, the perfect 'test and learn' strategy includes econometrics: You need to be able to divine the exact contribution of any new platform you try.

It’s crucial that brands testing new platforms give them a fair chance. There needs to be enough weight in the system for the message to have an impact. That might mean that some months as much as 10% of the budget is going on new platforms.

For entrepreneurs who want to set up ad-funded or part ad-funded digital platforms this represents a fantastic opportunity; brands that are willing to spend and have budgets to invest.

But if media owners want this cash then they will need to do more than simply demonstrate the strategic fit between their platform, the audience and a brand.

They will also have to demonstrate their faith in their platform by offering research that will prove whether they have delivered, be willing to adopt new trading models such as a cost per order deal or share the risk by offering heavily discounted rates that are only ratcheted up if and when they prove their ability to change behaviour.

At the same time, media agencies will be looking for greater incremental value on behalf of their clients. This could be high levels of editorial integration or cross promotion.

As media changes faster and faster, brands need to plan for fragmentation, the rapid rise of new platforms and learn about the new digital world.

Adopting a clear policy to 'test and learn' will ensure they are in position to benefit from first-mover advantage.

Christian Schmalzl, global investment director at MediaCom

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