L’Oreal’s UK CMO: ‘We are very clear on where our media money is going’
As advertisers continue to wrestle with the thorny issue of transparency, L’Oreal’s top marketer in the UK outlines the kinds of questions they should be asking when building a media strategy with no hidden fees.
L’Oreal’s top marketer in the UK outlines the kinds of questions his peers should be asking media agencies.
Being able to ask these questions is why Hugh Pile, the cosmetic giant’s UK chief marketing officer, can say confidently that he and his team “are very clear on where our money is going”. Whether his peers can say the same is debatable, particularly considering Procter & Gamble’s (P&G) withering assessment of a “murky at best and fraudulent at worst” online marketplace.
However, with an annual budget ($8.2bn) topped only by P&G and Unilever, it stands to reason that L’Oreal’s marketers must be “crystal clear aware of everything that’s going on” across its media supply chain – or risk paying the price in terms of hidden fees, ad fraud or as Pile puts it: “the smart advertisers that are well setup can get ahead of the pack with the right team behind them.”
But this can only happen if the advertiser has an honest relationship with its media agency. They may not be perfect, yet to disregard improvements from media agencies and still expect them to deliver more complex work for less money is unsustainable - something L’Oreal realised back in 2013 when it hired Maxus.
“We have a great partner in Maxus and the transparency is there,” revealed Pile of a £135m media relationship in the UK and Ireland he describes as built on strategy, not finance. “I’m not going to disclose the details of the deal [with Maxus] but the transparency we get through them is absolutely exceptional and we’re really clear where our money is going against technology, agency fees, DSP or whatever it might be.”
When the WPP-owned shop scooped the account in 2013 much was written about how prevalent transparency was throughout the pitch, and in the years since both advertiser and agency have worked together to prevent fraud, improve viewability, agnostically model campaigns and drive innovation. Like fellow big spenders P&G and Unilever, many of those improvements have been necessitated by the advent of programmatic and concerns over whether ads are seen. Unlike Unilever, L’Oreal doesn’t believe only buying ads that are 100% in-view is the way forward, arguing that it doesn’t make economic sense – at least not yet.
“We shoot for 70% plus when it comes to viewable ads but we don’t believe [buying] those that are [100% [ viewable because you lose inventory and reach,” says Pile, saying it's about finding the incremental value of that extra point of viewability for the extra CPM he or his marketers are buying.
“We’ve found optimal places where we would shoot for on viewability and similarly because we use all of our owned data we can also set with things like Google Doubleclick a viewable cost per completed view (VCPMV). So we can actually set how viewbale we want them [impressions] to be and set that as a target that we optimise against rather the old school metric of cost per completed view.”
His comments chime with a belief held by some media experts that 100% viewability isn’t worth the price. Research conducted by marketing agency IMM last year found that paying more for higher viewability as a way to drive up conversation rates is a smart move but only up to a point. After about 50%, the cost benefit ratio starts to slip, reported Adexchanger. Even if someone sees 50% of an ad featuring L’Oreal, there’s an argument that will instantly recognize the brand without seeing the other half and so it becomes a debate on performance versus value for money.
Pile’s opinion on the debate is that “you don’t bet the farm on one metric”. Rather, marketers must “look at the full picture and understand what you’re reach and viewability will be."
“You need to have good practice there so that you follow certain rules to hit a proven threshold and then you’re looking at what engagement metrics spill from there. Of course, different engagements drive different things: is it cost per lead, is it cost per share, ect. It entirely depends on campaign, brand and level of optimisation. With a good agency and good knowledge in-house you would optimise accordingly to get the best result for that strategic objective of that campaign,” he explains as to how viewability is a stepping stone to determining whether someone has engaged with an ad in any meaningful way.
Online ad fraud is another area L’Oreal has concerns about, particularly when it comes to user-generated-content (UGC). When asked about the potential suspect nature of UGC, Pile says L’Oreal already does a “huge amount” to strangle the likelihood of its ads appearing against the wrong content, whether that’s by constantly updating both whitelists and blacklists or tasking the likes of Integral Ad Science and Moat to continually analyse its placements.
“We also have private marketplaces that we buy against. They prove more expensive but we believe they make sense," adds Pile. "It’s what we’ve always done; we’ve always wanted outside back covers in print titles and we have a similar approach to private marketplaces established with the publishers that we work with.”
Pile’s comments, which come ahead of his appearance at the annual ISBA conference later this week (8 March), are endemic of how more advertisers are starting to question whether they have overspent on digital. Between Pritchard’s war on what he believes is a dire media supply chain and the Times’ high-profile exposé on online ad fraud, the question many brands face is whether they can continue to ignore the transparency issue.