An AdvertisingWeek Q&A With Stacy Durand, Founder/CEO Media Design Group, Los Angeles, CA
By R. Larsson, Advertising Week
According to Stacy Durand, Founder/CEO of Media Design Group, streaming media will not cripple broadcast TV. Her POV is that brands should find the right audience, be it streaming or cable, and make sure to show up.
Recently Advertising Week spoke with Durand in depth about the future of streaming vs. linear, media buying strategies and measurement, and her company’s innovative approach to performance video and media buying.
Q: A big part of what makes MDG unique is your proprietary platform called SmartMedia Stack. Can you break that down a little? How does this approach differ from other media agencies and what makes it a better approach?
Stacy: Our SmartMedia Stack is built on the idea of moving away from targeting audiences based simply on age demographics and focusing more on where they actually are, whether it’s bouncing from streaming to linear TV to social media and then back. It’s more about targeting that specific consumer that’s the most likely to buy your product or service, and less about finding where we think they may be. The SmartMedia Stack is about layering different data sources and drilling down to find that individual consumer through different sources. Ten years ago it wasn’t so hard to buy media – either a network performed or it didn’t. Now they’re scattered everywhere and we need and need to add every layer of data we can to point us in the right direction of where consumers are. Streaming and linear also inform each other so we can leverage success in one channel and use it to improve the other.
Q: Let’s talk about measurement: You’ve advocated for thinking about measurement in terms of lifetime value (LTV) rather than the more common customer acquisition cost (CAC). Talk about both, how they are used, their differences, and why or what scenarios LTV is better?
Stacy: Linear TV is an efficient medium to talk to a lot of people at one time. Streaming is an efficient way to talk to your exact consumer if you have some data to work with. If you have a product that has a high lifetime value, but if it’s a CPG product you’ll need to buy more of every month or so or a subscription service, it’s important to figure out your front-end goal that makes the most sense to get the newest customers because after that, if it’s a recurring revenue with no marketing dollars associated with it. We are all about helping our clients understand how to get to the newest customers and how to make them stick. But also to use data to understand what their true LTV is and what demographic buckets their current customers fall into.
Q: What’s the most provocative thing you can say about CAC vis-a-vis LTV?
Stacy: Often people compare digital and social and their low customer acquisition cost, but when you look at it over time – three, or six months, or even a year – you see that while you only paid $10 to get a customer, they only spent $30. Whereas on more engaging marketing channels like podcasts, TV, and streaming the cost may be higher but they spend more over time. It all depends on the life cycle of your business. A consumer is not going to buy multiple $300 air purifiers, but they will have multiple toothbrush heads or shaving razors. So when you look at D2C brands like Quip or Harry’s Razors, that are doing continuity or subscription-based models, the CAC is less important because of the long-term revenue potential.
The larger point is you don’t want to roll everything into one big bucket and say, my podcast buy needs to perform just like TV buy, which needs to perform just like my streaming and my digital. Each of them needs to be looked at on its own and as part of the mix through the lens of LTV and CAC.
Q: Are there one or two things you advise your clients generally around LTV vs. CAC?
Stacy: One thing we advise our D2C continuity clients to do is, usually after six months, and then again at a year, how long did your customers stick? You may need to go back and lower that front-end goal. Because if all you see a lot of customers are sticking around, you can lower your CAC and still get more return customers. Again it’s all about constantly measuring and then re-adjusting your front-end goal.
Q: Looking at some other issues around media, I wonder what your overall impressions of the NextFronts this year were? Did any news come out of it for you? Did anything surprise you about it?
Stacy: Well, the thing about that is we don’t know yet. You don’t know until September how each network’s slate looks. It was clear though that the industry is back in full force, which is nice to see after COVID, and that content is even more important given the choices between linear, connected TV, streaming, and social media. There is a movement toward paid advertising supporting streaming services as we’ve recently seen with Netflix and other fee-only services diversifying their revenue models/
Q: Netflix and streaming have been in the news quite a bit lately, first with their decision to add an ad tier subscription rate, and more recently with their supposed acquisition of Roku. There seems to be a lot of momentum around paid streaming caused by consumer fatigue with paid services. What kind of opportunities does this present for advertisers? Perhaps a renaissance with clever branded content, like what you did with Comedy Central/Zip Recruiter and Tractor Supply/CMT?
Stacy: Yes, this was a topic of conversation at the Upfronts as well. The shift to ad-supported free streaming services, like Amazon’s Freevee. It’s interesting to see what will happen in the future because you’ve got companies that have other revenue streams that can support an expensive entertainment division like Apple, Amazon and Disney; and you’ve got the other paid streamers like Hulu and Netflix, which need revenue from subscriptions to support content costs. I also noted the rise of ultra-niched channels catering to very segmented audiences the Black Enterprise Network of podcasts or other LGBTQ+ channels which have small audience sizes but who are hyper-focused and high-value consumers. Looking at our clients, the targeted integrations with Paramount+’s 1883 and Tractor Supply Company show the opportunities companies now have to build their brand with both existing and new audiences.
Q: What else are you seeing big picture-wise in terms of media?
Stacy: One thing I’ve been struck by is how linear TV has stepped up recently. Linear TV is far from dead. What we’ve been saying all along is to be in front of your customers wherever they are and be media agnostic. We don’t care if it’s a show on streaming or basic cable if it’s the right audience for your brand you need to be there. We also see a lot of opportunities for branded content and sponsorships. Lastly, D2C brands don’t think measure ratings, measure responses. What does it matter if a particular show’s demographic matches your brand if no one is responding?