Forced Integration

by , Jul 20, 2006, 11:04 AM
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"Integration" is a hot concept at media and advertising companies these days. For reasons that are probably as much about basic human nature as they are about replicating the traditional post-World War II enterprise organizational structures, everybody wants to "integrate" their organizations.

With the growing importance of online (ad spending up 46.4 percent for the first three months over the year-earlier period, according to Nielsen Monitor-Plus) companies are trying to figure out how to best "integrate" their online and offline buying or selling units. The concept that business units of the same company, serving similar and parallel markets through different media channels, might actually operate better independently, is beyond comprehension for most traditional business executives. Viewed through a mass production lens, separate and independent does not seem efficient; thus, it must be bad. Therefore, today, it is all about integration. In fact, in many cases, it is all about "forced" integration.

Is this the right strategy? Forcing integration certainly makes sense for some activities in today's new multichannel media companies. However, I think that it is being overdone, certainly in ad sales and marketing. To me, it makes little practical sense to force integration between the people that create, market, and sell online and offline ad products. I don't think that I have ever seen it done well.

Why doesn't integration make sense all the time? A number of reasons:

  • Online and offline ad organizations have different missions. In the offline world, they sell media presence--space or time against a set of relatively static audience metrics. In the online world, they sell response through some level of targeted reach or engagement or leads or sales. Since online is still new and still lacks an accepted baseline of media value, those on this side can't usually get away with just selling media.

  • They have different clients. The names may be the same, but the people on the buy side are different. They work in different offices, on different floors, in different buildings, cities or companies. They act and think differently. They have different ages and different life experiences. They have different motivations. It is ridiculous to think that just because both online and offline entities sell ads to AT&T or Citibank, they should be the same people or share the same office or boss. That is certainly not how their clients are organized.

  • They sell different consumer value propositions. Offline media is primarily about distribution. Online media is primarily about access. One is largely pushed to consumers. The other is largely pulled. People that are expert in selling distribution do it well. People that are expert in selling access do it well. Making someone do both will probably dilute the value of each.

  • Their products operate under different standards. Offline media is about doing the same thing over and over again, the same way, with lots of certainty. If newspapers are delivered one hour late once a month, the company might lose thousands of subscribers. If the color is off by 10 percent on the back cover of a fashion magazine, advertisers will cancel and never come back. Online does not work the same way. It is about testing and innovating and creating new things. Many times, things don't work, let alone work well. That is the nature of the product. Online ad products need to be sold with that in mind. Selling certainly and safety is very different than selling experimentation and innovation.

  • They have (or should have) different P&L goals. Offline media these days is all about harvesting cash flow and maximizing margins. It is not about building future cash flows. Online is (or should) be about creating long-term cash flows and new customers and future margins. It should be about growing the business. People who harvest things are different than people who grow things. They don't always work together well.

  • They are accustomed to different organizational structures and different cultures. The offline world tends to be hierarchical and has lots of work rules, and sometimes even unions. Offline workers' pay is more fixed and certain, and they don't always like or accept new things. Online entities tend to have relatively flat structures, few rules, and wouldn't know what a unit organizational vote was. Their compensation is much more frequently based on risk and reward. As you can imagine, these people, structures, and cultures don't always mix well.

    Am I wholesale against integration of advertising teams and ad product development and marketing activities? Absolutely not. I am against the forced integration. I am all for creating incentives for online and offline teams to work together. But I have seen too many great online people leave too many great companies because they were forced to integrate into offline worlds for which they were not ready, and which were not ready for them. Integration for integration's sake does not make sense.

    Am I against forced integration in all areas? Absolutely not. There are many areas in news gathering and editing and content development and in brand management and in the back-office where integration is essential. It makes sense. However, the fact that some activities in online and offline should be integrated is no justification for forcing the integration of all activities. Some things are better left alone.

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