The Endgame Of Media Buying And Selling

What happens to the business of digital media when emphasis shifts from targeting content to targeting audiences via scientific aggregation and optimization? The short answer is: it's complicated.
To drive some clarity around this question, I moderated the "The New Science of Advertising" panel at the recent OMMA Global Hollywood conference. To understand the dynamics, we must first break down the major players:
-       Ad Networks: We have 400-plus ad networks today, depending on how you count them. Many are marginal and opaque, yet they squeeze significant margins (for now). Other networks, and exchanges, can be innovative, transparent and promising. Nearly all position themselves around better technology, targeting and control for media buyers, and more monetization for publishers.
-       Publishers: Publishers are seeking to better manage and monetize their inventory amid unsold inventory and declining CPMs. Many publishers are embracing ad networks, with upwards of 40% of inventory being sold on the secondary market, up from just 5% three years ago. Indeed, many publishers avoid networks like the plague, in fear of brand and price erosion.
-       Publisher-Network Optimization Technologies: There is a new breed of optimization services, like Rubicon Project, that make it easier for publishers to manage hosting with multiple ad networks while maximizing profitability.
-       Advertiser-Network Optimization Technologies: There also are new technologies that optimize media for marketers. My own startup, Clickable, is a good example. Our technology integrates the major pay-per-click ad networks into one simple experience, and optimizes media buys to drive marketer profitability.
-       Second-Generation Media Agencies: Several agencies are trying to add new levels of intelligence and targeting to media inventory acquired from numerous sources, including publishers, ad exchanges and ad networks. Mixed with proprietary technology, client-side data and analysis, these new efforts, like MDC Partners' Varick Media Management, represent a second wave of audience aggregation and behavioral targeting.
-       Marketers: Marketers, the final link in the buy chain, must make sense of the complex web of audience aggregation and targeting. They also must think about how to integrate new audience aggregation techniques with customer relationship management. Surely, they question the many layers of middlemen, and see a lot of room for improved efficiency and effectiveness.
-       Consumers: Consumers are the most valuable piece of the entire media ecosystem. Ironically, their interests are rarely brought up in discussions about the future. But their influence will only grow because technology is introducing more choice and voice. David Meer, chief research officer at WPP's Enfactico, told me recently: "We need to stay grounded in high-level theories of what customers want, how we can meet their needs profitably, and how we can communicate to motivate them. And we must do this in a world where consumers control the conversation."
After evaluating these stakeholders, it's clear everyone's jockeying for position. Publishers and ad networks are dancing with each other, but with skepticism. Network optimization technologies would like to insert themselves between publishers and the ad networks. Marketers like the idea of ad networks, but still see a mostly undifferentiated market.
And agencies? They, especially, have demonstrated frustration as technology companies have become successful at their own game: making margins on media. Rob Norman, chief of WPP's digital media unit Group M Worldwide, said it well in a recent interview with the Wall Street Journal: "The ad-network business, we almost shouldn't have allowed it to exist. The tech firms got there first and dealt with the science before we did."
The jury's out over whether agencies can succeed in audience aggregation technology, but we're sure to see an intensified mix of disintermediation and codependence throughout the entire ecosystem. We also can expect several other trends to follow:
-       More transparency: Everyone's demanding it, and technology is fueling it. It's a competitive advantage, and it will drive quality.
-       Flight To performance: It's not just the economy that's fueling a flight to performance. It's also the desire for everyone to one-up each other, no matter where you sit. More efficiency and effectiveness, rooted in new methods of audience aggregation, are strong selling points in open, transparent markets.
-       Growing demand for simplicity: If the digital media landscape is broken in any way, it's because it's so complex. Complexity creates friction to anything getting done; the only way out is to simplify.
-       More media formats: It won't happen immediately, but an intensifying science of audience aggregation will begin to spread and normalize across other digital measured media. In the next five years? Probably not. But eventually.
-       Consumer scrutiny: As noted, technologies are empowering consumers. We also must not forget federal legislators who are becoming fiercer consumer advocates, especially around privacy. That's an area the ad industry is failing miserably on.
The endgame? Nobody knows. But the outcome will be far different than what we know today. What do you think?



5 comments about "The Endgame Of Media Buying And Selling".
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  1. M. eileen Long from Nature Publishing Group, March 27, 2009 at 11:36 a.m.

    Touche' Max! Advocates for high quality in all areas of media will control the endgame.

  2. Bruce May from Bizperity, March 27, 2009 at 11:37 a.m.

    I think we are going to see the second generation media agencies filling the gap created by first generation agencies that failed to wrap their arms around what ad networks were doing. The truth is that the complexity is truly mind boggling and few of us are willing to admit that. The growing focus on CPA points out the need to go beyond just thinking about the issues of generating impressions or clicks. If it doesn't lead to anything then nobody wins. Finding ways to simplify how this all works is essential to really educating the marketplace in ways that everyone can understand so that they can develop strategies that make sense to them. Good job pointing all this out.

  3. Jay Deragon from Social Media Directions, March 27, 2009 at 11:55 a.m.

    Max, as usual great article.

    Ironically Doc Searls posted today similar commentary regarding advertising and you can view it here

  4. Mark McLaughlin, March 27, 2009 at 1:24 p.m.

    What a great summary of the chaos in this space. Thank you. I think the "endgame" is relevance. Consumers welcome relevant advertising. In fact, with today's digital efficiencies, the consumer is willing to directly engage with an ad that offers a relevant value or experience. On the other hand, consumers ignore irrelevant messages. Advertisers want the same thing. Every advertiser wants to put the right message in front of the right person and they will pay a premium for relevant consumers. Unfortunately, the arbitrage model and the narrow focus on lowest common denominator direct response metrics gave birth to a plethora of ad networks that may or may not be improving relevance. Blue Chip advertisers who are ready to embrace the promise of behavioral targeting get so bogged down in the confusion around today's digital networks that they can't be blamed for hesitating to dive in more aggressively.

  5. Terence Chan from, March 28, 2009 at 12:45 a.m.

    Thanks for the succinct sum up of the Omma GHC, Max.

    Juggling the cross-platform channel balls today has become insanely complex, let alone doing it with the online medium with its infinite abundance of options.

    'It's the Technology, Stupid' - seems to be how people see as is the only sane solution to handling the dizzying and ever changing media maths of digital media.

    And 'Keep it Simple, Stupid' - the cardinal rule in presenting the technologywhizz bang to clients to avoid the 'does anyone know what this guy is talking about?' nudges in the boardroom.

    'Don't steal my bread' - seems to be an industry paranoia and 'fundamental motive for doing things' that is becoming increasingly apparent as the economy shrinks.

    Fair enough.

    What concerns me, however, is a seeming lack of enthusiasm in the broader deliverables upon which the motherboard and its circuitry must sit.

    It's not that people don't understand how to retrofit this to upstream/downstream or outbound/inbound marketing. Maybe we all think that this skill is a given, and therefore too boring to mention in-between every sentence. Or maybe we think this is not the right place to mention it.

    But to a Marketer reading this post, your well distilled article may seem nothing more than a Geek night with the boys hell bent on showing off their shiny new blackboxes.

    The End Game of Media Buying and Selling is the same as that for everyone - to grow loyal customers who trust you, and pay you handsomely for the fact. When we all start with that end in mind, it gets a whole lot simpler to figure out what technology can, and should, do for you.

    And maybe make it a whole lot less thought paralyzing, as to how Media Buying and Selling, contributes best in the emerging cross-platform supply chains of today.

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