As the digital landscape evolves so the companies within it have to adapt as well, but actually we all live in a short term world. Both publishers and agencies have their work cut out for different reasons but all too often good strategic decisions are being strangled by short term demands. This challenge has never been more obvious than right now.
I have been talking daily to organisations both in our group and externally about how we plan and adapt for the future, we can all see the major digital portals for instance having to sit and scratch their heads a little about dealing with the here and now but planning for the future. Take a Yahoo or a Microsoft, they have both embraced the new world of exchanges and yet somehow want or need to protect their network offerings, the two don’t sit easily in reality. As strategies they should be rewarded in their approach of embracing the exchange world, but instead they are under pressure to deliver their targets based on a 2010 estimation, when the world was entirely different. Was it that different? Were we not all talking about exchanges etc back then? Well yes we were but the spend was not backing up the rhetoric, 2011 is a different story. Audience On Demand, as the biggest exchange trader in the UK has accelerated incredibly, and that growth is having an impact. Look at Specific Media who but a year ago was recruiting staff and buying Myspace and a few short months later is making redundancies, that’s how quickly things move.
We are though at a juncture, and it’s for that reason we need some patience from the bean counters. 2010 did not properly represent the Exchange growth, 2011 is closer to the truth but 2012 will be big. As the long tail of Ad Nets is absorbed into the more focused addressable media hubs and digital consolidation continues, the likes of the Yahoo or Microsofts will begin to see the benefits of the exchange infrastructure and will be able to let go of the old DR network approach. They will start to reap the spends that once went to the Ad Nets, but this time via exchanges.
It is refreshing to see the strategy Yahoo are playing out in the us. There was an article today in fact on this in Adage – click here. They are going to take a hit in the US with their strategy of blocking the Ad Nets, Criteos and others from buying their inventory. Yes short term that is going to hurt them, longer term its a great move and will pay back undoubtedly. We are seeing a significant adjustment in the digital ecosystem.
Agencies are evaluating just as fast, less from a revenue perspective, more from a structural perspective. If you designed an agency today, would you do it the same? I doubt it and yet the upheaval required sometimes makes people think twice and come up with a number of reasons why they should not do something even though in the longer run it makes perfect sense. This requirement to change however on agencies and publishers comes from a number of key trends;
consolidation of digital, we have all seen the stats that show the big digital companies control a huge percentage of the total spend and audience, even within the exchange space you are dealing with a few big partners. I believe that clients are starting to see a new digital landscape that is not 40 sites on a plan. They are realising that actually they can achieve almost all they need with API buying, Audience On Demand and Search, its a shift, everyone is looking for scale and efficiencies.
Globalisation of media and advertising. Most pitches are becoming global, not all, the recent in for ZenithOptimedia of RBS proves that, but many are. As such as the clients think more globally then they look to the agencies to do the same, and the more you think like that the more the scale partners of Yahoo, Google, Microsoft, Facebook etc become important to them and us.
Commoditisation drives value. This is an interesting development for me. Years of being told by Microsoft and Yahoo etc that their inventory is ‘premium’ has rarely been backed up by any real insight except their own research. Now we have commoditisated huge swathes of inventory through DSPs and exchanges we are being able to see what value inventory has and what performs. We see the volumes of money we spend with these companies through the DSPs and what eCPM we pay for them, none of this is determined by a person or a power point slide or negotiation. Tech has decided, results have decided and demand has decided and the patterns are very interesting indeed. After millions of pounds of spend through Audience On Demand we now see the true value of inventory and yet it has never been more commoditised.
Technology is in fashion. Of course tech has always been in fashion but never more so than now. It has been developed for agencies in a meaniful way. Demand Side Platforms for exchange trading, Bid optimisation platforms for search and API buying, these things have been designed to help us drive efficiencies and improve performance and we really see the opportunity now. It’s brutally competitive though and VivaKi have decided to work with the best partners and then develop tech that links all those partners up providing an interface to work with, this we see as the great opportunity, if you then add that to new streamlined teams and workflow, you have a heady mix that can deliver fantastic performance and service.
So where does that leave us? It leaves us with a lot to do and we need more people to take up the challenge and either drive the change through their organisations or give the people who have to do it a break so they can work through this transition. The end result though is the ship has sailed, the change is underway and we need to embrace it or become a dinosaur.