Our industry loves scale. Does size matter?

The first few years of my career at Zenith Media were defined by how big we were. In 1996 we were No1! We were the biggest and that meant so much to so many people. As the years went by Zenith slipped a few places, then we merged, but then so did everyone else and we all jostled for a top 3 spot. As the years have passed the focus became digital. How big was our digital team, how much spend and we all wanted to have more than i-level back then. As time has passed though there seems a little less emphasis on it. There is an acknowledgement that it is less about the scale and more what you do with it. (Heard that somewhere else?). I would say that today it is more about what Tier you are in rather than position. 

This blog is not about agencies only though, lets take a look at clients. As a client if you are big and have a large Ad budget you expect some benefits with that, more team, cheaper prices, preferential treatment, better ideas and so on. As above though, if you are a clever advertiser or work for a sexy brand you can get the same even with a small budget, so again its how you use it.

Even a VC has a view on this, today we had a talk with the very engaging Scott Ferber or Ad.com and Videology fame and his summary of how the VCs approach business is better to have a business growing with big revenues and less profit, than high profits and less growth, they also want more and bigger and need numbers, why? Well if they invest in 50 maybe a few will come off so again Scale scale scale.

What got me thinking was the effect of Real Time Bidding on our media landscape especially video and eventually Connected TV. Is scale so important? As a media owner of course you need audience but we are scaling niches not trying to buy big one off audiences in Real Time Bidding so that scale is less important to us in the single hit and if that is the case then does that mean we want to fight as hard for these one offs? It is something the ITVs are most scared of, as Scott talked about today ‘unbundling’ they would rather sell a huge 18-49 female audience to an advertiser than have it unbundled through data and technology and reveal that in fact that the big 18-49 female audience was actually only 40% and that actually it had a lot of men and people outside that age. Is that not an opportunity though? surely they have just maximised their commercials, get each audience commercialised to its max – why does that not work? Because of scale and the lack of its importance to the buy.

But then is that not the same for advertisers? How does a £100m advertiser benefit from Real Time Bidding vs a £5m advertiser? The answer is they may get some extra team, some extra inventory arrangements but on the whole they pay the same price as the shop on the corner, just like search and API. So with exchanges, API and Search you are basically saying that a 50m digital advertiser on 70% of their spend gets no price advantage – thats a different world, and not one auditors will like either. Who does that scare most? We actually have a business where there are many vested interests to keep things as they are, big advertisers will always want to be treated differently in the markets, big media companies will always want to have the highest rating programmes, the most unique users, the biggest single readership and so on, the problem is in display and eventually in video we may have unlimited supply, if we have unlimited supply then we can reach scale one impression at a time, social media has helped us get there with its vast audiences. Finally of course agencies also want the rankings and the positions so this is all going to take time but I believe we are now on a journey that ends with scale, size and clout being less important than purity and exactness around audience buying and delivering the right ad to the right audience. Whether it is DSPs, Media Ocean or the next tech around the corner it is just a matter of time before there are more questions asked of the scale players ( generally the least willing to move into the new world of RTB)around the purity of their audience sells they are delivering and whether it is valuable or diluted and over priced.

Now I will caveat all of that with size of organisation delivering all these solutions probably does have an impact, I work for a big organisation so scale of expertise and experience does matter to be able to do a proper job of delivering Addressable media. You need infrastructure, you need rigour and you need investment but once you get to what you are buying and who is buying it, it is a slightly more of a level playing field.

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