True, the TV trading market functions extraordinarily well for many advertisers. Commercial impacts have been rising continually and TV prices are getting cheaper in real terms.  If advertisers are unhappy with their rates, they are free to change thanks to the portability of terms and the welcoming arms of the agency deal. For now, it’s a buyer’s market.

The TV trading market also suits most, but not all agencies. The Big 4 buying Groups are successfully exploiting their scale to salami slice value to attract more than their fair share of new clients. The evidence from financial commentators is that size is also delivering margin improvements through greater economies of scale and in leveraging advantageous media owner terms of business. Little wonder then, that two of the UK’s most successful independent agencies – MediaVest Manchester and Brilliant – put up the white flag this year and sold out to larger groups.

And what about the broadcasters? ITV’s resurgence in the ratings war has coincided with an altogether softer position on the CRR trading mechanism. Privately however, all the broadcasters are acutely aware that the large agencies have become too big to fall out with, and fear being subverted from impact “retailer” to impact “wholesaler”. Most media owners are looking hard at their own customer data as one way out of commoditisation, or are tentatively exploring a different kind of client dialogue.

Another influential contingent are the “policemen” of the ecosystem, the media auditors. But according to many observers, auditors are increasingly taking a softer line towards agencies by adjusting their benchmarks to accommodate more and more discretionary premia. This means virtually all clients can enjoy superior value against the “norm”, while the same clients may be handing bonus payments over to agencies which scarcely deserve them. As clients are increasingly able to measure business outcomes as a result of media placement, auditors, encumbered by legacy processes, now find themselves increasingly in a quandary about how best to advise clients on setting appropriate and relevant performance targets.

As we enter a sustained period of economic stagnation, media budgets and media owner income are set to flat-line. With media agency executives expected to generate growth in revenues and income, all ends of the media value chain are going to come under immense pressure.

Although OFCOM have delivered a clean bill of health to TV trading, there remain major governance issues around transparency, market power, and performance measurement on the horizon. Here are a few questions industry stakeholders should be considering in 2012:

-    Is it appropriate for agencies to increasingly trade on their own account and act as retailer to the media owner wholesaler?

-    Is it appropriate that advertisers spending more money on TV advertising have little or no leverage in gaining a price advantage?

-    Is it right that agency performance targets are set and measured by the same people?

-    Should loyal clients be concerned that their media agency is holding back value to award to more promiscuous clients?

-    Is innovation in trading and performance metrics being suffocated by the measurements which suit the commercial interests of auditors and buyers?

-    Should there be a clearer separation between media planning decisions and implementation?

-    What is the industry’s plan to replace audience research currencies, as advertising in other media becomes increasingly served, targeted and tracked?

-    Ultimately, is the industry value chain really helping to create a sustainable market, encouraging healthy competition and innovation?

On the current industry trajectory, we risk heading towards a destination where media trading morphs into a wholesaler/retailer model,  where clients and media suppliers are both required to increase their funding to maintain their terms, while less and less able to determine whether their investments are being efficiently spent.

Meanwhile, outside the broadcast ecology and eager to find a seat at the table, are the technology companies. Google and Microsoft are unleashing next generation entertainment hubs into the living room; Sky and Virgin Media promise targeting nirvana with addressable advertising pilots; Twitter and Facebook are being integrated into the vast majority of new TV sets.

The health of the media industry depends upon vigorous competition, trading innovation, and real accountability. Maybe it is the tech companies which can offer a better route for the industry to take.

Top 10 digital developments for 2012

1. Facebook to IPO

Expected in Q2 2012 and set to be the biggest technology IPO on record, raising $10bn and valuing Facebook at $100bn. So what will this mean? Will the role of investors lead to less focus on further development, acquisition and user experience, in favour of clawing back instant returns? Or will it in fact stimulate it? My guess is that it will most certainly stimulate it. Facebook has learnt a valuable lesson from Friends Reunited who, by prioritising the commercial over the user, initiated its own downfall. For Facebook, we could see the number of users reach 1 billion in 2012 and they have not and will not compromise that loyalty with a disrupted, overly advertiser driven user experience. Expect a host of changes and for the better.

2. Tablets taking over..

Although we have seen significant growth in the tablet market in 2011, driven largely by Apple’s iPad (c73% of the tablet market) and a series of flash sales e.g. HP Touchpad / Blackberry Playbook, 2012 is set for further acceleration with the launch of the next generation iPad and a suite of lower cost options, most notably Amazon’s recently launched Kindle Fire which is due to launch in the UK in Q1 2012 and expected to reach 15% of the overall tablet market.

Research conducted by QuickPlay Media revealed 51% of UK respondents had watched TV or a film on a tablet or smart mobile device. Coupled with the growth in simultaneous media usage, it presents a rich and vibrant environment in which to reach and engage consumers.

3. Connected TV

Recent weeks suggest exciting times ahead for the connected TV market in 2012. With Apple set to launch connected TV’s in 2012, Google’s Eric Schmidt predicting the majority of TV sets will include Google TV by the summer of 2012 and Microsoft’s recent roll out of the new Xbox Live experience, there is plenty room for optimism. Although there has been growth in 2011, it has been impaired by a combination of poor usability (Google TV a case in point) and a lack of clarity among marketers on how to approach this. A recent IAB report highlighted the appetite, with 85% interested in advertising opportunities but just 12% with a strategy in place.

Cross industry initiatives and new applications, which help marketers to make more informed and data driven decisions will help to address this. Take the recently launched social TV application Zeebox, which provides a platform to both observe and engage with consumers. From a measurement perspective, it may not be too long until we start referring to ‘social ratings’ alongside the more standard TVR’s.

4. Rise of m-commerce

m-commerce is widely expected to reach tipping point in 2012 following another year of exponential growth. Continued growth in smart phone/tablet adoption, changes in behaviour, i.e. more using mobile devices to research and make purchases and wider availability of transactional mobile environments, are the main contributing factors. Underlining this, eMarketer predicts a 73% increase in m-commerce sales ($11.6bn) in the US in 2012.

For marketers looking within, the challenge is to focus on the execution so that adoption is not stunted by poor (or lack of) functionality. In the UK, in 2011 QuBit estimated the loss of value to retailers to be in the region of £4bn, all due to poorly optimised mobile sites. It really is time to act, before it is too late.

5. SoLoMo…Po

Another year, another acronym! Let’s start with ‘SoLoMo’ –‘social’ ‘local’ ‘mobile’. Think Groupon, Foursquare, Gowalla etc. Following a somewhat precarious time for the category (modest results and delayed IPO by Groupon, and Facebook ditching their deals service), it may seem curious to feature this but it is the execution which has been poor, rather than consumer appetite, and this is likely to change in 2012.

The missing ingredient has been ‘personalisation’ (the ‘po’) which is something Facebook’s recent acquisition of Gowalla may set out to address. Combined with that, Google are set to launch their own assault on the market with a mobile check-in deals feature as part of Google+. What both of these have in common is a rich layer of social and demographic data which can be used to power the deal. From ‘we thought you would be interested in this’ to ‘your friends’ friend bought this’ presents a very exciting prospect indeed. 

6. ‘Crowdbuying’

Crowdsourcing was featured last year in my predictions on the back of a number of high profile campaigns in 2010. 2011 may have failed to live up to those expectations in the same form but there are nevertheless exciting developments on a slightly different tact. If crowdsourcing is fundamentally about ‘sourcing tasks through a community’, as opposed to specific individuals, you only have to look at the group buying and daily deals services, such as Groupon, Living Social and eBay to see the essence of crowdsourcing at play. Major retail brands such as Gap and Superdry are seemingly using these services to ‘crowdsource’ which products consumers are most likely to buy. Far reaching, highly effective and all in real time.

7. Rise of automation and real time

The transformation in online display media buying towards greater automation and data driven decision making is set to accelerate in 2012. The infrastructure and supporting talent has been established and both publishers and clients will start to take greater strides towards wider adoption of this technique. While previously supply and the quality of that supply has been a problem, this is set to change with more adoption (by content owners) and richer formats including rich media, video and mobile. Take up by marketers will increase but many will choose to tread carefully amid concerns over the quality of inventory, possible abuse of data and perhaps more importantly, the notion of agencies ‘trading on their own account’ and the accompanying lack of transparency.

For 2012, we estimate the automated buying market in the UK will reach 20% of the display market (to £200m), compared with an estimated 6% in 2011.

8. Paid social to continue to grow

Wider adoption, improved access to inventory (through self serve platforms and API’s), better analytics and a growing diversity of options is set to stimulate investment in paid social media in 2012. Aside from a post-IPO Facebook, watch out also for Twitter who, following the development of their UK operations, including the recent appointment of their first UK Sales Director (previous head of YouTube, Bruce Daisley), they will actively be seeking to grow their position and offering in the market.

Keep an eye out for social search which is set to become more advanced in 2012. The specialist social search engines such as Quora will continue to grow but importantly (and long overdue), we should see improved search functionality across Twitter and Facebook. Also, the widely rumoured launch of Microsoft’s social search service Socl.com (no release date as yet).

 9. ePrivacy – act before it is too late

The EU Directive on the use of cookies was implemented in May 2011, giving website owners until May 2012 to comply with the regulations. This may sound like a long time but it does involve rather significant implementational challenges and brands need to get on board sooner rather than later. There remains a worrying lack of clarity over what is required and the potential implications, but with reports suggesting penalties for not complying of up to “5% of the violator’s annual worldwide revenue”, the time to act is now. The quandary for brands is how to react so that they strike the right balance between regulatory compliance and usability.

10. Big data

Although the notion of ‘big data’ is not particularly new (in IT circles), in the marketing area it is widely being perceived as the ‘next frontier’, the movement from ‘fluff to science.’ So what does it mean? Essentially unlocking the intrinsic value stored within multiple sets of complex ‘big’ data. By doing this, the data becomes more accessible, more identifiable and ultimately more actionable. Data management platforms, e.g. Turn and business intelligence tools e.g. Tableau, MediaSense’s SIGNAL will help to facilitate this process and in turn lead to greater productivity and improved marketing effectiveness.

Exciting times ahead then!

After receiving more than 100 nominations for this year’s 30 Under 30 list the Media Week editorial team has compiled the 30 media professionals who best matched the criteria asked for. The list is a good representation of media agencies and owners with a sprinkling of clients and provides an insight into the future of the industry with many of the nominations exceeding what was expected of them for their age, while also demonstrating great entrepreneurial spirit.

The 30 who have made the list were chosen after demonstrating that they best met the following criteria:

•Greatest achievement in the media arena
•An example of problem solving for one of their clients
•What they hope to achieve in their jobs by the end of the year
•What contribution they have made to the media industry

This article originally appeared on www.mediaweek.co.uk on the 14th September 2011.

To see the article in full click here

Called Media Minds, our Group is a forum for expressing, exchanging and commenting on current and emerging issues that affect the global media industry.

Each quarter we publish a summary of the key topics that got our group talking the most

Click on this link to see a full summary of these discussions.

We hope you find what our group had to say interesting.

A report by consultancy MediaSense has identified that brand owners will increasingly use platforms to buy media direct from media inventory owners, and brands are already taking a greater interest in and more control of where their media money goes. Last year, Anheuser-Busch and PepsiCo, which Kantar estimates have a combined media budget of $1.15bn, pooled their US buying. Anheuser-Busch, now part of AB InBev, has been experimenting with direct buying since the Eighties.

Marketers are already buying online inventory direct via ad exchanges owned by Google, Yahoo! and Microsoft, but this could go much further to include television and other offline media, according to Ottokar Rosenberger, UK country manager for online dating site eHarmony. “I can see a future where ad performance data flows directly between media owners and brands. Set-top boxes in every home will help that transformation,” he says (see Viewpoints:The Brand Owners, below).

Angus Lovitt, marketing director of gaming site King.com, claims that all media will soon be traded in this way. “The media channels are going to fall like dominos. Whether it be online, TV or outdoor, everything is going digital and it is all going to be bought and traded in this manner,” he says.

In a market worth $450bn (£280bn) worldwide, about 80% of media buying is still done through an intermediary, according to consultancy MediaSense. But the role of these organisations is being transformed by developments on the internet.

Advertisers can bid for space in real time based on the cost of each impression, setting a market rate for every eyeball on an ad.

In turn, this makes the traditional process of negotiating prices obsolete and diminishes one of the crucial selling points of media agencies – securing discounted prices from media owners for their clients.

It also means payment models can be established on an ad performance basis rather than by commission, which media agencies have historically taken on clients’ spending. While current negotiating procedures remain in place, brands might not initially get as much bang for their buck as they would using the buying power of agency groups, but if advertisers start buying direct they might feel their communications are more platform-neutral.

Mark Creighton, chief operating officer of media agency Mindshare, which is part of WPP-owned Group M, notes that real-time bidding is already taking place for offline media. “There is evidence that it is starting to impact on local and regional TV and radio in the US. That airtime is being bought in an automated fashion in auctions,” he says.

The UK is expected to follow suit in the coming year, and media auditor Ebiquity – formerly Billetts – has already seen media agencies recommend to clients that all of their media be bought in this way, according to head of digital practice Federica Aperio.

And while the big agency groups are starting to set up trading desks to buy media for clients through automated auctions, brands can cut out the middleman and bid themselves.

Some of the larger US advertisers already recognise this, claims Aperio. “There are already examples in the US where brands have taken it on themselves to create and manage their own trading technology. This puts the advertiser firmly in control and closes the gap between the buyer and seller.”

Many brand owners have been using online channels to buy media direct from media owners for some time. Even the smallest company or sole trader can easily run a Google AdWords account to buy paid search advertising, or purchase display ads through Facebook’s self-service platform.

Santander director of brand and communications Keith Moor says financial services brands often buy media direct online, especially when they appear on comparison websites. Moor says that where Santander has placed advertising directly with media owners, it is generally in the online arena (see Viewpoints:The Brand Owners, above).

Lovitt at King.com has taken all buying of online display advertising in house, and says that online gaming is another sector where buying media direct is common practice because media agencies create an extra layer of complexity.

Auctions make the buying power previously used as a negotiating tool by media agencies virtually irrelevant, says King. “Agencies cannot get us the best prices any more because we are part of an auction model. The new paradigm is about being smarter, not being bigger.”

Not all marketers forecast such a fundamental shake-up. Lovefilm chief marketing officer Simon Morris believes that until automated buying tops the agenda in offline media, there remain barriers to brands going direct to media owners. “For the foreseeable future, buying power is going to be important, certainly in TV,” he says.

Media agencies have traditionally held their strongest cards at the negotiating table. Through agency and umbrella deals, where they buy from a media owner on behalf of many or all of their clients at once, agencies can get lower prices than would be attainable by an individual brand.

But this can mean some platforms are recommended to clients because the agencies have to spend a certain amount with a media owner to get the discount, and as a result their advice is not always in the client’s best interests. One senior marketer told Marketing Week that she was surprised when her agency recommended Channel 4 and ITV because she had explicitly said that her budget would not stretch that far.

Santander’s Moor says that with TV there is always a trade-off between quality and price. “If I want to access better-quality programmes and cut out some of the crap, I am going to take a hit on price.”

Procter & Gamble has previously negotiated its TV deals in house though the actual buying has generally been done by agencies. In 2009, P&G took its media negotiations in China away from its local agency Starcom Guangzhou.

But perhaps the most prominent brand to have circumvented agencies entirely in its offline media buying is brewer Anheuser-Busch. The tie-up with PepsiCo last year met with scepticism and resistance from media agencies and owners alike, not least because their combined spend was less than 1% of the US market and they had much less buying power than a large media agency network.

Even if automated auctions do take over the offline media buying process, reducing the importance of negotiations, there is still likely to be an important role for agencies in planning and evaluating campaigns. Omnicom MediaGroup chief trading and accountability officer Johan Boserup says: “Any advertiser can buy raw media exposure from a media owner. But optimising the buy towards the key performance indicators of their business is very difficult without the data and expertise of the specialist media agencies.”

Aligning media buying with business objectives is crucial, given that automated bidding means media will be bought according to cost models more directly tied to the business impacts of campaigns. To increase their revenues and profits, as opposed to business volume, brands will need to understand the value of the customers that their media activity delivers. This should involve measuring the impact of individual media owners’ inventory, not just the wider categories into which it falls.

If brands are to achieve this, the only alternative to taking agency advice is to invest in the necessary expertise and technology to understand ad performance data. King.com’s Lovitt has done this by poaching talent from media agencies, but says the scope for brands to do it across the board is limited by the number of specialists in the field.

Yahoo! senior director of direct response Nick Hugh says Capital One is another brand known for doing much of its media buying and planning itself, but only because the financial services provider has spent a lot of money establishing a complex data analytics division (see Viewpoints: The Media Owners, below).

Lovefilm’s Morris says, however, that brands’ more immediate priorities may make them reluctant to overhaul their internal organisation. Most marketers are more likely to focus on the next month’s sales figures than on what shape their teams and reporting structures might have in one or two years’ time, he says.

Agency networks will continue to have the advantage in this respect, says Hugh at Yahoo! “The big agencies have economies of scale from a learning, data and technology perspective. They have more data to drive return for clients.”

Group M chief executive Irwin Gotlieb agrees that data will remain a selling point for media agencies. “The more we do in this space the more data we have access to. We have a diverse portfolio of clients, which means we have the scale of trading, the scale of operations, the broad insight and can efficiently acquire the technologies that are necessary.” (see Viewpoints: The Media Owners, below)

Andy Pearch, director of the MediaSense consultancy, sees the agency role as making sense of the information coming from either end of the supply chain. “Ultimately brands must own and take responsibility for their performance data, media owners will increasingly mine and sell their consumers’ data, while the agencies sit in between, managing and optimising these data sets,” he says.

The possession of data collated from numerous clients and media platforms, and the skills and technology for analysing it, could also allow media agencies to develop an emerging role as brokers of ad inventory. Understanding how brands can best target their desired audiences, agencies will be able to buy space from media owners and resell it at a premium to the advertiser that considers the specific opportunity most valuable.

But media owners are also becoming more powerful. Companies such as Yahoo!, Google and Microsoft now own content-driven sites and the ad networks through which online ads are traded. As such, they are equipped with their own ad inventory, as well as the audience data and auction technology that allow them to price and sell ad space from other media owners.

While brands and media owners will only have access to data on their own ads and platforms, the boundaries between the three sides of the triangle are blurring.

Media owners, with a unique understanding of their own audiences across an ever more diverse portfolio of platforms, are well placed to provide package deals direct to brands. Brands, meanwhile, are moving more into content creation and are acquiring knowledge of how audiences consume media, while loyalty card schemes mean they can assess the impact of media activity on individual consumers’ purchasing habits.

Agency groups, too, have taken steps to increase their ownership of content. WPP recently acquired a minority stake in youth media brand Vice Media, while Interpublic has held a stake in Facebook since 2006, which is now believed to be worth $200m to $300m, and it committed to help sell the ad space – but not exclusively to its own clients. However, when Microsoft started selling Facebook’s banner ads in 2006, the deal became effectively redundant.

As agency groups become more involved with media platforms, they will need to avoid the appearance of feathering their own nests. Pearch says: “There have always been conflicts of interest where an intermediary acts as buying agent.
Technology is bringing about massive opportunities for brands, but these advances also mean brands will need to ensure media agencies provide neutrality in planning, transparency in trading and control of brands’ data.”

If media agencies’ expertise is to be trusted, brands must be confident that their choice of media is only being determined by their business objectives, or marketers will be quick to take control of their own media buying.

Viewpoints: The Brand Owners

Ottokar Rosenberger, UK country manager, eHarmony

How we deal with data will dictate how this is going to play out. I can see a future where ad performance data flows directly between media owners and brands, and we are going to move to a model where we can take real-time bidding for ad space into mass media.

Set-top boxes in every home will lead to models that are built around performance-related pay. Some people think it might happen through agency-run trading platforms, but it might actually be direct deals between brands and media owners.

That somewhat diminishes the role of media agencies in negotiating deals. They might keep it to some extent because they are brokers, and we will need brokers. It could lead to direct relationships, with the media owner, the brand owner and the media agency all sitting in one room.

The media agency will be more concerned with the integration of media channels, and what that means for clients. The role of looking across your media mix and advising you where to put your money and how that impacts on the consumer is still an important role that media agencies have to play.

Keith Moor, director of brand and communications, Santander

Brands now do more direct deals with media owners than they used to. This has happened because of the speed with which online media has developed. It is easier to understand the trading model with some online opportunities. For example, there are a lot more cost-per-sale deals, and therefore your exposure is limited to the value you receive when the deal is delivered. It is not as easy to do those deals in other media where you do not get as many direct effects from a promotion.

However, brands might negotiate a deal with a TV supplier for a sponsorship property, for example, but they will still do their deal for spot airtime through an agency. We do deal directly with some media owners, and they tend to be more in the online space than the offline space.

Media agencies are trying to change their model. They have been a lot more progressive than creative agencies have been because their margins were compressed more quickly. Now they make sure a proportion of their fee is buying expertise and consultancy, not just grunt. We use Carat, and they used to be known as gorillas with calculators. They do get us the rates, but now we also buy people and expertise.

Viewpoints: The Media Owners

Ian Clark, former director of special projects, News International

In the past, media owners were not focused enough on their clients’ sales, but there are more digital opportunities alongside newspapers, magazines and TV where they can offer portfolio sales. It is easier for them to do that with the depth of knowledge they have of their own ad inventory than it would be for an agency.

Clients are not as knowledgeable alone as they could be with an agency riding shotgun alongside them. They are often spread too thinly to provide enough time to go through all the performance data, and to ensure they set out the right key performance indicators and follow them up. That is where the agency can help. This is not a one-size-fits-all model. Clients with a strong sense of what they are after and how they can measure that are most likely to take advantage of that relationship.

Agencies need to maintain media-neutrality and I think it is only a positive thing when they can connect up with media owners and understand more about what that media owner could specifically do for them and their clients. Increasingly, media agencies are engaging with media owners at an earlier stage than they ever would have done previously and getting to them at the planning phase.

Nick Hugh, senior director of direct response (EMEA), Yahoo!

Yahoo! bought the Right Media Exchange, an open platform designed to enable buying and selling of online ads in real-time auctions, four years ago. The big five agency holding groups have all created their own trading desks to buy in this way.
The vast majority of display advertising in Europe is bought through agencies.

There are one or two advertisers who like to go direct, for example Capital One, but that is because behind the scenes they have an incredibly advanced analytics team. In the US, where the market is 12 to 18 months ahead, some brands are certainly going direct to the media owners because they have the technology and they have hired the people.

Yahoo!’s intention is to be at the centre of the ecosystem, both from the user and advertiser perspective. The content we provide through our websites is important to the user side and tools like the Right Media Exchange are important to the advertiser side. We will always own the ad performance data on our own sites ourselves. From the agency side, they have their advertisers’ data. It is those two combined that drives value for the advertiser.

Viewpoints: The media agencies

Irwin Gotlieb, chief executive, Group M

The idea that evolution will bring us a scenario where brands buy their own media directly from media owners is very silly. I do not have a single client that I am aware of that is looking to go into that business. It takes massive investment in talent, technology, systems and analytics. But it is not just the investment, clients are not in that business. I’m not about to start manufacturing snack food products [as a client might].

Today we have to trade in our traditional area of expertise in paid media but also earned and owned media. Earned is everything from the social sphere where we need to listen to the conversations and participate in them as appropriate. Owned media is content that we create that portrays the brand attributes that we want to promote. But on the paid media side the models are shifting quite dramatically as well. Now we can define our audiences and targets much more precisely and that will become more pronounced because we will have actual purchase patterns, behaviour patterns and therefore patterns of intent.

Brands have access to limited amounts of data and certainly not the media consumption side of it. Nobody has access to all the data, but the challenge over the next few years is for someone like us to join the various data streams and form them together alongside the right analytics, with the appropriate targeting and de-duplication work across the audiences.

As we refine our target definitions, the ability to segment the market and the need to customise the message increases. That greater segmentation and the communication’s design almost goes hand in hand with the target definition. The media agency will be a larger part of developing the creative briefs, just because of the analytics and insights it brings.

Mike Cooper, global chief executive, PHD Worldwide

Technology has a habit of fundamentally reorganising industries. In the next 12 months, we are likely to see the emergence of real-time bidding for auctioned ad space, in the closed environment of ad exchanges. These will encourage more risk-averse media owners and more premium inventory into the real-time bidding system, which should lead to rich media, video and mobile being traded through exchanges. On top of this, Google is now starting to feed YouTube video inventory into its real-time exchange.

An increasing amount of media spend is going to be traded in a bid-based, more automated way, which means that a greater percentage of the media pie will become easier for advertisers to buy direct. Some clients will inevitably be tempted to try. However, with this there will be a greater need for understanding and integrating all of these channels.

Media agencies bring a more quantitative mindset to the party and also they can bring in an understanding of what opportunities exist in the form of channels, technologies and potential partnerships. Not to have media agency or media planning input in the planning stage would be a little odd.

To capture the indirect effects of marketing investment will in most cases require econometric modelling, factoring in all paid-for and owned investments and the resulting earned effects. Reporting right through to financial contribution is the ultimate measure.

This article was written by Michael Barnett and appeared in Markeing Week on 28/4/2011. To view the article online, click here

In one particular area however there is no doubt, DSPs and SSPs (Demand and Supply Side Platforms) are set to revolutionise the media planning and buying industry, with RTB (Real Time Bidding) projected to take up to 50 percent of the US market’s online display and video inventory by 2012, with Europe and Asia not far behind.

For decades, media planners and buyers have constructed and negotiated schedules around demographic and psychographic proxies for real behaviour, and then bought the media for as low a CPT as possible with one eye on quality. Now they can focus on consumers in relevant segments and follow them around the web with increased precision, serving appropriate content at the right time, as well as honing in on those consumers who exhibit particular behaviours and/or who can be identified in very specific environments i.e. behavioural and contextual targeting.

This of course will all now be subject to EU privacy legislation but putting that aside for the moment, let’s fast-forward to a media marketplace not so far away and look at how brand owners will be affected, and let’s start with the positives:

- There will be a shift to outcome-based trading whereby media owner inventory will be priced according to its direct value contribution to customer engagement and/or sales. Brand owners will therefore be increasing investing in activities that directly and measurably impact sales and/or other KPIs.

- Data analytics providers will encroach upon the traditional market research space, resulting in proxy metrics and representative panels being increasingly replaced by ‘end game KPIs and consumers’. Brand owners will therefore be able to bring the traditionally disparate disciplines of performance management and decision making much closer together.

- There will be increased connectivity between retail sales data and media platforms, enabling brand owner marketing activities to be more responsive to consumer behaviour (and potentially retailer demands!).

- Brand owners will increasing use platforms to buy media directly from media inventory owners, the early adopters of which are likely to be those involved in performance-based activities who will benefit from increased control of a critical sales channel.

- The relationship between brand owners and their media agencies will change significantly. Some will choose to ‘down-grade’ their relationships to one of pure trading supplier, whereas others will choose to ‘up-grade’ the relationship to a strategic partnership level.

Either way, relationships with media agencies will need to be much better managed than they are currently: no longer will media be about delivering simple CPMs and indirect measures such as reach and frequency, but will be more directly linked to business impact i.e. sales and engagement, measured by CPA and CPE.
Even more importantly however will be the change in the status of the media agencies, and the consequent change in their relationships with both brand owners and media inventory owners.

This last point is crucial because 80% plus of $450billion media market is planned and bought through intermediaries, and for most brand owners that means media agencies.

The largest media agency grouping is WPP’s Group M. Irwin Gotlieb, Group M’s Global CEO views were reported in a Bloomberg Businessweek interview back in February, 2008 “As far as Gotlieb is concerned, the rules have changed. In a world where ads can be customized to the individual and every click and ad view measured, he says, advertisers and media companies alike will gladly pay for his quantitative expertise. In five to seven years, he predicts, he…will be an arbitrageur, buying ads in bulk, slicing them up for niche audiences, and reselling them at a premium. “Then,” says Gotlieb, “we don’t have to be transparent.”

If this is broking, maybe we have something to learn from the City’s Big Bang “…when London’s financial services industry made three giant changes to its organisation. One was to end the century-old distinction on the London Stock Exchange between jobbers and brokers: jobbers dealt as principals making markets in shares, while brokers were only allowed to trade on behalf of clients…All these old ways had their purposes. The jobber-broker split had been there to stop securities houses offloading shares, bought at the wrong price, on to their unsuspecting clients.”(Hamish McRae, The Independent, 15.10.06)

If inventory owners are the ‘jobbers’ of the media industry and the ‘brokers’ are the media agencies, and they are increasingly going to become one, does that then mean traditional media agencies as we know them today will split into trading and advisory (ala investment banks), and brand owners will buy inventory across various trading platforms and sources, taking best advice from wherever that may reside?

Too far-fetched? In our view, change along these lines is a matter of when, not if, and those brand owners which embrace and prepare for this technology-driven change will gain better media performance and business rewards. These brand owners will adopt a much more proactive approach to media management, under-pinned by more effective cost-to-service ratios, driven by remuneration schemes with payment linked to real business results rather than intermediated proxies. For all the potential upsides and opportunities, there are of course challenges and risks:

- The contractual relationship between media agency, media owner (who could be the same entity) and brand owner will have to change, as will remuneration policies.

- Transparency related issues will create ‘inefficiencies’ in the value chain which will need to be addressed using new processes.

- Brand owners will have to understand where resistance of self-interested parties dressed as protection from e.g. JICs, media owners, media auditors and others, is ultimately against their own long-term interest.

- Migration from traditional intermediated metrics to new media currencies will not happen over-night, therefore there is a keen requirement to ensure value doesn’t seep between the ‘transitional cracks’.

- As data becomes increasingly valuable, there will be a need for new approaches to data ownership, portability, hosting and adserving.

- Many brand owners will find they become ‘accidental analysts’ which could result in resource overload and information paralysis if data is not appropriately aggregated, filtered and displayed.

From MediaSense’s perspective, those Brand Owners that plan and act for change will be the winners. It will entail hard yards and open minds but those who do not embrace this change could unsuspectingly end up at the wrong end of offloaded media, bought at the wrong price!

This article appeared on www.mediaweek.co.uk on 4/4/2011. To view the article click here.

• This area is not their greatest concern. Brand owners are still building their digital competencies, cross-channel measurement and paid/owned/earned strategies
• Marketers will require evidence that automated platforms can improve effectiveness as well as deliver efficiency/more eyeballs
• They will be concerned that growth in automation may stifle risk and creativity
• Procurement will require evidence that automated platforms ensure visibility of the value chain, and may want a seat at this table
• They will expect to see efficiencies in agency fees and productivity gains

To see copies of the presentations from the day click here.

BT, Guardian Media Group, Associated Newspapers, Trinity Mirror, Northcliffe Media and Telgraph Media Group have formed a “media alliance” opposing the proposed merger on media plurality grounds.

A spokesman says the alliance “deeply regrets” the fact that culture secretary Jeremy Hunt looks set to clear the deal and that its proposed undertaking to spin off Sky News to address concerns about media plurality is “pure window dressing”.

He adds: “It has been well-documented by former Murdoch editors that arrangements of this kind, including those put in place to protect the independence of the Sunday Times and Times, have proved wholly ineffective. Smoke and mirrors will not protect media plurality in the UK from the overweening influence of News Corporation.

“In addition, the undertaking does nothing to address the profound concerns that the takeover would give News Corporation greater power to restrict or distort competition through cross-promotion, bundling, banning rivals’ advertisements and distorting the advertising market with cross-platform deals.”

The alliance says it will contest the proposal and is considering taking legal action against NewsCorp.
However, with the culture secretary stating he does not intend to refer the bid to the Competition Commission, the merger looks likely to go ahead.

Culture secretary Jeremy Hunt, speaking to the BBC, said: “I myself wanted to address the concentration of media ownership. These are legally binding, legally forcing undertakings.”

Those undertakings include that Sky News must have an independent chairman. Currently James Murdoch is the non-executive chairman and will not be able to continue his role.

Hunt adds the undertakings also include that adherence to the broadcasting code is part of the articles of the assocation of the company.

He adds: “That means impartiality, which is one of the things people like about Sky News at the moment, will be in the articles of association.”

Formal oppositions need to be raised by 21 March, when the public consultation period ends.
Andy Pearch, co-director at Media Sense says the UK media sector will be “transformed” should the merger go ahead.
He says: “A company claiming the biggest national newspapers, the most powerful broadcasting provider and its broadband services as well, serving all the key media communications channels, is transformational.”

Bob Wootton, director of media and advertising and advertiser body ISBA, says advertisers are already speculating how NewsCorp’s renewed media power could affect the marketing industry should the deal be cleared.

He says: “On one level, advertisers are saying the merger is not a problem because an integrated media owner could be more consistent to deal with. On the other hand, others are concerned NewsCorp could become awfully big and potentially nasty.”

But Wootton adds it is too early to speculate on today’s announcement alone.
“Today’s news is just a milestone on the way to progress,” he says.

This article was written by Lara O’Reilly and appeared in Markeing Week on 10/3/2011. To view the article online, click here.