Do you hear that sound? If you listen closely, you can hear dry erasers swiping whiteboards in conference rooms all over the globe. In each one, a digital tech company’s CEO and CMO are trying to push their ‘unique’ proposition to the advertising landscape by condensing its title into a three-letter acronym.
It seems to be a rule within our industry that no tech can take off without a flashy acronym accompanying it. Why is that? Because as digital advertising grows more complex, more people need to be able to sound intelligent when speaking about the operationally driven marketplace that’s evolving. Being able to speak intelligently and truly understanding how the marketplace works however are two different things. If you are a leader in your company, are you ready for the operationally driven marketplace?
What Does an Operationally-Driven Marketplace Look Like?
Countless studies have shown that people are consuming more and more media through the web and through mobile devices and with that comes a sense of entitlement amongst digital advertising professionals that we deserve our share of the brand advertising spend. There are certainly a large number of companies that have been investing as such based on this potential.
But the revenue will not be coming our way if we as a media segment don’t become easier to work with. According to Google and Nextmark, managing display ad campaigns can take up between 8% to 28% of the budget in overheads, compared to 2% for TV. Combine this with digital’s inability to effectively forecast its impact on driving ROI for marketers and marketers are going to stick with the ‘sure thing’ of traditional media.
Therefore, despite our best efforts as an industry to sell digital based on what we feel we deserve, our inefficiency and unpredictability prevent advertising spend coming our way at scale. Marketers want digital, but they can’t be sold it in its current form. What emerges is an operationally-driven marketplace, where the focus is no longer on selling the concept but operational efficiency – create the proper piping and the ad spend will follow.
In this operationally-driven marketplace, Sales doesn’t go away. For brands, agencies and publishers, “never been done before” ad executions are extremely valuable and need Sales to make it happen. Relax, the greatest invention in the history of sales – the three martini lunch is going nowhere.
But when it comes to traditional digital sales of standard ad placements, the sale must change from specific campaigns to the connecting of systems and the value that any particular party brings to that connection. Each party in the transaction must know before the systems are connected what they have, how valuable it is and how much they are willing to buy or sell it for.
In this new marketplace, the right impression at the right time in front of the right person must happen faster than the speed of sale.
What Constitutes Ready in This Day and Age?
Ready in digital advertising does not mean knowing what is going to happen. Ready means understanding what you control and what you don’t. Ready means understanding what business you are actually in. Ready means being organizationally configured to seize opportunities and flexible enough to adjust when conditions change. Ready means being operationally efficient. Ready means coming together as industry leaders at events like OPS London and talking about innovation and best practices in making our companies run.
For publishers this means coming to grips with the notion that not every impression is valuable. Impressions are not your children: don’t treat them the same and cut them off if they are not producing. Publishers who are ready are learning what their data and impressions are worth through analytics not by what they hope it’s worth. These publishers are talking the new language of the buy side and proactively helping drive the conversation away from lower CPMs but to higher ROI for all involved.
I can’t say what being ready means for an agency other than it’s key that they find the right balance of embracing the operational efficiency of automation while still providing their own secret sauce. The more an agency acts like a network, the easier they can be replaced by someone cheaper and faster. The more an agency brings clients insight and the ability to act on that insight, the better positioned they will be. I’m sure Richard Wheaton, MD at Neo@Ogilvy, will have something to say about this in his keynote presentation May 15th.
For others in the space – for lack of a better term I’ll call them “intermediaries” – readiness will be measured by how well they play with others while creating unique value. Unfortunately much of what is considered valuable today can be duplicated. Therefore, readiness may be about staying a few moves ahead of the competition until the dust settles.
Across the board, with the exception of Google and perhaps some other larger players, readiness for an operationally driven marketplace means an uncertain future. In the past, hiring more sales people could solve problems. As we shift further and further toward automation, the focus will shift to operational excellence.
Your digital leader probably already works for you. That leader is probably located in the backroom in operations. It’s someone who can navigate the business and the technical side and sees opportunity in market changes. Unfortunately these people are not being groomed properly. In the US, exceptional operations people have seen their roles grow from managers to directors to VPs to CROs. In the European market it’s time to recognize the assets you already have that aren’t being prepared to meet their full potential.
Automate or outsource, but whatever you do, get rid of ‘trafficking.’ Manual processes have no place in a company ready for an operationally driven marketplace. Make them go away. Note this doesn’t equate to getting rid of operations staff. Those same people are needed in new ways – helping connect systems, analyzing data and creating new products – the things you’ve always wanted these people to do, but to date have been unable to.
Partner with people smarter than you. Much has been written about the advent of the “Math Men” – the new advertising people who are more about statistics than creativity. The fact is, the world needs more math people and there aren’t enough to go around. My suggestion is to partner with companies who can provide these math-types and demand from your providers solutions that allow non-mathematicians to discover insights. Internally, work to develop stats minded people into positions to help drive the way.
Think outside of display and beyond the PC. Mobile devices are changing the way we communicate, the way we transact and the way we message. Mobile companies are not tethered by old business models and so we should learn from people like Jonny Shaw, Master Chieftain at Naked Play and Russell Buckley, Chief Marketing Officer, Eagle Eye Solutions who are speaking at OPS London about new concepts for us to incorporate into our business plans as we plan for the future.
Work the problem. Now is not the time to sit on the sidelines. If the extent of your data and remnant strategy is that you receive a check at the end of the month, the only thing certain is you are not making as much money as you could be and you have no idea how much money you are losing. Test. Fail. Learn. Repeat.
Come together and focus on the real enemy to our industry: inefficiency. The battles that exist between agencies and publishers and networks and everyone else in between are struggles for revenue that in the grand scheme of things is too small for our industry to thrive. As leaders of companies in digital advertising, let’s solve problems we all share in bringing more advertising budgets our way.
I look forward to a day we aren’t competing for scraps but for serious money – and I know I’m not alone. Join us believers at OPS London on May 15th to discuss how we earn what we deserve.
Get the latest on all things premium at OPS London, which will bring EU digital advertising leaders and ops professionals together to discuss and develop best practices for operational excellence. Register today for OPS London, which will be held May 15, 2012.