Mind the Media Fragmentation Gap
ADOTAS EXCLUSIVE — Media buyers and sellers continue to struggle with how to bridge the media fragmentation gap that has disrupted the traditional ad buying model. Before we dive into the solution, we must first ask: Can we quantify media fragmentation?
• Nielsen’s “Television Audience 2007″ report indicates that the number of channels the average TV viewing American household could access grew over 530% from 1985 to 2007 (from 18.8 channels to 118.6 channels).
• Blog tracking authority Technorati reports that there are over 175,000 new blogs created every day.
• A July 2008 Netcraft Web Server Survey indicates there are over 175 million unique websites and that the web is growing by over 3 million sites a month.
This explosion of media options has left the media buying and selling industry in a conundrum over how to efficiently deal with an ever-increasing number of media options. Buyers can no longer be expected to have every media outlet and its related data on the tip of their tongue. Conversely, sellers who represent more and more fragmented audiences are unable to stay in front of all the relevant buyers. What to do?
In the online space the industry has attempted to address this situation with the advent and meteoric rise of ad networks. For buyers, ad networks aggregate small audiences and deliver volumes of impressions cheaply and with a single buy. For sellers, ad networks aggregate the buyers and provide a simple method for moving primarily remnant inventory.
The network approach has been a moderately effective short-term band-aid, however the fact remains that ad networks are not addressing the root problem – making targeted media buys efficient in a highly-fragmented media universe.
For media buyers, ad networks simply take the place of dealing with individual sites. Most media buyers will tell you that it would be more effective to find, evaluate, negotiate and buy each individual site separately so that it could be measured independently. However, the tools they are using today are not efficient enough to make this a reasonable approach. Additionally, since networks ultimately manage ad placements, media buyers also have little to no control over the association of their brand with particular content.
Publishers have a similar, yet inverse, view of ad networks. Large publishers use ad networks as a way to dispose of unsold remnant inventory. Smaller publishers who have limited or no inside sales capabilities turn to networks for access to an aggregated buying audience. Either way, publishers are using ad networks for the same fundamental reason – to address inefficiencies in the media selling process as a result of a highly-fragmented market.
Again, this has been a moderately effective short-term band-aid for publishers; however it comes at a significant price. A recent IAB/Bain & Company study on the publishing industry reveals that publishers selling inventory through ad networks are making sales at an average 90 percent discount versus direct sales rates. As the IAB/Bain study concludes, this is short term thinking and not sustainable. Quoting directly from the study recommendations: Publishers must become more disciplined in managing ad inventory and deploy improved methods and tools to enhance yield management.
Media Buyers and Sellers Bridge the Gap
Now that it’s clear ad networks have not successfully bridged the media fragmentation gap, what’s the next step for media buyers and sellers? How do we find our way back to a workable business model and market conditions that benefit both parties? The good news is that new tools and improved methods have been developed to help both agencies and publishers streamline the media buying process. Let’s first take a look at the agency side of the equation.
Instead of looking solely to ad networks for improving the efficiency of the media buying process, advertisers and agencies also need to look at their internal processes and the media planning tools and technologies they currently use. Solutions like SRDS have been used throughout the industry for decades and have recently introduced new functionality and online tools in an attempt to help buyers better navigate the fragmented media environment. This is a step in the right direction, but advertisers have yet to find a way to deploy these established solutions to adequately alleviate process inefficiencies brought about by the disruption of media fragmentation.
Emerging media buying and planning solutions from companies such as MediaVisor, Mediaplex and my firm Balihoo are now gaining traction among advertisers and agencies. Today’s media buyers are hungry for planning solutions that include not only media research tools and information for ad buys across all media channels – whether print, online, broadcast, outdoor, events, and more – but also advanced planning, knowledge management and communications features such as RFI and RFP functionality for contacting publishers directly — all within a seamless online environment. The leaders among the new breed of media planning solutions are already offering such advanced features and more.
Ad networks certainly have their place, but the bottom line is that emerging media planning and buying solutions available today allow advertisers and agencies to not only bridge the media fragmentation gap without having to give up control, but also increase the overall efficiency of the ad buying process across the organization. No longer limited to what individual ad networks have to offer, these new tools also help media buyers identify the full range of opportunities available to them that will best suit their marketing objectives, whether it’s a premium or remnant buy. The result is a highly-targeted, effective media plan implemented using sophisticated tools to take administrative work out of the system.
Recent developments on the publishing front also point to new approaches media companies are beginning to use to better manage and promote their available inventory. Technology media company TechInsights recently launched TechInsights Direct, an online portal for media buyers to search, analyze, buy and manage media transactions from TechInsights’ multiple media properties. This is a perfect example of a media company taking its own steps to bridge the media fragmentation gap for existing and prospective media buyers. Publisher-branded portals exemplified by TechInsights Direct allow media companies to present and promote their ad inventory directly to a broader range of media buyers instead of relying solely on ad networks.
These new applications also include tools for creating cross-medium and segment specific advertising bundles that improve the efficiency of the media sales process as well as notifying their buyers of available remnant inventory. More direct sales means increased revenue for publishers rather than the 90 percent discount rate through ad networks that the IAB/Bain study concluded is not sustainable.
Advertisers and buyers also have greater control with self-service tools offered by these new publisher portals that allow them to search, plan and initiate media transactions on their own terms. Media buyers can research the full range of publisher offerings, not just remnants or opportunities limited by the networks’ proprietary mix of media properties.
Sports Illustrated also recently launched its own online portal for media buyers and advertisers called SI Media Marketplace. Although based on the eBay auction model and geared mainly toward selling remnant ad inventory rather than a mix of premium, standard or remnant media buys, which differs quite a bit from the TechInsights model, this is another proof point that publishers are seeing the opportunities afforded by new tools and technologies that allow them to sell directly to buyers.
Media fragmentation will continue to challenge both media buyers and sellers, but recent developments in media planning tools and technologies and the growing number of organizations adopting these new solutions indicate that the industry is working toward bridging the gap.