Media Management

Media procurement: time to double down

An Evolving Landscape

“Increasingly new approaches to how procurement is measured have to be considered. In this chaotic world, the traditional metrics of savings and cost-avoidance are less relevant and measures of impact and effectiveness are far more important”

The inaugural Marketing Procurement IQ conference was a great opportunity to discuss openly the many ways that marketing is changing, with big implications for marketing procurement.

The first day explored the changing face of content, production and distribution with Artificial Intelligence poised to transform the industry.

Day Two was all about media and while AI is undoubtedly a factor, there was a lot else to discuss as media enters a new era. Let’s call it ‘Advertising 3.0’.

The analogue world was a simple one, where advertising was scarce and controlled, both voluntarily by media owners and through some light regulation.

Advertising inventory was closely linked to editorial content in a symbiotic relationship where advertising paid for media content from broadcasters, publishers and billboard owners.

Advertisers, their agencies and their customers shared the burden of audience measurement and there were no other links in the supply-chain.

The Digital Age, roughly the last 25 years, saw an unprecedented ‘big bang’ in media where the amount of advertising exploded, especially through search, social  media and unlimited online display.

The close relationship between advertisers and the media was disrupted by the newcomers such as Google and Facebook. They didn’t have to create content because their users did it for them, so the established media owners found themselves deprived of ad revenue but with a high cost of content.

The adtech industry arrived and hoovered up a large proportion of ad budgets in the ultimately futile pursuit of mass personalisation.

This trend is set to continue on steroids in the age of ‘Advertising 3.0’, especially as Retail Media Networks (including their equivalents from other sectors with mass user databases) and Digital Commerce command up ever larger slices of the advertising cake; this itself is growing strongly as advertising consolidates as the primary funding source for digital content of many kinds, including TV. 

Artificial Intelligence enables brand-building through the ‘flywheel’ effect of first-party data and its ability to generate sales and loyalty.

Advertisers are faced with a vast array of choices in where and how to invest but with an unprecedented lack of a framework for common measurement. Instead it’s a free-for-all with thousands of competing options and adtech eco-systems for each channel eager to take their share.

The big monies are going to Retail Media, Digital Commerce and Connected TV, the latter being both an offshoot of traditional broadcasting as well as a standalone sector.

It’s dynamic, chaotic and rife with elephant traps. Digital channels brought with them new hurdles for advertisers, including poor ad exposure, automated traffic (including outright fraud) and uncontrolled amounts of advertising, some of which ended up paying for nefarious operators and creating severe brand safety issues.

The agency sector has arguably changed less and is still dominated by the big holding companies, who are fighting a rearguard action against new competitors of many kinds and the big digital platforms themselves. Advertisers still default to the big agency groups for international scale, even though the holding companies are increasingly having to invent new revenue streams from their supply-base.

This new media world needs the rigour that procurement brings. It’s a maelstrom and it requires a higher order of control and management that rests on a deep level of understanding of the channels themselves and the many eco-systems around them.

The starting-point should perhaps be self-evident; advertisers are buying everything in this environment. They are paying for the media inventory, the agencies of many kinds, the various adtech players who facilitate ad appearance, the media vendors and the many ancillary businesses that rely on the channels’ eco-systems. 

So it is important to have processes and protocols in place to cover off all of these individual investment categories, and especially the huge costs of buying the media inventory itself. Sometimes it may seem that the focus should be on the supply-chain when in fact it’s the big cost of media that should be the first item on the list. Procurement should consider themselves to be the media buyers, even if the actual execution is outsourced.

In this complex market, knowledge and rigour are mandatory and media procurement should be a specialised function, working with internal stakeholders as well as independent providers to ensure the right level of governance, contractual precision, measurement and contract verification.

Although the elephant traps are real, they can be avoided with the right approach, roadmap and resources. Without these, the market is an impenetrable jungle for the unwary.

Increasingly new approaches to how procurement is measured have to be considered. In this chaotic world, the traditional metrics of savings and cost-avoidance are less relevant and measures of impact and effectiveness are far more important.

The second day of the Marketing Procurement IQ conference covered most of these market dynamics in depth, with much more to follow.

In the second part of this article, we’ll look at some of the specific points that were discussed and we’ll also look at those that remain on the agenda for future conferences.