Digital is the fastest growing and arguably most strategic sector of the advertising market, yet an agency executive recently told me that transaction costs are 300 percent greater than for television.
As is often the case with rapidly innovating industries, marketers are struggling to master and manage the media planning and buying workflow. With the recent launch of a coalition dedicated to developing industry standards, it seems that we may finally be able to make the business of digital advertising more efficient.
The complicated display advertising ecosystem (see diagram here) exacerbates work flow issues for agencies and their clients. Campaign data gets pushed through third party intermediaries, ad networks and exchanges, demand side platforms and more. Reporting, tracking and reconciliation tends to be manual and thus very inefficient.
Last week, Interpublic and Microsoft announced “MOMS” (Media Operations Management System), a program to overhaul the workflow involved in planning and buying digital media. The hope is that The American Association of Advertising Agencies will expand the initiative to a coalition of agencies, marketers, media and technology solution providers; developing standards for streamlining digital advertising with automated technology processes.
Beyond removing needless cost, initiatives like this inevitably streamline the ecosystem, hopefully weeding out the low value middle men that populate the landscape today, and shining a light on what specific points of value each vendor is providing. No doubt that these reform initiatives will become increasingly important to the industry’s survival much less growth over the next 5 years, with additional holding companies announcing similar efforts and embracing technology standards that will allow them to better leverage economies of scale in the age of digital data.
In fact, we’ve seen similar reform efforts in other industries; from Enterprise Resource Planning (ERP) systems streamlining resource allocation in the enterprise, to Electronic Data Interchange (EDI) making B2B transactions more standardized and efficient, and even recent efforts in the medical industry to address the security and privacy of health data with the Health Portability and Accountability Act (HIPAA).
Why is the advertising industry so late to the game?
– Mike Baker, CEO, DataXu
(**This piece was also posted on the MarketShare blog at Forbes.com: http://blogs.forbes.com/marketshare/2010/07/16/digital-advertising-efficiency-agencies-ad-networks/)