Advertising’s Future driven by Principals, Accountability, Ultimate Metrics

The history of advertising has been one of delegation, trust and evaluation by intermediate metrics. In these areas, advertising’s past will not define its future.

The digitization of media and advertising, the emergence of a ubiquitous Internet, and the development of powerful, cheap, cloud-based data storage and analytics are changing all of advertising. Digital media and advertising, and Internet protocol networks, mean that marketers and media companies can have direct relationships with their consumers. Cheap, powerful, easy-to-use data analytics and visualization tools let media and advertising companies capture, store and leverage consumer behavior data in powerful and proprietary ways.

Over the next few years, I believe that these trends are going to dramatically shift the power balance in several key parts of the media and advertising ecosystem. Power will shift from agents to principals, as marketers bring more and more proprietary, data-related parts of their advertising management in-house. Accountability will trump trust, as the key principals — marketers — demand more and deeper transparency into advertising deliverables and results. And, finally, ultimate metrics — viewed impressions, proven engagement and attributable sales — will win out over intermediate metrics like delivered impressions, GRPs and reach and frequency.

I believe this, because it is already happening today. Consider:

Rise of procurement. Today, procurement departments and officers at consumer marketing companies hold as much or more sway over agency selection and compensation as chief marketing officers. Enough said.

Reduction in agency fees. Every year, scores and scores of top marketers’ media planning and buying accounts go into review. Whether the outcome is incumbent retention or challenger selection, one result is always the same: The media fee goes down. Agencies can no longer hold as strong a position as they have if they don’t have the money to hire or retain the talent to do so. Less money means less in return, which means more work and power must reside at the principal — whether this is planned or not.
Rise of large, single-source panels. Over the past few years, we have seen the development of massive, single-source purchase panels tied to media and advertising. Companies like Experian have long been able to match digital- or direct-marketing exposure to sales. However, now we are seeing entrants do this in a big way in TV. TRA pioneered this area with its purchase panels tied to set-top box viewing data. So, too has WPP’s Kantar. Most recently, we have seen TV industry heavyweight Nielsen combine anonymous purchase behaviors from 80% of U.S. credit card transactions with TV program and ad viewing behavior, with its Nielsen Buyer Insights. Why should anyone buy on only GRPs, when they can buy on a “cost per sale” basis?

What do you think? Can the closed, smoky-back-room world of advertising survive much longer?

By Dave Morgan
Dave Morgan is the CEO of Simulmedia. Previously, he founded and ran both TACODA and Real Media.
Courtesy of MediaPost