Hidden Costs of Digital and Social Media

At first it was relatively easy to add digital and social media to the media mix amp8212 a bit like upgrading your wardrobe by shopping for new clothes Advertisers could recruit digitalsocial experts for their marketing teams and find specialized agencies that could do the digital creative and media work Existing roster agencies were not much help in the early days they saw new media as a technical specialty better handled by others Sir Martin Sorrell writing in the WPP 2003 Annual Report justified the lack of interest by traditional agencies in digital media quotSpecialized companies love working independently in their specialized fields even though their clients have broader needsamp8230 it is in the nature of specialist talent that it is unlikely to flourish within the confines of a single marketing companyquotTraditional abovetheline agencies did not immediately diversify into digital Advertisers had to look elsewhereThis outcome set the stage for the abandonment of the agency of record AOR and the significant increase in agency rosters for advertisers that were hellbent on expanding into digitalsocial And for every specialized agency added to a roster the marketing department added specialized media expertsScopes of work SOWs expanded significantly as banner ads email marketing Facebook posts Instagram posts mobile marketing efforts and website development were added to the traditional SOW deliverables in print radio and TV Media spend fragmented amp8212 from the simple broadcast and print channels of the traditional era into 15 or more major media channels across traditional digitalsocial and search Programmatic capabilities too were later added to the mixAgencyclient processes grew and expanded like a nuclear chain reaction Every campaign needed briefs channel strategies media plans media buys and campaign performance reporting Programmatic advertising required briefings strategies algorithm selection programmatic implementation reporting and optimization Search required briefings strategies buying performance reporting and optimization And all of this needed to be fed by the creation of massive amounts of quotcontentquot by roster creative agencies For every 10 creatives among roster agencies today39s SOWs involve 3000 deliverables across all media typesThe number of professional quotinteractionsquot between agency executives and client executives has grown exponentially The real hidden cost of the digitalsocial revolution was and remains organizational and interaction complexity Agencies and their clients are overwhelmed by the need to communicate and deal with one another amp8212 to plan obtain approvals carry out work calculate ROIs and readjust after results have been analyzed It39s talk talk talk negotiate approve reconsider talk talk talkInteractions burn hours and burn out people Ironically interaction hours are increasing exponentially at a time when fees continue to be driven downwards by procurement Organizational and interaction complexity is neither recognized nor paid for by advertisersOrganizational network analysis a diagnostic approach that measures the number of interactions in an organizational system has proven to be exceptionally useful in documenting the complexity of agencyclient relationships In one media relationship recently diagnosed by TrinityP3 there were 9000 separate interactions involving 20 agency FTEs across 15 processes The briefing process required 45 interactions per head channel strategies needed 48 interactions per head media planning required 60 interactions per head and media buying needed 45 interactions per head The pace of communication both within the agency team and between agency and client was exhaustingProcurement in manufacturing and distribution created success by reducing complexity and eliminating nonvalueadded costs in manufacturing and distribution supply chains If only they focused on this in the media industry Disappointingly procurement focuses only on reducing fees despite the massive increases in organizational and interactive complexity due to digital and social fragmentationThere39s more to the media business than issues of transparency The hidden costs of complexity are large and growing and are a threat to agencyclient effectiveness It39s time for procurement to seek ways to simplify relationships and reduce these hidden costsFor those in procurement get out your slide rules and focus on complexity reduction as the new pathway for improved efficiencyImage creditamp160amp160Valdis Krebsamp160wwworgnetcomClick the social buttons to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Hidden Costs of Digital and Social Media

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Michael Farmer

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Hidden Costs of Digital and Social Media

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