Top Ten Issues Confronting Media, Agencies & Advertisers - By Jack Myers

Originally published May 2010

Privacy and Data Ownership/Value tops my list of the most critical ten issues confronting media companies, advertisers and media agencies for the decade. The issues I focus on in my subscriber-only commentary are not the typical "social media" and "online/mobile video" challenges, which are extensions of established and well-functioning organizational models. Rather, my Top Ten Issues focus on game-changing realities that every company doing business in the media and advertising industry must recognize and consider in their strategic planning. Next week, Jack Myers Media Business Report will publish revised 2010-2012 Spending Forecasts for Media and Marketing.

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Top Ten Issues Confronting Media, Agencies & Advertisers
1.Privacy and Data Ownership/Value
2.Media Marketplaces and Exchanges
3.Who Owns the Media Deal? -Client or Agency or Media Company
4. Deal Transparency & Arbitrage:Inventory & Data
5.Organizational Restructuring
6.Globalization & International Markets
7.In-Store Battleground
8.Hyper-Localism
9.Cause Marketing
10.Where is Management Coming From?

Privacy and Data Ownership/Value
While data privacy concerns are being discussed at length, with the IAB, ANA and 4As taking the lead in implementing industry regulations in the hopes of avoiding government intervention, it seems inevitable that the issue will be politicized with the industry taking it on the chin. As aggressive as the industry has been, government officials are likely to become more aggressive with both Democrats and Republicans seeking the upper hand on consumer protection regulation. More important than privacy issues, however, is the debate over the ownership of data. While traditional Nielsen, Arbitron, MRI and ABC metrics remain the basic currencies for media buying and selling, dozens of competitors are producing high-quality information and insights from set-top boxes, online/mobile digital consumer drill-down, and proprietary research – both custom and proprietary. The currencies of the future will emerge from the landscape of currently available resources, some custom and proprietary and others syndicated. TiVo, TRA, Marketshare Partners, Google Analytics, Omniture, BlueKai, Exelate, Audience Science, Lotame, Media6Degrees, Quantcast, Datran, Jovian, Targus, Expedia. These are just a fraction of the many suppliers who are competing for a share of the data marketplace. WPP has invested heavily in Kantar and has made investments in Invidi and Visible World, which incorporate data rights into their business models. Who owns the rights to data and who will have the rights to arbitrage it? If agencies package and re-organize data, will the costs for each component part be transparent or will the value be in the package and subject to incremental fees? Data providers, media, advertisers, agencies, data manipulators/managers, distributors: who owns the rights to the data and to profit from access to the data? The issue of data ownership is just beginning to be discussed, and it will emerge as an important battleground throughout the next decade.

Media Marketplaces and Exchanges
I could easily spend several issues of Jack MyersMedia Business Report on the issues related to the development and expansion of media marketplaces and exchanges. Each of the leading agency holding companies has established media buying platforms and is investing in Demand Side Platforms. MediaMath, InviteMedia, [x + 1], Turn, Data Xu, Appnexus, Efficient Frontier, Triggit, AdBuyer and others are battling to establish their market and value. At least nine ad exchanges, led by DoubleClick, Right Media and ContextWeb are serving the industry. Eight data exchanges and aggregators; nine major data optimization providers; ten creative optimization enterprises; plus data exchange providers, analytics companies, and ad servers are all in the market and battling for prominence. As media sellers, agencies and marketers align with selected service providers and as these providers align with specific holding companies, competitive battle lines will be drawn.

Who Owns the Media Deal?
Client or Agency or Media Company
In several countries in Europe and Asia, the agency owns the deal/relationship with the media seller. In the United States the advertiser owns the deal with the media company, and the agency is simply a middle man with no proprietary rights to benefit from the deals they negotiate or from their buying clout or marketplace advantages. This issue is directly related to the next major issue confronting media, agencies and marketers:

Deal Transparency & Arbitrage:Inventory & Data
In countries where agencies own the media deal, they typically have rights to keep their media pricing confidential, enabling them to sell the media to their clients at a profit. The United States has the greatest media cost transparency of just about any nation in the world. If agencies are able to negotiate beneficial deals with media based on their clout, market intelligence, unique data assets, relationships or any other competitive advantage in which they have invested, they must share those cost advantages directly with the client and fully disclose all pricing. The client owns the deal – not the agency. Similarly, media sellers are completely free to negotiate special opportunities directly with the advertiser, and the decision to compensate the agency for any work provided is completely at the discretion of the client. This flies in the face of the traditional commission model, in which the agency is compensated through a percentage arrangement (15% discount) directly by the media. Historically, client-direct deals were billed at "gross," and the 15% commission only paid to a qualified agency. While media companies continue to operate on a gross/net basis, the fundamentals of the commission are no longer relevant. On the surface, transparency should be good. However, whether the agency should have more opportunities to own the media relationship directly is an important issue for the future. Agencies add value to media assets, aggregate media, compartmentalize and separate media assets for repackaging, and have multiple opportunities to profit from creativity, knowledge, asset ownership, insights and technological capabilities. In many instances they are prevented from doing this by the requirements of transparency and deal-ownership. Agencies are disincentivized from serving their clients' needs and interests, and are relegated to commoditized buyers of inventory. This is one of the most critical issues that will be debated and will determine the future health of the industry.

Next week, Jack Myers Media Business Report will publish revised 2010-2012 Spending Forecasts for Media and Marketing. On May 17, I will continue my overview of the Top 10 Issues Confronting Media, Marketers and Agencies.