The academic definition of a value chain is a high-level model of how businesses receive raw materials as input, add value to it through various processes, then sell finished products to customers.
The value chain is perhaps most visible in manufacturing, where physical products are made. But the idea is equally important in service industries, where time, knowledge, equipment, and systems are used to create value for end users. Although we rarely hear the term used in reference to media, a value chain is heavily exercised by management consultants specializing in operations, supply chain, six sigma, and many other business disciplines.
Media, like all businesses, can be broken down and explained with a value-chain model. It involves publishers, content, audiences, and, of course, media planners and brand marketers.
With increasing demand and adoption of behavioral targeting, a more modern, relevant way of defining and delivering value has emerged in media. It's redefining the value chain that's largely in sync with the macro trend of consumer-centric communications.
New Raw Material or New Process?
Whether focused on the masses or on a niche, the media value chain is based on publishers' ability to generate and develop content in the hopes of attracting an audience. Content has always been the raw material that's ultimately "processed" to create value for media planners and buyers.
Processing content typically involves segmenting the attracted audience and providing the ability to target that audience. Historically, this segmentation was primarily limited to editorial adjacency, as the content associated with editorial is further processed and monetized with attached demographic proxies, such as gender, age, and income.
Media planners and buyers flock to these advertising windows adjacent to editorial, largely in hope of reaching the client-desired audience the content has attracted. With behavioral targeting, however, the content is further processed with an alternative way (and arguable more accurate methodology) to produce media value.
Content is and will always be the primary driver of audience aggregation. In this sense, behavioral targeting provides a new way to process the raw material in the value chain.
Delivering the Value
Effectiveness and efficiency are the founding pillars of media value.
As media professionals, our responsibility is to provide sound strategies to deliver media effectiveness. Effectiveness can be elusive. Since the assessment is based on initial input and assumed parameters, a campaign is only as effective as the expectations and metrics established up front. These vary from case to case.
Although campaign effectiveness is variably defined, finding the delicate balance between cost and service value is inherently given in the scope of media planning. This is often referred to as efficiency. In a world in which consumers are becoming increasingly elusive due to multimedia consumption and the Internet-empowered accessibility to content, behavior has been established as a much more accurate proxy for intent than demographics are.
In this sense, behavioral targeting doesn't only represent a new processing methodology in the value chain but also delivers value and a promising alternative that will benefit both the publishers and advertiser in the constant struggle between inventory and availability, and aggregation and audience distribution.
What This Means for Online Media
Certain types of content attract specific types of customers. Publishers use content to create clusters or segments, then apply some kind of viewership measuring unit, such as circulation distribution, impressions, unique audience universe, or any other identifiable, quantifiable proxies, to add value to the content. This is eventually monetized and sold to marketers who purchase these "processed" goods.
Whether behavior can be traded as a commodity doesn't have immediate impact in the media value chain, but how it can help media planners minimize waste and achieve more efficiency and effectiveness to reach the target audience is certainly worthy of consideration.
To publishers, behavioral targeting means an additional way to quantify, monetize, and augment the available audience inventory. For media planners, it represents a new way to deliver value to clients.
In the former online media world of low-cost run of site or network, and premium editorial adjacency, behavioral targeting has introduced a new way to process content and to produce media value for clients.
There's no guarantee behavioral targeting will increase marketing values, and it's no panacea for weak online campaigns. What it does bring is a new element and perspective to a predefined, antiquated planning model that historically focused on demographics.
For an industry that thrives on innovation and new perspectives such as online media, this means the mere availability of behavioral targeting has already redefined the media value chain.
Andy is off this week. Today's column ran earlier on ClickZ.
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Based in London, Andy Chen is vice president of digital solutions for Viacom Brand Solutions(VBS) International. Prior to Viacom, Andy was the media strategy director at Carat International/Isobar, which handles global media and digital strategies for Philips, Renault, Adidas, and various other multinational clients.
A true advocate for global integration and strategy, Andy has lived and worked in Copenhagen and Stockholm, where he was a management consultant for the Swedish Advertising Association. He received his BA from University of California, Berkeley; and a MBA in international marketing and global management from Stockholm University, School of Business. Named one of the "20 Rising Media Stars to Watch in 2004" by "Media Magazine," Andy is a frequent international conference speaker on digital and interactive media. He published his first collaborative book, "The Changing Communication Paradigm," in November 2005.
December 12, 2013
1:00pm ET / 10:00am PT