Shifts in Media Raise Questions of Where Ad Value Lies

This could be the year when all the reshuffling and restructuring of 2008 is put to the test. For media firms and ad agencies, the primary goal of recent reorganizations has been to integrate in order to operate more effectively as digital media transforms their industry. However, shifts in approaches to buying and selling media are raising questions about where the value of media lies.

At a panel held by Undertone Networks in midtown New York this week, execs representing key components of the digital media industry seemed to concur that the next few years will be some of the most exciting and challenging in decades.

“The forest has to burn for the new growth to rise,” said Quantcast CMO Adam Gerber, predicting a “massive transformation” for the industry in the coming decade. The flames will get higher in the next two to five years, he said.

Online ad spending will continue falling, in part due to downward pressure on display advertising resulting from excess inventory and ad network efficiencies, said media analyst Jack Myers. The economic recession will also put advertisers in a more conservative frame of mind, said Myers. “There’s a nesting going on in media,” he suggested, noting marketers may not want to experiment with digital media. They also may feel more secure limiting their dollars to tried and true platforms.

What that will mean for media firms or agencies is subject to debate. However, some are adapting in the hopes of surviving the fire. NBC Universal, for instance, has restructured its sales staff to become more centralized. “It makes us much more customer-focused,” said Peter Naylor, SVP digital media sales at NBC Universal.

Ensuring clients are better served is also the reason Mindshare has reorganized, removing media silos and creating core divisions centered on things like research and analytics and client leadership.

For NBC and Mindshare, as well as other recently reorganized publishing firms such as Condé Nast and Meredith, the goal is not only to consolidate staff, but to focus on digital offerings and services, and remove barriers that in the past have forced clients to work with multiple point people dedicated to separate properties or media.

“We’re still filling in the gaps,” said MindShare CEO Scott Neslund. Translation: The framework is there, but nobody’s entirely sure how these new organizational models will be executed.

With media firms starting to think on a more holistic level, salespeople aren’t necessarily selling individual properties anymore. Instead, they’re selling audiences or experiences. The problem is those companies don’t always like the way that approach is playing out from an ad buying perspective. For instance, ad networks and technologies such as behavioral targeting often sell audiences. As media consumption becomes more distributed across platforms and properties, however, those audiences become more diffuse.

Although agencies and media companies have taken similar approaches in removing internal silos, they may not agree on where the value of media lies. Media firms, for example, may not appreciate the use of retargeting to find audience members outside of the sites they were originally cookie-d on. Such technologies can dilute the value of media brands, because they allow advertisers to reach the audiences they once paid premium prices for on branded sites, for lower costs across the Web via ad networks.

“It feels like cherry-picking,” Naylor said. “It just puts everything on its head.”

The potential tug-of-war between publishers, advertisers and tech firms enabling these targeting technologies leads some to wonder whether the age-old promise of advertising in premium environments will be enough for media firms to maintain brand integrity.

Another big-picture question involves the data driving digital media and advertising. The industry must begin discussing data usage, stressed Quantcast’s Gerber. It’s not about who owns the data — it’s about how it’s used, he said. To initiate the conversation, the industry must reconcile two types of data — data that has value in aggregate (audience demographics, for instance) and data that has standalone value (such as registration data or previous consumer purchases). There must be a balance between the ability for publishers and marketers to employ that data, and data protection or exploitation.

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