Demand and Supply Platforms - the Media Industry's Big Bang

Question: Discuss supply and demand in the industry.

Summary: Andy Pearch, the director and founder of MediaSense Company, announced that the new demand and supply-side patforms - DSP and SSP - will "revolutionise the media-planning and buying industry". The two new platforms are supposed to change the relationships of media platforms with brand owners and media invetory owners, and that is important because 80% of the media market is planned and bought through intermediaries (intermediate agencies) and in most cases that means through media agencies.

Here are some of the advantages that, according to Pearch and MediaSense, DSP and SSP are supposed to bring in:

• 
  
  There will be a shift to outcome-based trading, whereby media owner inventory will be priced according to its direct value contribution to customer engagement and/or sales. Brand owners will therefore be increasing investing in activities that directly and measurably impact sales and/or other KPIs (key performance indicators).


• Data analytics providers will encroach upon the traditional market research space, resulting in proxy metrics and representative panels being increasingly replaced by "end game KPIs and consumers". Brand owners will therefore be able to bring the traditionally disparate disciplines of performance management and decision-making much closer together.


• There will be increased connectivity between retail sales data and media platforms, enabling brand-owner marketing activities to be more responsive to consumer behaviour (and potentially retailer demands!).


• Brand owners will increasingly use platforms to buy media directly from media inventory owners, the early adopters of which are likely to be those involved in performance-based activities that will benefit from increased control of a critical sales channel.


• The relationship between brand owners and their media agencies will change significantly. Some will choose to "downgrade" their relationships to one of pure trading supplier, whereas others will choose to "upgrade" the relationship to a strategic partnership level.

Analysis: In my opinion the launch of these innovations is too risky. In fact there are more challenges and risks to this project than there are advantages. Here's a list of all the challenges and risks MediaSense came up with:

• The contractual relationship between media agency, media owner (who could be the same entity) and brand owner will have to change, as will remuneration policies.


• Transparency related issues will create "inefficiencies" in the value chain that will need to be addressed using new processes.


• Brand owners will have to understand where resistance of self-interested parties dressed as protection from e.g. JICs, media owners, media auditors and others, is ultimately against their own long-term interest.


• Migration from traditional intermediated metrics to new media currencies will not happen overnight and therefore there is a keen requirement to ensure value doesn’t seep between the "transitional cracks".


• As data becomes increasingly valuable, there will be a need for new approaches to data ownership, portability, hosting and adserving.


• Many brand owners will find they become "accidental analysts", which could result in resource overload and information paralysis if data is not appropriately aggregated, filtered and displayed

The transparency related issues is what worries me the most, because the "inefficienies" in the value will have to be addressed using new processes, but how much time is it going to take to come up with these processes? And what if they will turn out to be just as "ineffective"?

In my opinion, it would be much safer to wait and try to improve these two platforms or come up with a different strategy to get the media agencies a new status and improve their relationships with brand owners and media inventory owners.

Sources:http://www.mediaweek.co.uk/news/1063657/Demand-supply-platforms---media-industrys-Big-Bang/