Aggregating Cross-Channel Audiences – State of Industry

I thought I’d take some time in light of the recent announcements of Google and Yahoo! (APT) and share some thoughts I’ve had watching this all play out and partaking in this from both the buy & sell side.

The current state of the digital media industry for Google, Yahoo!, and many other smart companies is to capture as much of the advertising revenue as possible.  There are 5 major places to capture ad dollars:  TV, radio, print, OOH (out of home), and online.  The sixth place (and in the image to the left) is through “other” channels which could be street teams, non-traditional, and other misc. opportunities.

State of Digital Media Industry

Throughout the 90s and up until about 2003, the majority of digital media companies went after the online media spend of brands.  Today, this equates to approximately $24.9bln dollars.  The online spend of brands is new as the medium has been around for less than 20 years.  We’ve seen significant dollars allocated to the digital world however and the growth rate is still enticing for many companies to continue chasing.  Most corporate development folks and CEOs of startups in the digital media world say that they are chasing “branding” dollars as this is traditionally in the television & print space… much more ad dollars than online/digital alone.

AdWeek Emarketer Chart

Google’s market cap is approximately $100bln so obviously, they are going after more than just online ad dollars.  Look at who they are hiring.  I deal with Google on a daily basis and their national advertising team is made up of former ad agency folks who understand all marketing channels, not just digital.  We can have significant conversations about radio, print, and television and you’d think they didn’t work at Google.  You can see that though their founders came up with a new way to monetize online search, they are open to looking at all other marketing channels.  Their acquisitions/corporate deals in the technology/media world have given them advertising reach into print, radio, television, and I’m assuming some OOH coming soon.  They’ve also got a gaming acquisition (Adscape) as well as quite a few things under wraps.

It’s no secret that Google AdSense is a platform.  The platform enables marketers and agencies to “one-stop-shop” for all types of media needs and with the help of their ad serving technologies (Google Ad Manager & DoubleClick) and measurement (Google Analytics), perform an entire campaign and analyzation all in one place.  Theoretically, if you wanted to advertise, why would you want to go any place other than Google?

Yahoo! is moving in the same direction and that’s the goal of their recent APT launch.  Though APT is corralling the newspaper consortium together today, there are larger sights for this platform for the future.  In a recent NY Times article, I was bearish on this platform because historically, Yahoo! has always had good intentions but their internal groups never work together well and come across as a disjointed company.  I recommend that Yahoo! actually shut it’s sales force down for 1 year while it works out the internal struggles so it can approach the market in 2010 with a significant value proposition.  I don’t think investors would like this, but if they want to survive the future, this might be a very smart thing for them to do.

These aren’t the only two major companies moving in this direction.  Plenty are.  Using a bit of technology, companies are trying to automate and/or create efficiencies to the advertising process (media) all within their own walled gardens.  I see this as an issue in the sense that agencies are moving in many directions as well (article on what agencies are doing coming next week) and in some cases, tangential.  I also see an opportunity here for a third party company to come together and create an uber-layer (a Kayak if you will) to aggregate all media deals across all of the major players and facilitate the transactions.  Please, not in the long tail.

People aren’t just trying to aggregate inventory, they are trying to aggregate cross-channel marketing dollars.

I’m fascinated by this ecosystem and watching technology infuse the media buying world.  I’ve built digital media companies that sell to agencies and brands but now, standing on the other side of the fence from the buy perspective (ad agency).  Seeing both sides of the ballgame is invaluable and urge people to check it out if you have the opportunity.

  • Christien

    It’s amazing how much forced change Google is creating. At some of the largest media buyers in the world, media silos are being brought down in an effort to keep up with Google. Google is creating the model for the way to do it. The models for TV, print, radio, etc are already in stone, and Google, on a daily basis, defines how digital media is bought and sold. Buying arms of agencies can’t keep up. It will reduce agencies back to planning and creative only.

    On the OOH vendor side, I know some companies that are scared to death of Google creating an “Outernet” backbone because it will render them obsolete.

    Anyway…great insight as always!

  • Alan Kelley

    Darren, another excellent, thought-provoking post

  • Darren

    Christien, you mentioned a great point. Most agencies and brands can’t keep up. That’s 100% correct. The pace of innovation is too fast and much of it is going to get lost.

  • Craig Wilson

    Great insight. These guys are really forcing change at an amazing rate. Where will it end?