#0 Digital Transformation impact on Advertising industry — The prologue
All activities, industries, movements, companies, groups, people are impacted by the time passing by. I wanted to have a look at how the latest technological evolutions have transformed the advertising agencies these last few decades.
I will focus, for this exercise, on the Media Buying Agencies, those which buy ad space on tv, billboards, internet, … I will try to highlight some of the main drivers and how they reshaped the “way of doing things”. How much time it took, the opportunities and threats it represented and where, I guess, this business is heading to.
For the opportunists (ie. entrepreneurs) out there, you will spot, transpose what happened and what’s happening in this industry for your own benefit and hopefully for the better…
#1 Digital Transformation impact on Advertising industry — The prequel
Jumping in the Google Digital Advertising world
My journey in the Digital Advertising industry started back in early 2007. A Google recruiter gave me a phone call for an open position at Google Brussels’ brand new office.
Back in these days, Google was expanding its local sales forces throughout Europe. Usually, before opening an office in a new country, Google hired a few temporary people to first investigate the market. Then, following the results of their market research, the feasibility, maturity and market potential, Google started to hire a new local team. I was part of this first new local team.
When I picked up the phone, to be honest, I had no clue about Google advertising business. I guess, like Obelix, I felt in the cooking pot on my first day and since then I made my professional life out of it! Google and Googlers were amazing. A truly startup mindset. The candid silicon valley enthusiasm.
My chance was that I had already a strong grasp on what’s motivating me and what’s not. So, when I signed my contract, I made a contract with myself. I can sum it up in one article: “art 1.1. Stay as long as you learn”.
Luckily Google’s culture, structure, organisation and people were very open. The opposite of hierarchy by titles, by seniority. It was the hierarchy of ideas assessed by their rational. Google was moving very fast. The contrast with its competitors, the traditional media owners (tv, radio, print, outdoor,… companies) was striking.
But this was not valid only for its competitors. Media buying and planning agencies did not see it coming neither.
A traditional media world of bargain
When it comes to media buying, that is buying ad spaces for running the advertising campaigns for a company, called the advertiser, there are 6 main global actors: WPP, Omnicom, Publicis, Dentsu, Havas and IPG.
Their business model was like traders on volume. How to buy big volumes of ad space, benefit a discount, give one part of that discount back to the client and keep the rest.
To illustrate, let’s say that I do manage the ad buying for Netflix, to promote its latest Netflix Original series. Next to Netflix I also do manage Nike, to promote the new Jordan sneakers. Having both budgets to invest, I can go to any media owner or network, like a TV broadcast, and ask for its best discount if I invest both budgets onto its channels. I do the same with its competitors to drive prices down. Size matters. Pretty straight forward.
to be continued…
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