The world of who buys and who sells media and marketing services is going to change dramatically over the next five years, and not just because of the growing roles digital companies like Google and Facebook play in the ecosystem.
Companies that have historically bought media on behalf of marketers are realising that to grow their businesses they now need to own core assets that would otherwise be described as media — while companies that have historically owned and sold media are realising that to grow their businesses, they now need to deliver full marketing services, not just media.
Whether speaking to investors or industry trade groups, WPP’s Martin Sorrell has been explicit on his vision for the future of his holding company. WPP is investing heavily in three key areas: technology, data and content. Sorrell has said that building market-leading capabilities in these areas is key to retaining and growing WPP’s client base and margins.
Interestingly, all these are the areas on which media owners and sellers have staked their businesses. While content is an obvious ‘media owner’ domain, so is technology and data, whether it was printing presses and broadcast facilities, content management systems and ad servers, or subscriber lists and targeting databases.
Perhaps not coincidentally, we’re also seeing media sellers talk about the importance of building marketing service capabilities. Just this week, in announcing a licensing deal with IBM’s Watson, Turner Broadcasting’s Michael Strober, its executive vice president of client strategy and ad Innovation, told The Wall Street Journal, “Over time we are looking to turn ourselves more into a marketing services group than just an advertising sales team.”
What an interesting juxtaposition. While these kinds of moves have happened in the past, we’re clearly hearing about them more these days. Here are some of the reasons why:
Market shift from media outcomes to business outcomes. Everyone is waking up to the importance of measuring and valuing advertising not just on media output metrics like GRPs and CPM, but on business outcome metrics like store visits and sales. Both buyers and sellers will have to build expertise in these areas, which means that agencies will need the technology and data to measure and optimize outcomes, and media owners will need marketer relationships to understand advertisers’ ultimate desired outcomes.
Control. To the owners of technology, data, content and audiences go control of delivering predictable, provable, profitable outcomes for marketers. Both buyers and sellers want that control. Enough said.
Margin. There is not much margin in providing cost-plus services. There can be massive margin in owning valuable technology, data, content and distribution. Both buyers and sellers want — and need — to grow their margins if they are to survive and thrive.
Everyone becoming frenemies. Sorrell used this term years ago relative to WPP’s relationship with Google. In this increasingly complicating and overlapping world of media, marketing and technology, the notion of competing and cooperating with many companies at the same time is becoming the norm, since having more capabilities and greater scale is essential.
Grass is greener. Might agencies be trying to be sellers, and sellers trying to be like agencies, because of their discontent with their current lot in life? Do they believe that the grass is greener on the other side?
I don’t think so. In fact, I think that the moves on both sides of the media market to build full capabilities makes most sense for those companies that not only like their current market position, but want to strengthen and grow it. It’s not about leaving that side behind. It’s just enhancing assets and capabilities to exploit it further.
What do you think? Can media owners and sellers become agencies before agencies become media owners and sellers?