“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Mark Gorman, CEO at Matrix Solutions.
While M&A strategies offer media companies a leg up on competition, little attention goes to the behind-the-scenes drama when aligning the legacy technology platforms across these corporations.
The technology platforms getting hit the hardest often facilitate the lifeblood of media: advertising. It’s almost unfathomable to think about the state of AT&T’s and Time Warner’s ad data now after the merger or what Comcast’s and Sky’s could potentially look like.
But as more media companies enter these conversations, it’s imperative they anticipate the challenges that lie ahead post-merger and formulate a plan to overcome them.
Biggest pitfalls and unknowns: The devil’s in the data
There are quite a few pitfalls left in the wake of media M&A. The most important and time-consuming is the alignment of data. Mergers on a global scale can take years to align data and ad sales networks. Take, for example, Disney and ABC, which merged in 1996 but are still experimenting with how to best help advertisers reach audiences across all of their combined properties, including ESPN, Freeform and the Disney channels.
Undoubtedly, the biggest challenge facing media companies is in bringing together dozens, if not hundreds, of ad sales ecosystems to accurately buy, sell and track the sales and associated metrics. It’s an enormous undertaking and in some cases, the technology doesn’t even exist to integrate systems, making it necessary to hack into a program to integrate it with another stack or, worse, task people to manually fill in spreadsheets to provide some inkling of what is happening across the new company as a whole.
Aside from sheer software integration challenges, there are still many obstacles when it comes to aligning advertising across different and possibly global platforms and legacy systems. Differences in how inventory is sold across various global markets and how each local culture demands sales are key factors. Where one market relies on a transactional approach to ad sales, another may use a personal approach. As such, the metrics to determine the ads’ value will most likely be different. When looking to align sales data for each legacy system, it becomes nearly impossible to keep track of each one-off transactional sale.
And when it comes to regulation and censorship, data alignment can also be a serious task. It is necessary to not only note the differing regulations for selling and running ads across varying media markets, but also vet the appropriateness of content; something that is universally accepted in the US may be culturally insensitive to someone else.
These data alignment drawbacks are not only detrimental to the internal success of a company – anyone trying to access a company post-merger typically experiences an inconvenience as a result.
For media companies, external parties affected could be advertisers looking to buy ad inventory or even readers or viewers who may suffer from a lower ad quality experience, all of which is dependent on how the mother ship runs the organization through the transition.
Sometimes, an acquirer will impose its laws and the traditional customers of the target company will be thrown into a whole new method of business. Or the acquirer may instruct the target company to do business as usual, thereby eliminating any potential synergies or benefits that could be shown to the customer.
Where do we go from here?
As the industry continues to face extreme competition, we cannot expect mergers to slow. With the seemingly uphill battle facing media companies post-merger or post-acquisition, it is absolutely essential that advertising executives at any media company in the M&A equation be aware of the issues that could plague the health of their newly linked company.
Media companies should be strategizing for how they can mitigate data alignment obstacles long before contracts are drawn up. They should develop a strategy that is based on step functions rather than trying to boil the ocean at once.
An acquisition should be about creating synergies. How can the data and tech stack organization make these synergies a reality?
Whether a local media entity acquires a small ad tech company or two major media companies merge, there are consequences at every scale that seriously delay productivity or affect how external parties can interact with the brand.
That said, a merged company’s future success depends on all parties understanding the advertising challenges to come and having a plan to align data.
Follow Matrix Solutions (@MatrxSolutions) and AdExchanger (@adexchanger) on Twitter.
