“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 Madan Sundararaju, vice president of the M&E sector at Capgemini Americas.
You’ve heard it before: The pandemic accelerated massive shifts in the marketing industry. Budgets fell from 10.2% of total revenues in 2014 to 6.4% in 2021, yet digital spending grew by an average 11.5%. In fact, this year, advertising across all digital channels will exceed 60% of global ad spend for the first time and will rise to 65.1% by 2024.
The reason for all this digital growth? Personalization – paired with effective measurement – has enabled marketers to see and understand results, ultimately driving them to spend more.
So how can traditional media platforms adapt to these trends and increase their share of ad revenue?
If personalization is the currency these days, then media platforms should begin offering “marketing cloud as a service” and “clean room as a service.” These options will allow companies to provide personalization at scale by giving ad buyers the ability to direct their ad spend toward specific segments and properties at desired times. The result will be increased precision in geography, demography, income and more.
For example, consider a streaming platform seeking to increase its ad relevance with a new-age demographic. By implementing these additional services, the media company will be able to provide said streaming customer with a much more personalized and desirable advertising strategy.
The increased precision that marketing cloud and clean-room services drive will require ad buyers to move toward more programmatic and tech-oriented interactions. This removes agency disintermediation and pricing friction in the end-to-end ad sales process. And that’s a win-win for the entire ad sales ecosystem: ad sellers, ad buyers and consumers who end up with a better, more personalized experience.
Shift identity from media platform to technology provider
With clean rooms and marketing as a service, media companies can transform from content providers into technology services providers. And once a company can be classified as a technology provider, it opens the door to secondary revenue streams, such as the cost of consumption on the platform.
There is, however, one caveat: Most technology companies are often forced to offer technology services at a loss for extended periods to drive interest and adoption. Media companies will need the stamina to offer similar onboarding runways if they hope to be successful.
Learn from cloud natives
Traditional media companies can use companies born in the cloud as models. Cloud-first organizations have become experts at accelerating their technology road maps and innovation rates to readily adopt and improve their monetized platforms.
While this may be a new area of learning for media companies, it is an opportunity to foster a deeper experience. Combining complicated second-party data with first- and third-party data to create more valuable, granular segments is just one example of how traditional media companies can adopt more sophisticated technology practices to increase their ad revenue. The resulting customer interaction will produce greater clarity and velocity and can significantly change the content experience.
Disruption is an opportunity
In the past, disruption occurred slowly. This traditional notion has been turned on its head in the wake of a global pandemic, which forced almost all industries to react and adapt to mass disruption in real time. However, disruption will continue until outdated practices and technologies are improved by innovation.
In the media industry, disruption is widely understood to be a threat to linear. However, this does not have to be the case. Content is still king; it will always be. But customer-directed, data-driven ad sales will separate the winners that provide mass personalization from those who are left behind.
By making room for new cloud technologies, media companies can achieve higher revenues while offering consumers the more personalized experience they’ve been wanting.