CAUTION: The Advertising Industry Financial Procedures Are About To Change

By Mike Drexler

Ready for this? Over the next several years the financial process, including staffing, budgeting, systematic reporting, as well as resource management will have to change in the advertising industry. Sound extreme? Here’s why:

One of the most overwhelming phenomenon in the age of digital communications is the volume and speed in which information is transmitted and real time data analyzed with almost immediate reaction time. Think about this for a moment. With  easily accessible real time data, immediate responses and reactions to advertising messages and media expenditures are becoming the new normal. Some call it agile marketing. Advertising funds will have to be as fluid as the marketplace. That means when budgets are established to achieve certain goals and objectives, stability will fall by the wayside. The marketing feedback received from media investments will be known almost immediately and will be acted upon almost concurrently. No longer will budgets be fixed for any extended period of time because return on investment will not allow it.

Already, agencies are preparing and acting on immediate analysis and reaction to  real time data. Not only their own client’s sales and marketing results but competitive advertising data as well. Data obtained from social media conversations (within hours), shoppers tracked throughout the purchase funnel with planned targeted messages that can be executed instantaneously, automated retail and online sales data fed directly into DMP’s (Data Management Platforms) to not only create predictive models but rapid, investment responses as well (with widespread smartphone personalization , data reaction is even more instantaneous). In addition, programmatic buying soon to be transitioned to other media, with cross platform and multi-media campaigns being analyzed “on the spot,” advertising investments will be evaluated on a performance basis “round the clock”.  All of this will, of necessity, change financial planning for advertisers and all their suppliers.

Considering the ramifications of how and when these investments are made we can see how they will also reformulate overall financial calculations and commensurate staffing. Imagine how organizations will have to adapt when the fluidity of perhaps their biggest investment (marketing) will, by default, require reengineering their financial calculations.  As far as staffing is concerned, new kinds of thinking will embrace people who can draw strategic insights and optimize strategies from immediate real time data, not only traditional analytics.

Companies are all going through significant changes to cope with the fast paced digital ecosystem. They haven’t completed the journey and perhaps, in this age of automation and digital innovation, they never will. What is important, however, is that organizations must position themselves and plan for constant change. They must balance resources with applications that produce not only profitable but timely yield. They must allocate fixed costs more appropriately with variable costs. They must know when to abandon outmoded practices. And, in the case of advertising, be much more flexible with marketing dollars and have necessary systems in place to measure and monitor real time changes in marketing conditions.

Originally published in Media Village

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