Criteria for AdvertisingBusiness ManagementPowering the Digital Value Chain of Today and Tomorrow

White paper | February 2011

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

THE CHALLENGE 4

THE ROLE OF ADVERTISING BUSINESS MANAGEMENT 8

INTRODUCING OPERATIVE.ONE 11

CUSTOMER SPOTLIGHT 12

CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT 13

CONCLUSION 15

REFERENCES 16

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EXECUTIVE SUMMARY

Remember when marketers contracted with agencies to create their campaigns and agencies worked with

publishers on their behalf? When display banner ads reigned, targeting was limited, success was measured by

impressions and click-throughs, and one ad server was all that was needed to run a profitable ad business?

Since then, a renaissance of innovation across the digital value chain has transformed the way consumers

experience advertising and reshaped the traditional relationship between advertisers, agencies and media

companies. Advertisers are negotiating directly with publishers, agencies are expanding their services portfolios

by acquiring boutique shops, and publishers are trending towards network-like models by signing deals with

affiliate partners.

For media companies, innovation has provided unique opportunities

to understand audiences at a more granular level, offer premium

custom solutions and explore new revenue opportunities with

emerging partners. But there is another side to the innovation coin

which to date, has hindered this industry’s ability to prove its true

potential as an effective advertising medium. That is, fragmentation.

Frequently described as the wild west, the fragmented ecosystem

has spawned major operational complexities—decentralized

data, disconnected processes, lack of business transparency and

workflow inefficiencies.

Fortunately, more mature industries had experienced these same

challenges during their evolution and identified that what they were

facing represented classic supply chain management problems.1 To move forward, they quickly learned that

in order to effectively scale, an end-to-end business platform was needed to connect all the disparate data,

processes and systems.

Our industry is at the evolutionary threshold where the old ways of doing business are no longer sustainable

for profitable growth. Media companies will not succeed if they cannot bring it all together and reduce the

complexities of doing business.

This paper examines the challenges faced by media companies in today’s environment, the role Advertising

Business Management plays in today and tomorrow’s digital value chain, and requirements for ensuring

success.

In today’s rapidly

evolving industry,

media companies

cannot survive if

they cannot bring it

all together.

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Innovation + Fragmentation = Complexity Because of the Internet’s low barriers to entry, technology solutions have quickly proliferated across the digital

advertising value chain over the last fifteen years. On top of the internal business systems used to run a digital

advertising operation, such as CRM, analytics tools and financial applications, today’s landscape exposes a rich,

dynamic ecosystem of demand-side and supply-side solutions.2 On the demand side, agencies, ad networks,

exchanges, demand-side platforms (DSPs) and data brokers are just a few examples of solutions aiming to

maximize each interactive marketing dollar. On the supply side, ad servers (display, mobile, and video), third-

party data providers and targeted audience solutions enable media companies to exploit the benefits of cross-

platform campaigns.

Figure 1. Digital advertising solutions have proliferated into a fragmented, complex marketplace, challenging a media company’s ability to fully capitalize on interactive opportunities.

THE CHALLENGE

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CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

THE CHALLENGE

Undoubtedly, the interplay of these demand and supply side solutions across the digital value chain, present

advertising opportunities that are unique to the digital space. The current reality, however, falls short of this

potential. Why? Innovation has driven a fragmented marketplace of non-standardized data, disconnected

systems and non-integrated processes. According to Steve Sullivan, the Interactive Advertising Bureau’s (IAB)

VP of Digital Supply Chain Solutions, digital innovation is not slowing down any time soon—“What we’re

experiencing is an increase in speed and an increase in complexity, where things are going faster, faster, and

faster.”3

For many media companies, this uncontrolled fragmentation has significantly impeded their ability to fully

capitalize on online advertising’s potential. Offering mass customization represents just one area publishers

struggle with as a result of the industry’s increasing complexities.

Providing Mass Customization in a Fragmented Ecosystem As Booz & Company Partner Christopher Vollmer points out in his Digital Darwinism report, digital media

companies have numerous points of contact with their readers, which enable them to “slice and dice their

audiences, better match ads to consumer segments, thereby increasing the marketer’s efficiency and

effectiveness.”4 This ability to provide

audiences on a more granular

level uniquely differentiates digital

from traditional media; however,

fragmentation has created a

challenging environment for media

companies to deliver targeted

audiences and for advertisers

to harness optimal marketing

effectiveness.

Unlike traditional media, digital

advertising products are dynamic in

nature. This stems from the fact that

their components are a constantly

changing mix of technologies

which media companies adopt in

Figure 2. As media companies struggle with the complexities of the new ecosystem, many are looking towards updating their supply chain capabilities to address the relatively high costs of executing digital campaigns. Booz & Company, Digital Darwinism. 2010.

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CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

THE CHALLENGE

order to provide targeted advertising solutions. One day, a banner can represent a consumer segment sourced

from a data provider; the next day, it can represent an audience that was aggregated from an ad network. In

a rapidly evolving marketplace where fragmentation only continues

to accelerate, it is easy to see how mass customization becomes

extremely difficult for media companies to achieve. Questions such

as: “How do I accurately forecast what I have to sell by audience

segment?”, “How do I give reliable access to this information?” and

“How do I effectively operationalize mass customization across all the

systems we use?”, raise critical business issues.

Without the right business infrastructure to integrate processes,

centralize data and connect critical functions across the demand and

supply sides of the ecosystem, running a digital advertising business

suddenly becomes costly. As reflected in Figure 2, media companies

view transaction costs as relatively high in comparison to traditional

advertising mediums—resources spend extensive manual effort

supporting campaigns in multiple systems, operating in silos and

pulling relevant performance metrics. As a result, media companies

have begun to rethink their supply chain capabilities as a solution for

managing high transaction costs.

Scaling to Meet the Needs of the Future Cross-Platform and Cross-Media Convergence A recent survey by DM2PRO.com revealed that greater than half

of all campaigns for the top ten percent of publishers are cross-

platform (include mobile, video, and display components in a single

order), and 60 percent of publishers plan to sell cross-platform

campaigns in the next 6-12 months.5 In the near future, a sales

proposal will also begin to include more traditional channels such as

print, radio and TV.

The convergence of platforms and media channels will require an

Media Company Combines Multiple Ad Divisions to Streamline Operations:

Condé Nast

Today, many digital publishers are re-thinking how to organize their multiple advertising divisions to facilitate a smoother, integrated buying experience. Recently, Condé Nast reorganized its overall digital operation, fusing Condé Nast Digital sales and marketing team with the Condé Nast Media group, forming one multi-platform and multi-brand unit.(3) According to Drew Schutte, Condé Nast Digital’s Senior Vice President and Chief Revenue Officer, the new structure not only allows seamless coordination with print sellers to meet the increased demand for cross selling, it ultimately improves the company’s speed to market.6

Condé Nast is just one example of how media companies’ are fundamentally changing their business models to meet increasing brand demands for an integrated experience. For companies like Condé Nast, separating the business from the production layer will be a critical driver to operational success.

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enormous amount of operational harmonization for media companies to effectively scale. Without the right

infrastructure to manage this convergence, systems will continue to operate in a fragmented manner, causing

disconnected people, data and processes.

The Extending Enterprise In addition to marketplace convergence, media companies are exploring new types of partnerships with

premium content providers to meet advertiser demand. Extending the enterprise to affiliate partners

presents a new set of operational considerations—managing partners, providing partners transparency

into performance and managing revenue payouts. Without the infrastructure to manage all of the data and

processes required to support these new partnerships, media companies will not be able to profitably scale.

Separating the Business from the Production Layer To execute a buy today, our industry operates within the production layer, where all the different technologies

used to execute a buy, such as ad servers and third-party data providers, function. This way of operating

inevitably presents serious challenges for any media company focused on adapting their business to

accommodate innovation, and cross-platform and cross-media convergence.

In countless other industries, such as automobile, airline and retail, companies initially struggled with

similar challenges, unearthing the need to operate at a level above the production layer—the business layer.

Enterprise systems provided the infrastructure needed to connect and streamline all processes and systems,

creating significant efficiencies and shifting focus back to the customer.7, 8

Digital advertising similarly needs to learn how to move out of the production layer and focus on integrating

CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

THE CHALLENGE

“Put simply, a company’s opportunity to create, sell and use

advertising effectively and profitably will depend on its ability to

deliver it seamlessly.”9

- Randall Rothenberg, Former President and CEO of the Interactive Advertising Bureau

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all the components of the value chain into a streamlined business layer. By doing so, media companies can

continue to innovate without disrupting the business.

The marketplace of digital technologies has become a thick, seemingly impossible-to-navigate jungle of

advertising solutions. As fragmented growth will continue to accelerate, media companies need to prepare

themselves for future realities. They can no longer adopt new technologies at the pace of innovation, scale

their organizations or sustain maximum performance if they are ill-equipped to deliver a seamless customer

experience.

The good news—these challenges represent classic supply

chain management problems which have been solved before

in more mature industries. In the next section, learn how an

end-to-end platform can help alleviate media companies’

operational complexities so that they can run scalable and

profitable digital advertising businesses.

Providing a Business Layer That Brings it All Together Uncontrolled adoption of new technologies and fragmented

business processes are no longer sustainable. The complexity

of the ever-evolving digital landscape demands a new model for

media companies and their partners to manage the business of advertising. This model should not only enable

open integration across any partner of choice without disrupting every day business, but also bring together all

data and processes and provide end-to-end business transparency.

Built upon classic supply chain management principles, Advertising Business Management addresses the new

set of requirements needed for media companies to attract a bigger share of marketers’ budgets. By bringing

together demand and supply-side processes and systems into a single business layer for selling, trafficking,

managing, optimizing and billing ads, Advertising Business Management provides the platform upon which

companies can continue to innovate and scale effectively.

The following provides a summary of the widespread impact an Advertising Business Management solution can

THE ROLE OF ADVERTISING BUSINESS MANAGEMENT

Advertising

Business Management

provides the business

layer media companies

need to constantly

innovate without

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have throughout a digital media company’s organization.

Master Inventory While Effectively Reducing Transaction Costs Fragmentation presents serious challenges to understanding the nature and quantity of a media company’s

inventory across its various audience segments.

By hooking into all relevant systems and integrating critical pieces of targeting data, an Advertising Business

Management solution effectively solves the challenges companies face accessing accurate, real-time, multi-

dimensional inventory. By providing an interface that makes the exchange between buyers and sellers easier,

utilizing Advertising Business Management has the added benefit of reducing transaction costs.

Capturing Revenue Opportunities at the Speed of Digital As the market for digital advertising solutions grows and cross-media and cross-platform convergence becomes

a reality, media companies more than ever need better visibility into their product offerings and an easier way

to do business with clients.

Today, however, media companies struggle with inefficient sales processes as people continue to operate in

silos and the systems they use remain disconnected. For Sales, this leads to an increase in time spent gathering

information for proposals, validating information and manually re-entering data across multiple systems. As a

result, Sales executives spend more time in front of their computers than with clients.

Advertising Business Management provides Sales with the increased transparency and efficiencies to close deals

faster and focus more on prospecting and building deeper client relationships.

Execute Campaigns More Effectively At the heart of operationalizing revenue opportunities, Ad Operations can play a vital role driving transactional

costs down through automation and maximizing revenue collected through proactive campaign management.

With many media companies, however, Ad Operations is not set up to successfully deliver their full potential.

A disconnect resides between people, processes and systems, perpetuating a lack of transparency across the

organization, manual data re-entry in multiple systems and often times, reactive campaign management. As a

result, the cost to run a digital campaign appears relatively high in comparison to more traditional advertising

channels—more time is spent gathering and validating data than delivering quality customer service.

Advertising Business Management addresses these inefficiencies by significantly streamlining the majority of

trafficking and data reconciliation activities. As a result, Ad Operations can focus more on proactively managing

CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

THE ROLE OF ADVERTISING BUSINESS MANAGMENT

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campaigns and serving clients’ business needs.

Improving Cash Flow With Streamlined Billing Processes Media companies continually aim to improve the speed and accuracy at which they close the books. The faster

Finance can get accurate invoices out the door, the quicker the organization can move towards healthier cash

flow.

In today’s environment, however, media companies struggle with long, arduous billing processes. The seemingly

unlimited number of advertising solutions in a company’s product catalog and variety of invoicing requirements

presents many billing challenges. Furthermore, non-standardized delivery data may reside in multiple systems.

This lack of standardization frequently causes discrepancies, so make goods have become the rising star for

resolving these billing issues.

Ultimately, the disparate and discrepant data hamper Finance’s ability to effectively close the books, as manual,

time-consuming processes are required to gather, validate and reconcile delivery data. Advertising Business

Management accelerates financial close by connecting all the necessary people, processes and data needed to

support billing.

CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

THE ROLE OF ADVERTISING BUSINESS MANAGMENT

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INTRODUCING OPERATIVE.ONE

The Advertising Management Solution That Brings it All Together Built upon more than 10 years of experience serving the online

advertising industry, Operative.One is the first end-to-end Advertising

Business Management solution that frees media companies from the

operational complexities of running a digital advertising business.

Operative.One provides the business layer media companies need to

operate effectively, connecting all demand and supply-side processes

and systems required to package, sell, traffic, manage, optimize and bill

advertising solutions. By integrating data, streamlining processes and

providing end-to-end transparency, the platform fuels performance and

the agility to adapt to marketers’ increasingly custom needs. More critically, as digital innovation accelerates,

and cross-media and cross-platform solutions converge, Operative.One empowers media companies to

continue innovating without disrupting the business.

Operative.One Key Benefits

For Product Marketers• Reduce unsold inventory by 5+%

• Boost CPMs by 7-10%

For Ad Sales• Reduce RFP response time by

two-thirds

• More time to prospect and handle greater RFP volumes

For Ad Operations• Reduce campaign execution costs

by 30%

• Minimize over and under delivery, reducing revenue losses by half

For Finance• Collect 100% of contracted

revenue in less time

• Reduce campaign billing costs by half

Figure 3. Operative.One brings together media companies’ demand and supply-side processes and systems necessary to package, sell, traffic, manage, optimize and collect revenue on advertising products. As a SaaS-based application, it is a fully customizable platform that provides enterprise-level security and flexible integration through open APIs.

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CUSTOMER SPOTLIGHT

Leading Digital Radio Provider In 2010, this eleven-year-old internet radio company became focused on delivering advertising beyond the

personal computer to cars, mobile phones, TVs and other devices. In order to effectively execute new channel

strategies, the company (again) turned to Operative to manage its expanding digital supply chain. Already

experiencing significant operational efficiencies with Operative Dashboard, they saw even greater benefits in

Operative.One’s ability to flexibly integrate with any emerging partner. Upon upgrading to Operative.One, the

company has the freedom to explore cross-platform innovation without disrupting the business. By providing

the ability to respond to multi-channel proposals, execute integrated campaigns, and bill orders sourced in

several platforms, the solution enables the company to continue running a scalable, profitable business.

Leading Provider of Targeted Media Programs In order to scale its publisher network business, this company looked to Operative.One to improve cost

control and maximize investment in several disparate systems. Sellers had been using a combination of

different platforms – one for revenue, another for inventory, and then spreadsheets for forecasting. The lack of

visibility into the critical information needed to target non-traditional audiences made it difficult to introduce

new partners into the selling process and continue to grow their network. Operative.One was selected to

ensure efficiencies were built, while controlling costs. The solution has proven to streamline workflows while

dramatically decreasing the margin of error and eliminating the need for multiple touch points.

Leading Celebrity Journalism and Health & Fitness Magazines Publisher This leading publisher of celebrity journalism, and health and fitness magazines in the U.S. wanted to become

more strategic and proactive in their product and sales approach. Digital innovation has created many new

opportunities for publishers to package and sell inventory, cross-platform, e.g., mobile, video, display, on the

same IO. However, this particular publisher knew that without the proper foundational layer in place that

would give them the ability to access data, in real-time and through one central repository, they would be

unable to capitalize on these new revenue opportunities. They also needed a solution that would allow them

to streamline inefficient systems and processes, so their sales team could move just as fast as the digital era.

Operative.One was selected as the ideal solution to help the company gain the visibility and transparency

necessary to maximize new business opportunities. Operative.One is also enabling them to obtain significant

cost savings by streamlining operational processes and systems across the organization.

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CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

Below is a starting point for digital advertising executives to ask of

any provider of Advertising Business Management Solutions under

consideration. The goal is to ensure the vendor is capable of meeting

critical Advertising Business Management criteria, and thereby deliver

on its true value proposition: Freedom from complexity.

Measurable ROI

How does the vendor report and measure on savings and revenue

contribution? In our view, this cannot clearly be identified without

measuring:

• Sales efficiency: What capabilities drive measurable reductions in

RFP response time and increased RFP volume?

• Impact on effective CPM: What capabilities drive revenue contribution through increased eCPM?

• Unsold and remnant inventory: How does the system minimize unsold and remnant inventory?

• Advertising Operations efficiency: What capabilities drive measurable reductions in campaign errors and

execution time?

• Impact on over and under campaign delivery: What capabilities minimize revenue cannibalization?

• Finance efficiency: What capabilities drive measurable reductions in time and cost to close the billing cycle?

How does the system drive measurable reductions in time to cash and enable 100 percent collection of

contracted revenue?

• Overall transaction cost reduction: By what percent are costs lowered across inventory?

End-to-End Visibility

• Is the vendor able to connect critical functions, processes and systems into a single platform?

• Does the vendor provide closed-loop controls, preserving data integrity throughout the digital lifecycle, i.e.,

from proposal through the billing?

Key Criteria for Advertising Business Management

1. Measurable ROI2. End-to-End Visibility3. Empowering Innovation4. Flexible, Open Platform5. Deep Domain Expertise

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CRITERIA FOR ADVERTISING BUSINESS MANAGEMENT

CRITERIA FOR ADVERTISING BUSINESS MANAGMENT

Empowering Innovation

• Is the platform future-proof in that it will empower scale for tomorrow’s cross-media leaders?

• Can innovation be operationalized in real-time without disruption to the business?

• How are new partners added?

• Does the vendor support one view of primary and third-party data?

Flexible, Open Enterprise-Level Platform

• Does the vendor provide its software as a service (SaaS), offering lowest possible deployment, maintenance

and overall ownership costs?

• Is the platform fully and easily extensible through a rich set of APIs?

• Does the platform support enterprise-level security?

• Is the platform configurable to your particular business needs?

• How are new systems integrated?

Domain Expertise

• Does the vendor have deep domain expertise in digital advertising operations?

• Does the vendor have experience streamlining the science of advertising business management through

technology automation, enabling media companies to focus on the art of innovation, relationships,

retention and customer satisfaction?

• Does the vendor offer value-added services to maximize success and ensure flawless campaign execution?

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CONCLUSION

The shift in advertising dollars into the online arena presents significant opportunities and has spurred a

renaissance of digital innovation. However, fragmentation and complexity have prevented the movement from

flourishing. The digital media industry cannot truly thrive until it becomes easier to do business with.

How can publishers embrace innovation while operating effectively and profitably? Even more importantly, how

can media companies enable clients to focus on what is truly important, marketing effectiveness?

During the 1980s, a constantly changing business environment was marked by democratization of intellectual

property, as mainframes became displaced by personal computers. In addition, the enterprise was extending

due to mergers and acquisitions, globalization and outsourcing. Business was becoming fragmented and

extended.

In the same decade, large companies figured out how to strike the balance between profitable growth and

innovation through adoption of enterprise business software. Business management systems enabled

innovation by centralizing and streamlining all primary work processes, integrating all of the necessary internal

and external systems and providing greater transparency to the business. Since the enterprise software

evolution, you will not find a leader in any industry that has not figured out how to bring together all of their

value chain processes and systems.

Digital media today is no different—and can certainly learn from history. Let’s face it—it is rare today to find

any media business delivering customer value with only the people and products sitting inside its walls. An ad

product sold today is the result of the coordination of multiple ad servers, third-party data, targeting systems

and creative tools. Add print and mobile, and you’ve got yourself a true supply chain problem.

In order for media companies to grow profitably, they need an Advertising Business Management system that

operationalizes innovation as it happens, without disruption to everyday business. Additionally, by connecting

disparate production systems, companies can focus on customers, products and the business of advertising.

Operative.One is the first Advertising Business Management solution to respond to today’s dynamic needs,

by joining the demand and supply sides of the advertising ecosystem. The platform provides freedom from

the complexities of the digital value chain by integrating all processes and systems necessary to package, sell,

traffic, manage, optimize and bill ads. With Operative.One, media companies and their partners enjoy end-to-

end business transparency, resulting in a boost in operational efficiencies and reduction in overall transaction

costs.

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REFERENCES

1. Simchi-Levi, D, Kaminsky, P, & Simchi-Levi, E. (2008). Designing and managing the supply chain. McGraw-Hill

College.

2. Digital Advertising Technology Landscape. (2010). Luma Partners.

3. Sullivan, S. at Interactive Advertising Bureau. (2010). Ad Operations Summit Speech.

4. Vollmer, C. at Booz & Company. (2010). Digital Darwinism. www.iab.net/media/file/Digital_

DarwinismMME2010FinalReport.pdf

5. DM2Pro. (2010). Digital Ad Ops State of the Industry Survey. www.dm2pro.com/downloads/20100624_1/

download

6. Fell, J. (2010). Condé Nast Reorgs Digital Sales and Marketing. http://www.foliomag.com/2010/cond-nast-

reorgs-digital-sales-and-marketing

7. United States General Accounting Office. (1996). Best Management Practices: Reengingeering the Air

Force’s Logistics System Can Yield Substantial Savings. http://www.gao.gov/archive/1996/ns96005.pdf

8. Matsubara, K, Pourmohammadi, H. (2009). The Automotive Industry Supply Chain: The Evolution Of Quality

And Supplier Relationships. http://www.bizresearchpapers.com/8.Hamid-.pdf

9. Rothenberg, R. at Interactive Advertising Bureau. (2010). The iPad’s Threat to Advertising. http://www.iab.

net/iablog/randall-rothenberg/2010/01/

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