Holding Cos. as Media Owners: Is It Good for Anyone?


Sure, we applaud the recent moves that holding companies have made toward becoming more innovative and more engaged in the shift toward digital media and marketing. Their recent acquisitions and investments in technology companies are strong signals that they are putting their money where their mouths are and are serious about staying relevant in the technology-powered digital landscape of the future.

That being said, it is possible to get too enamored of the latest technology and have the new tools and capabilities blind you from seeing that you have crossed a line from being an agent to being a seller. When a holding company owns and operates a media property, such as an online ad network, and then suggests that its agency subsidiaries purchase media from this media property, they have gone too far.

Yes, recent ad network and ad-exchange technologies make it easy for just about anyone to start an online ad network. And yes, the media companies are sick and tired of giving aggregators a dollar just to have them pocket half of the money as margin. But in the U.S., clients expect their agencies to work entirely on their behalf in negotiating media deals, not to make money on both ends of the transaction. Given this expectation, it would seem to be difficult for a holding company to make any owned-and-operated media property investment pay out. Once clients understand their agency's holding company is double-dipping, there are bound to be some tough questions to answer: How can you guarantee your network isn't getting preferential treatment? Is the performance of my campaign being sacrificed for your network's margin?

The first attempts by the holding companies to aggregate online media have been limited to the traditional-network model. They have established a consolidated network buying organization to handle online network buys across their agencies.
Using this version 1.0 approach, the holding companies set up a network of networks. In practice, this means that:

1. The consolidated-network buying organization shoves networks and performance buys through a traditional ad network management infrastructure.

2. They manually manage a global frequency cap by instructing the participating networks to turn up and down their individual frequency caps.

3. They then rank the networks by CPA performance. Their media optimization consists of demands that CPMs be cut by those networks not meeting the CPA goal.

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