How to Boost Agency and Tech Performances Using Supply Chain Management

There will surely be a learning curve for some

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In media, one of today’s most in-demand skills is the ability to connect, integrate and synchronize multiple partners, which is truly needed when it comes to agencies and mar-tech and ad-tech providers.

The increasing complexity of data, technology and partners has opened the doors of the media industry—once home of creative people and psychologists—to the discipline of supply chain management. The challenge for CMOs is determining how to embed this emerging capability in the current organizations, training plans, recruitment efforts and partnerships for media.

With an initial focus on logistics and physical flows, supply chain management—the design, planning, execution, control and monitoring of supply chain activities—expanded first to information flows (supply, demand, inventory, service level) and then to financial flows (cash, capital, payments, credits).

In supply chains, the multiple partners often have different incentives that must align across all three dimensions. In media, there is no physical flow. Yet information and financial flows are quite complex, and supply chain management can help coordinate across all partners.

Lost in translation

Several media problems can be optimized with supply chain management approaches, from agency management—what processes should be in-sourced?—to the waterfall in the programmatic supply chain—how to approach auction dynamics?—to the lack of connection between media and creative—what creative assets are performing better?

As such, supply chain management can go from zero to hero. Its prestige was once subordinate to that of creative people. Now it helps solve crucial problems. Significant value can be created for both extremes of the supply chain: the advertisers and the publishers. Then there are agencies and technology companies in the middle.

Media operations have become so complex that the myriad of specialist agency and technology providers often confuses people in the media industry. The capability gap between advertisers and ad-tech or mar-tech professionals does not make things easier.

Media leaders need to act as connectors and translators between the business needs of brands and the multitude of technology companies. They need to possess a handful of old-school engineering and process skills blended with an in-depth knowledge of today’s media industry.

How to move forward

Advertisers need to design the most suitable puzzle of capabilities that best meets their specific business needs. To do that, they first need to map out all potential technology and agency partners. While this may seem an easy task, today’s marketing technology landscape includes about 8,000 active companies. An exponential increase of complexity calls for the ability to navigate this overwhelming ecosystem and drive simplification.

By focusing on the processes with higher value added, advertisers can define an action plan. Processes like media measurement, planning, creative connection, buying, verification, reporting, source-to-pay and auditing could represent a good starting point. These processes form the backbone of the media supply chain, where most value and costs are generated.

By understanding the top partners in each of these areas and their potential synergies and duplications, advertisers can select technology and agency partners that can run the core processes of the media supply chain in a structured and automated fashion. Once the mapping is complete and the choice of specific partners is done, the overall system needs robust governance to drive efficiency and effectiveness.

From an organizational perspective, advertisers need to embed supply chain management thinking in their day-to-day operations. This will help optimize resource allocation across partners in the ecosystem and design robust governance models. It will also drive collaboration, innovation and efficiencies.

Supply chain management can synchronize today’s fragmented, data-rich, tech-enabled ecosystem that’s full of integration challenges. Operations research can help advertisers leverage advanced analytics to solve the corresponding optimization problems.

Going forward, the advertising industry will go through deep digital transformations. CMOs have an important role to lead the media function to a new frontier. Supply chain management is one of the capabilities that will be needed, and CMOs have multiple solutions available to raise the bar in this space, from hiring, training and growing supply chain professionals in their media functions to teaching supply chain skills to their existing media professionals.

Both solutions will require significant learning agility—some people will need to learn a completely new industry; some will have to learn a drastically different mindset.

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This story first appeared in the April 12, 2021, issue of Adweek magazine. Click here to subscribe.