Thriving in a Fragmented Market: Leveraging Advertising Diversity
CONTENTS
As predicted by Pathlabs’ CEO at the start of 2024, fragmentation is a prevalent challenge for brands and agencies navigating the digital media and advertising landscape, with only those most adept gaining the competitive edge.
This blog aims to define fragmentation, discuss the associated challenges and opportunities, and explore how an MEP can help mitigate the ambiguity.
What Is Fragmentation in Digital Media and Advertising?
Fragmentation, stemming from the idea of market fragmentation, is a term that characterizes the ongoing diversification and proliferation of channels, devices, platforms, audiences, services, and players in the digital media and advertising industry today.
The Importance of Diversifying Advertising Channels
Fragmentation is important as it is a naturally occurring process. As markets and industries, along with their constituent operations and parties, grow and evolve, they branch out, becoming increasingly specialized and tailored to distinct audiences and functionalities.
This has been precisely the case for our digital media and advertising industry and all it encompasses.
The industry used to be much more straightforward, anchored in core channels like billboards, radio, TV, and print. A handful of publishers, advertisers, and intermediaries represented the main stakeholders. Ad placement was made in a direct deal, negotiated, and set within a few hours.
Over the years, and since going digital, this simple model is no more, as fragmentation has catalyzed in the industry across multiple levels:
Channel Level
While traditional media persists, digital media channels have fragmented and expanded, now including display, paid social, paid search, CTV/OTT, native, DOOH, in-game advertising, etc.
Each channel has seen further fragmentation; for example, paid social encompasses platforms like LinkedIn, Meta (Facebook and Instagram), Pinterest, Reddit, TikTok, and Snapchat, while CTV includes services such as Amazon Prime Video, Peacock, Hulu TV, YouTube TV, etc.
Audience Level
Broad audiences have specialized and dispersed across these channels and platforms. Within these locations, teams can place ads in front of audiences who are not just statically absorbing content but also performing different activities, including social engagement, researching information, looking for services, and searching for products in the retail sector.
New targeting methodologies and audience segments, such as behavioral, interest, demographic, geographic, first-party, and third-party, are also available.
Service Level
The ecosystem supporting campaign execution has broadened from solely relying on in-house teams or traditional agencies to incorporating a diverse array of media services, including external vendors, independent agencies, and media execution partners (MEPs).
These services vary in extent; some may only help with creative development and media planning, while others provide full-service offerings.
Device Level
Consumer engagement with advertising content now spans mobile phones, tablets, laptops, CTVs, and even DOOH billboards in public spaces.
Buying and Execution Level
Beyond traditional direct deals, the media buying and execution landscape has diversified. Teams now navigate various buying options, from self-serve arrangements on specific platforms to bidding across open exchanges and private marketplaces (PMP) with DSPs.
Tracking, Reporting, Analysis, and Software Level
Tracking, reporting, and analyzing campaign performance has fragmented maybe the most. Teams must decide how best to obtain and use data from their campaigns, whether through the native platform used for execution or supplementary data tools and services such as TapClicks or Google Analytics.
Furthermore, they must identify and utilize additional tools to leverage during the campaign process. LiveRamp for data management, Asana for task/project management, and Double Verify for security verification are just a few examples of these technologies necessary to run complex and quality campaigns.
Challenges with Navigating Fragmentation
Added Complexity for Teams
The primary challenge fragmentation poses is its added complexity for those navigating the digital media and advertising industry, especially on the advertiser and media execution side.
Teams don’t have the simple luxuries of executing media campaigns reminiscent of the pre-fragmentation era. Instead, if they want to serve ads and run a digital campaign, they must forge a very intricate path in decision-making regarding the right channels, platforms, services, tracking and attribution tools, auction types, ad servers, and data to use—the list goes on.
Piecing all these parts together and making everything speak to one another is even more difficult, requiring teams to invest much more overhead, time, and strategy to scratch the surface of success with their digital media endeavors.
This complexity further magnifies for agencies managing several campaigns for clients.
Inconsistent Tracking and Reporting
Tracking and reporting are necessary for successful campaign execution, yet fragmentation has made these processes messy.
Many teams track and report on campaigns within the platform they use for campaign execution; however, especially when running multi-channel campaigns, they need additional tools and software to help compile, analyze, and report on data.
As if choosing which technology to use wasn’t hard enough, many of these disparate tools and add-ons do not communicate or integrate easily, resulting in incompatible data. In effect, campaign metrics, attribution models, and other data might calculate incorrectly or appear differently depending on where the team looks.
This directly leads to blurred insights; when teams can’t accurately discern campaign performance, executing campaigns becomes increasingly unclear.
Audience Dispersal: Need for Multi-Channel Presence
Lastly, since audiences have specialized and now adhere to different channels and platforms, this also increases complexity.
Teams must execute more integrated channel strategies to fully reach their target audience while continuing to test and stay agile if the audience's preferences shift.
Leveraging Advertising Diversity for Strategic Advantage
Although fragmentation complicates the digital media and advertising industry, it has yielded multiple beneficial outcomes.
Innovation and Problem-Solving
Our digital media landscape thrives on innovators, problem solvers, and entrepreneurs empowered to address issues and create enhancements.
Whether motivated by dissatisfaction with existing services or a belief in how to do something better, they develop and pioneer new platforms, tools, services, and methods fueling ongoing innovation within the advertising industry, tailoring them to specific audiences or markets.
This myriad of new offerings contributes to fragmentation, however, it is beneficial as it enriches our industry. Just look at the current state of going cookieless; we see a new swath of services, platforms, and tools coming out every day. It is introducing complexity, but also many breakthroughs and niche solutions.
Flexibility and Autonomy
With traditional advertising, teams had a few channels and mediums to choose from and limited partners and services to work with.
Now, fragmentation has caused the opposite: teams have too many locations where they can place ads, and they have even more tools, platforms, and services to use.
In effect, teams can build their tech stack and execute paid digital media however they want. This is a big win, especially for independent agencies that value flexibility and offer other services and products alongside digital media.
Personalization and Catering To Funnel
In our fragmented industry, teams no longer have to create a single, generic advertisement to run on a traditional billboard or the radio. Instead, as mentioned, they can have a multi-channel approach, personalizing the ad content for each corresponding channel and funnel objective.
For instance, a team advertising a sale may create one version of their campaign for broader audiences on Meta to generate awareness, simultaneously developing a separate campaign version with specific calls to action, maybe even a discount code, targeted to another audience on display and paid search to push lower funnel engagement and conversions.
Thrive in a Fragmented Market with a Media Execution Partner
Agencies that offer digital media services already face challenges in determining how to execute campaigns and drive client performance.
Now, to be successful, these agencies must further invest time in researching, testing, and adapting to the new happenings spurred by fragmentation. In short, decoding fragmentation becomes a full-time job, added to these leaders’ current campaign execution and management responsibilities.
To alleviate this burden, agencies can collaborate with a Media Execution Partner (MEP). MEPs offer specialized workflows, advanced technology access, and, most notably, a team of trained professionals dedicated to assisting agencies with their media execution.
A MEP's team stays abreast of the increasingly fragmented landscape, performing market research and vetting its tech stack. This allows them to step in and perform the media execution for agencies, unifying all the pieces and enabling agency leaders to free up time and focus on high-level planning and scaling the business.
In Conclusion…
Fragmentation in digital media and advertising has led to a complex landscape with diversified channels, platforms, and audience segments.
This evolution presents both hardships and opportunities, requiring adaptability and strategic innovation. The industry will likely continue to fragment, necessitating even more nuanced approaches to campaign management and execution.
Leveraging partnerships with Media Execution Partners (MEPs) can be a vital strategy for navigating this fragmented market. It allows agencies to focus on high-level strategy and business growth while relying on Pathlabs' people, workflows, and technology to drive media performance.