The Capabilities to Drive High Performance in the Digital Advertising Industry

For the 2008 Accenture Global Digital Advertising Study—our second annual report on important trends in the digital advertising industry—we surveyed executives of digital media organizations, traditional firms and media services companies about the attributes of high performance and which of their peers they believe will rise to the top of the digital advertising industry in the years to come.

In general, the quest for high performance frames this year's study. We asked respondents to think about keys to achieving high performance in digital advertising: What are the attributes most important to success? Which of these attributes do they feel is most in need of upgrading at their companies if they are to compete effectively?

These two questions led to the emergence of three capabilities that are seen as most important to overall success in digital advertising and, simultaneously, most in need of attention: workforce talent; applied business analytics; and investments and business development.

Asked to name companies poised for high performance in the coming years, the results signaled that significant change is at hand. Many of today's most successful companies rank lower than the digital leaders in terms of perceptions of their prospects for long-term success.

The digital advertising industry is currently experiencing impressive growth. Internet advertising revenues around the world now exceed $45 billion and are on a trajectory to reach 21 percent of the market by 2012.

At the same time, because digital advertising is a relative newcomer on the scene, many companies are struggling to understand how to assess value, how to measure progress and how to benchmark performance. What are the characteristics of a high-performance business in the digital advertising arena when it comes to sales, costs, operations, talent management, organizational structures and leadership? What can be learned, both from the new up-and-comers in the industry, as well as the traditional, well-established firms? What are the barriers to growth and what are some companies doing to overcome those challenges?

Accenture’s 2008 Global Digital Advertising Study sought to answer these critically important questions about digital performance, standards, return on investment and keys to success.

The 2008 Accenture Global Digital Advertising Study asked executives to think about keys to achieving high performance in digital advertising, phrased in terms of 14 attributes related to strategy, technology, business performance and culture. What are the attributes most important to success? Which of these attributes do they feel is most in need of upgrading at their companies if they are to compete effectively?

These two questions led to the emergence of three attributes that are seen both as most important to overall success in digital advertising and simultaneously in most need of attention:

• Workforce talent: Attracting and retaining top talent, so that a company has the right skills and experience to be innovative and to define the right operating models, technologies and business partnerships necessary to drive high performance. Improving sales force performance is especially important.
  
  
• Applied business analytics: Developing more effective information technology and process capabilities that support the timely application of analytic insight to business problems and offerings—for example, taking website traffic analytics and using it to target messages to a consumer.
  
  
• Investments and business development: Creating more extensive and robust investment and business development plans that can meet the needs of a more dynamic environment, one in which alliances and partnerships in particular are critical to success  

One major headline from the Accenture research is that the rumblings of major change in the advertising industry can already be heard based on a comparison of current industry performance with perceptions of executives about who will dominate in the long term.

As part of our analysis, we created a ranked ordering of advertising companies according to total advertising revenues. We then compared that evaluation to how executives in our survey ranked these same players according to the perception of the companies' ability to achieve high performance in the future.

This analysis showed that many traditional advertising companies drop precipitously in ranking, meaning that executive peers are less than confident in the ability of traditional advertising companies to meet the challenges of the digital advertising age.

On the other hand, these same executives believe the future lies with the kinds of companies who are already dominating in terms of digital market share. These companies are perceived by their executive peers to be better equipped to achieve high performance as the advertising industry evolves in a digital age. Several companies rose in ranking based on perceptions of their potential to be high performers in the future.

What are the imperatives for action based on the 2008 Accenture Global Digital Advertising Study?

• Consider core vs. non-core skills and capabilities and expand the scope of outsourcing.
  
  
• Focus on developing the right culture for success.
  
  
• Analyze the current workforce based on capacity for repurposing.
  
  

In the area of applied business analytics: 

• Develop leaders who push to create a fact-based culture that extends even to suppliers and other business partners.
  
  
• Improve the capability to hire and retain employees who are data savvy or who can quickly become so.
  
  
• Focus on retooling processes to be fact based, with an integrated, cross-enterprise view of the data.
  
  
• Develop new technology-based solutions to capture, sort and make sense of the data.

When it comes to investments and business development: 

• Invest in more sophisticated customer segmentation capabilities.
  
  
• Effectively manage the transition to a performance-based environment.
  
  
• Target innovative new formats such as mobile gaming.
  
  
• Carefully analyze what capabilities to develop internally and which should instead be grown through acquisition or other means.
  
  
• Consider careful acquisitions to achieve marketplace dominance.

Accenture believes that capitalizing on the opportunities of digital advertising is, in large measure, a cultural issue. Indeed, this year's survey underscored a similar finding from last year: that the cultural and people challenges for an established business facing rapid, disruptive change are profound.

The answer is, in part, strong leadership, but also attention to the details of managing change and putting new performance measures in place.