Risk Management in Digital Advertising: An Analysis from the Advertisers’ Media Management Perspective

ABSTRACT For advertisers, media management is the downstream part of advertising: After creative content is produced, advertisers manage different distribution channels to reach the right target audiences in efficient and effective ways. In the last five years, new technologies have disrupted this space and supported the exponential growth of digital advertising. Creative content may be distributed via internet-connected devices, such as desktop, mobile, or connected TV. Advertisers must understand the benefits and risks of each channel to best allocate their marketing budgets and drive both growth and cost savings. Tech and data-driven digital advertising promises many benefits to advertisers, ranging from precision targeting and measurable results to automation and real-time optimization. At the same time, advertisers face major challenges from a host of actors in the media ecosystem that often have misaligned incentives. Several studies have investigated how digital advertising activities affect business results in order to understand their positive and negative impacts. Very few studies, however, have focused on risk management in relation to digital advertising. In this article, we aim to fill this gap. Specifically, we identify the main risks in the paid distribution of digital advertising and the corresponding mitigation strategies. We examined digital advertising from the advertisers’ media management perspective. Interestingly, we found that risks and corresponding mitigation strategies can be clustered in specific groups that can help chief marketing officers and media executives drive the right actions.