Take a look at what people are talking about in the world of digital advertising and one topic that seems to be creating serious column inches is the rise in advertisers taking their programmatic trading out of agencies and bringing it in-house. Netflix and Kellogg’s have been amongst the most vocal here, coming clean at the end of last year in AdAge about the benefits of taking control of their programmatic activity for themselves – improved transparency, greater efficiency and effectiveness and regaining control of their own first party data.
These are compelling arguments for taking programmatic in-house and the whole issue has put the cat amongst the agency pigeons. Not surprisingly, having been the most important partner for advertisers for so long, the new technology-driven landscape is leading to unsettling times for agencies.
The pressure on agencies is only likely to grow as big brands like Procter & Gamble also announce that they are looking to save half-a-billion dollars in intermediary and agency fees, with CFO Jon Moeller telling analysts, “We plan to significantly simplify and reduce the number of agency relationships and the costs associated with the current complexity and inefficiency while upgrading agency capability to improve creative quality and communication effectiveness.”
So does ‘in-house’ mean ‘agencies out’? Certainly not. But what it does mean is that agencies need to let go of their traditional model in the knowledge that media arbitrage and percentage-of-media payments are unlikely to keep them in the manner to which they are accustomed for much longer. Instead, they need to refocus their position in terms of what knowledge and skills still render them invaluable to advertisers. It is now a question of them adding value, rather than complexity, to the digital advertising process.
Agencies’ understanding of brands’ consumers, their desires, needs and aspirations, remains unrivalled. This is the fuel behind any great campaign, and agencies will continue to be the powerhouses in creating advertisers’ media strategies and planning. Clients will also need agencies to not only execute campaigns across media that is not transacted through programmatic channels, but also to connect online and offline. Agencies are the ones that have the over-arching view across all media and can bring their knowledge to bear in creating a more cohesive cross-media planning strategy.
Equally, if not more-so, advertisers will need agencies to bring creative and disruptive thinking to the party. As online gets increasingly crowded, the ability for a brand to stand out is paramount. The agency’s skills in pushing creative boundaries and enabling high-impact, personalised campaigns that are in context and relevant will be invaluable.
However, once an advertiser brings programmatic in-house, for agencies this also signals the relinquishing of that two-way partnership between them and the client which they have enjoyed for so long. Instead, they will increasingly be part of a three-way relationship with advertiser, agency and ad tech partners. The agency focuses on strategy and planning, the technology firm brings the programmatic platform, training and support for implementing campaigns and the client takes overall control of all activity.
In this scenario the agency planning team becomes accountable to the client for the planning of all media under the client’s direction and communicating with the technology partner about how the overall strategy influences programmatic. The technology partner is accountable to the advertiser for executing against that strategy and sharing results with both client and agency to inform future campaign planning.
For all three members of this new-look team it’s about collaborating and working to their strengths to add value to the process – and ultimately for both agency and technology partner to earn their seat at the table.
