Agencies need to change. This is something that became clear to us in research we carried out amongst global CMOs which showed that only 27% of advertisers feel that having the most talented media agency will contribute to the success of their digital advertising campaign.
So what’s more important to them? And, with agencies currently owning the biggest slice of the $140 billion (Emarketer estimate) global digital advertising pie, where is the balance of power going, particularly where programmatic trading is concerned?
It seems it’s a case of advertisers taking control for themselves. In our research 46% of all advertisers and 56% of Mega advertisers (spend £40m+) told us that they believe a deeper in-house knowledge of digital advertising technology will be the most important factor in bringing them digital advertising success. Forty three percent of advertisers also plan on bringing more responsibility in-house for digital planning within the next 12 months.
The biggest catalyst for this shift is that advertisers are becoming concerned about the opacity and over-complexity that is rife in the digital advertising eco-system. From our research we identified that forty three percent believe that there are still too many vendors and middlemen associated with buying digital advertising space. More than two-thirds feel that transparency levels in media trading have stayed the same or declined. As marketers push a growing proportion of budget into digital advertising, there’s a real desire for a clear understanding of where their money is going, what their advertising is achieving, who is seeing their ads – and, ultimately, to stop losing the 50%+ of their spend they lose through fees, inaccuracies, out-of-frequency ads and fraud.
Advertisers are simply not getting the transparency that they want from media agencies who tend to use a number of trading partners who all take margin, and whose campaign reporting is usually based on a summary that shows the top 10% of sites where ads are seen, ignoring the increasingly important long tail of digital advertising. This type of reporting has limited value in any case; not only as it ignores the majority of a campaign, but also because what’s more important to an advertiser is not only which site their ad is on, but who the consumer is. While a number of advertisers still allocate a percentage of their digital advertising budget towards contextual buys with specific publishers, the vast majority, 82%, are moving this money away towards audience-targeted buys.
In addition, advertisers are concerned about the safety and quality of the sites where their ads are appearing and this is not something that can be determined through contextual buying. However, within programmatic there are tools such as pre-bid filters, viewability, scores etc that make it possible to significantly reduce risk.
The reason why the in-house option has sprinted up the agenda for global brands is because there are now alternative options making it more feasible for them to do this. As ad tech firms become more client-focused and advertisers become more tech-savvy and control-hungry, this is leading to creation of programmatic platforms that enable brands to bring both data management and media execution within their own walls, with the support of their tech partner.
The other facilitator is that there is a new business model which benefits advertisers too whereby technology firms such as AudienceScience are shifting away from payment by output. Instead, clients pay an enterprise fee for running their entire digital advertising programme through one platform – much like brands use SAAS solutions such as CRM, web analytics and email service providers. This means the incentive is to provide quality, rather than volume, and this is contracted by the brand rather than agency partner; however, access can be provided to agencies as required to meet the client’s strategy.
So what does this all mean for agencies? I believe that, for the forward-thinking ones out there, it’s about a rebirth of sorts. They are recognising that the modus operandi is shifting away from a two-way, agency-client partnership, to a three-way relationship that brings technology into the picture.
Instead of fighting a losing battle to retain revenues from ad buying, they are extending their value proposition to clients by strengthening the skills that advertisers really need from them – long-term media strategy and planning plus the execution of media that is not being transacted through programmatic channels. They are recognising that it is better to invest in making themselves indispensible to clients in sustainable ways, rather than fighting for the day-to-day management of audience and data, targeting and trading which is proving to be handled more effectively by technology.
After all, it’s better to have a smaller slice of a bigger pie than to have no pie at all.
