What Will Come of Digital Agencies?

2 Jun

digital mediaWith the continued growth of digital media as a delivery mechanism for content and a forum for communications between brands and consumers and among consumers isn’t it time the question was asked; “Is there a need for ad agencies specializing in digital?”

 According to Gartner, digital marketing represented an average of 28.5% of global marketing budgets in 2013. As digital has become more an more pervasive virtually every marketing services firm and advertising agency has developed a full compliment of resources and proficiencies for transacting business in a digital world. This dynamic has led to a great deal of overlap on many advertisers’ agency rosters, with multiple firms providing similar services and introduces challenges with regard to coordinating efforts from a multi-channel media delivery, tracking and performance optimization perspective.

 In our agency contract compliance auditing practice it is commonplace to find that multiple agency partners are purchasing digital media, producing digital creative and contracting with ad serving partners to distribute ads on behalf of a given advertiser. Additionally, it is seldom that we find that these activities are coordinated to leverage that advertiser’s full-investment with a given publisher or third party ad-server or to minimize creative development expenses, where digital asset sharing could have resulted in an “adaptation” rather than a customized creative exploration.

 Similarly, agency holding companies must also be evaluating these redundancies in resources and personnel and questioning the need to maintain separate agency brands focused specifically on digital. Eliminating duplicative software licenses, technology platforms and administrative services within their agency network and re-allocating their digital personnel with the goal of boosting utilization could yield significant savings. Realizing the potential for improved operating efficiencies, agencies have already begun to concentrate digital media placement resources within their network trading desk operations and digital production capabilities within agency network centers of excellence. So, in a sense, the move away from separate stand-alone digital agencies has already begun.

 In order to assess their opportunities in this area, rather than simply allow their holding company partners to transition them to a solution of the holding company’s choice, advertisers should begin assessing service delivery models that work best for their operations. Digital asset management, big data and the advent of demand side platform technology create a multitude of options for advertisers both in aligning themselves with the right strategic partners and or in transitioning certain digital advertising functions in-house.

 The question to be asked is: “Do advertisers have the requisite information in terms of agency delivery costs to accurately assess alternatives or build a business case for internalizing select digital activities?” In most instances the direct answer is “No.” Near-term, advertisers would be best served to begin assessing digital media and production workflows, evaluating time-on-task for each facet of the digital creation and delivery chain and benchmarking the rates currently being paid across their agency network for specific functions. This will allow advertisers to engage with their procurement teams and agency partners in meaningful dialog to begin charting solutions in this area with the goal of allowing advertisers to fully optimize their digital investments in a more secure, transparent manner.

 As with so many technology driven process changes, there will be no “industry standard.” Rather, savvy advertisers will work with their agency partners to shape digital delivery models, which are right for their brands and their business based upon the knowledge and resources available today. In the end, both agencies and advertisers have an opportunity to forge stronger relationships, realize efficiencies and be in a position to better leverage the monies being invested by advertisers in the digital arena. In the words of the great American author, Mark Twain:

 “The secret of getting ahead is getting started.”

Interested in learning more about a strategic supplier management for your marketing services agency network? Contact Cliff Campeau, Principal at Advertising Audit & Risk Management, LLC for a complimentary consultation on the topic at ccampeau@aarmusa.com.

 

 

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