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Working Media or Tech Tax?

2 Apr

dreamstime_xs_40032570Fact: Digital media expenditures have grown to represent the lion share of advertisers’ media spend, with programmatic being the dominant form of digital media advertising. According to Zenith’s recently released Programmatic Marketing Forecast, “65% of all money spent on advertising in digital media in 2019 will be traded programmatically.”

As marketers continue to focus on increasing working media ratios, they must confront the rise in expenses ranging from agency campaign management fees, data fees and adtech fees associated with their digital media investment.

According to WARC, which provides guidance to many of the world’s largest advertisers, advertising agencies and publishers, in 2017 “over $30.0B of the $63.4B spent on programmatic advertising went to technology vendors.” Thus, it is understandable why so many refer to these fees as a “Tech Tax.”

U.S. Advertising On the Rise In 2019

5 Mar

dreamstime_xs_29951176Good news for the U.S. advertising industry as revenues are expected  to grow 2% in the first quarter and 7.6% for 2019. This according to Standard Media Index (SMI).

Of note, SMI data is generated from raw invoices — actual dollar amounts spent on each ad buy — from five of the seven media agency holding groups and independent media agencies Read More

 

Be Big Somewhere… 3 Keys to Media Planning Success

20 Feb

apertureIn the past, there were two overarching concepts that helped to form the basis of an advertiser’s successful media planning efforts.

Be Big Somewhere – Simply stated, this approach held that in order to break through the clutter and gain the attention of an advertiser’s target audience one had to focus their media in places and at times where they could achieve a significant share of voice vis-à-vis the competition.

Aperture – Core to this concept was the belief that each consumer had an ideal time and place when they could be reached by an advertiser’s message. Simultaneously, there were times when the consumer was either prepared to buy or was gathering information regarding a potential future purchase. The intersection of these two points was the “aperture” and was considered to be the ideal point to expose consumers to an advertiser’s message.

Simple proven concepts that had withstood the test of time… up to a point.

At a time marked by the hyper-fragmentation and proliferation of media where consumers have access to a plethora of choices for accessing information and entertainment, it is questionable whether or not these concepts still hold true.

While the dynamic of a rapidly evolving media marketplace creates exciting content access options for consumers, it poses challenges for advertisers and their agency partners. For example, while the average amount of time consumers spend with media is significant, averaging 721 minutes per day (Source: Statista, 2019) determining the right time and place for targeting an advertiser’s message is difficult at best:

Avg. Time Spent with Media by Consumers in Minutes per Day (2017)

  • TV                                            238
  • Mobile (non-voice)               197
  • Online (laptop, desktop)     123
  • Radio                                         86
  • Other Connected Devices      33
  • Print                                          24
  • Other                                         21

         Total Minutes Per Day         721

Further, over the course of a typical day, studies have shown that consumers are exposed to somewhere between 4,000 and 10,000 ad messages. This exposure leads to increased levels of consumer apathy and message burnout. Thus, achieving a meaningful share-of-voice to break through the clutter, and then to effectively reach the target audience and finding the right aperture in this environment, is certainly more complex.

Compounding these environmental factors, at least for advertisers working with multiple media agencies, is the added challenge related to the development of an integrated, holistic planning process to help optimize media allocation decisions across agencies, platforms, publishers, networks, etc.

Moving forward there are three evolving, but yet to be perfected, media planning tools whose furtherance would greatly aid advertisers and their media partners:

  1. Cross-channel, multi-touch attribution models – In order for advertisers to truly optimize their media investments, it is imperative that they be able to assess the role that each consumer touchpoint plays in achieving their goals.
  2. Cross-platform media measurement tools – Simply put, planners need tools (e.g. common metrics) that will allow them to better understand campaign reach by platform and overall, while being able to calibrate total content ratings, regardless of where consumers view the message.
  3. Artificial intelligence platforms – AI has the potential to greatly assist media planners (and buyers) in analyzing multiple data sets to aid in everything from audience segmentation to creating and comparing alternative strategies and leveraging data on a real-time basis to optimize buys while a campaign is underway.

As the industry continues to perfect these tools and agencies master their application, the ability to plan media seamlessly across platforms will be greatly enhanced. In the words of NHL Hall of Famer, Wayne Gretzky:

A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

 

 

Media Agencies on Edge as Management Consultants Take Aim

1 Jun

Contract SigningIt came as no surprise to anyone in the industry when Accenture recently announced the launch of its programmatic ad unit. After all, weeks before Accenture had completed the acquisition of Meredith’s digital media unit MXM. Further, over the course of the last few years many of the large management consultancies, including Accenture, had acquired creative, design, digital, CRM, Social and full-service agencies as they looked to expand their presence in the marketing services sector.

The row over Accenture’s announcement, at least within the agency community, was focused on its Media Management practice and the work that they do globally in the media auditing and agency review space. The argument proffered by agencies and their associations, specifically the 4As and the UK’s IPA, was that it was inappropriate for Accenture to provide media auditing and search consulting services and programmatic media buying due to the potential for conflict of interest. In short, the agencies expressed concern that Accenture would utilize the data that is accesses in its media management practice to inform its work in the programmatic buying area.

Many would argue that the “conflict of interest” defense raised by the agency community rings hollow. This is due to the fact that Accenture and other management consulting firms routinely implement firewalls and processes to separate and protect data from one client or practice being co-mingled or misused intentionally or not by another.

Further, the agency community has had its share of “conflict of interest” challenges in the recent past ranging from its acceptance of AVBs to media arbitrage to ownership interests in intermediary firms not disclosed to clients that have served to undermine their credibility and the level of trust clients are willing to afford them. Thus, while Accenture’s announcement may be a sensitive topic for agencies, clients will likely have little concern.

Let’s face it, the world is changing and the media landscape has become more complex thanks in large to the growing impact of technology, accelerated levels of media fragmentation and fundamental shifts in consumer media consumption habits. Marketers in particular have become more highly focused on the effective use of data and insights to better target select audiences, geographies, behaviors, etc. Thus, organizations looking to boost their performance and to optimize their marketing investment, are seeking partners that can provide holistic, objective, strategic insights to guide their decision making.

Management Consultants are well positioned to provide the requisite marketplace, competitive and consumer assessments along with strategic recommendations and tactical implementation support across the evolving marketing funnel. Global in scope, the large consultancies have hundreds of thousands of employees, serving in a variety of specialized practices that can be tapped to work with marketers in the identification of problems and opportunities and the pursuit of strategies to achieve their business objectives. The addition of programmatic media capabilities to encompass planning and buying is a logical extension of the consultants service offerings.

Media agencies were long the profit engines for agency holding companies and the onset of digital media and the meteoric growth of programmatic buying represented a boon for media agency margins. Unfortunately, revelations about certain buying practices and growing advertiser concern over the lack of transparency surrounding their digital media investment ushered in a period in which advertisers began to actively evaluate new media agency partners, tighter client-agency contracts and new digital media models. It should be noted that among the new models that advertisers have pursued has been bringing aspects of the programmatic media buying process in-house, often with the counsel and assistance of management consulting firms. These trends have allowed the consultancies to curry favor with CEOs and CMOs and to expand their toe hold in what had been space traditionally dominated by ad agencies.

Given the size of the global programmatic marketplace, measured at $14.2 billion in 2015 and estimated to be $36.8 billion in 2019 (source: MAGNA Global, June, 2016), it is easy to see the appeal for the management consulting firms in general and Accenture in specific. As an aside, the market potential in this sector dwarfs the size of the media auditing and review market by a wide margin.

The media agency community would best be served by focusing on what it can do to leverage its position of strength to protect its share of the media planning and buying business. Time spent focused on “conflict of interest” claims as a defense against incursions from consultants or other non-traditional competitors will likely garner little support outside of the agency community and will therefore not be productive.

 

 

If Not an RFP, Then What?

15 Mar

RFP ProcessIt was with great interest that I read a recent article on Digiday entitled; “End of an era: Media buyers are ditching the much-hated RFP” that heralded the demise of the digital RFP.

For those of us with a media background, we’re certainly familiar with the longstanding list of complaints leveled by media sellers at agencies on the multitude of abuses heaped upon them by what is perceived as an unfair or at least highly disorganized and inefficient RFP process. I get it and I empathize with the media sellers for the inequities which they have suffered at the hands of misguided or poorly trained media buyers.

Let’s face it, the RFP does serve an important role in allowing media agency buyers to gather the requisite detail from media sellers as it relates to their ability to deliver on the agency’s media plan and to solicit inventory, audience delivery and pricing feedback.

Yes, the standardization of RFP templates appears to be a pipedream and the resulting impact on the time and effort required by media sellers to complete these RFPs is onerous, the process cumbersome and meaningful feedback from agency media buyers rare. For these and other reasons, it is understood that agency media buyers and publishers alike dislike RFPs.

That said, some of the reasons cited in the aforementioned article to support the declining use of RFP’s should raise concerns among advertisers. I’m not talking about the reduced role of price negotiations due to the increased use of biddable media, but rather the notion that an uptick in the use of digital direct buying, agencies relying on meetings with sellers rather than an RFP or a seller’s ability to “figure out what the strategy is” do not support abandonment of this important tool.

Properly executed, the RFP process allows an agency buyer to communicate strategic and tactical instructions to the seller. In turn, asking sellers for feedback on how best to drive performance for the advertiser’s brand can yield a treasure trove of information. The RFP also provides an excellent opportunity for publishers to make a compelling case as to why they should be on the buy.

Additionally, RFPs serve as an ideal tool for establishing parameters on items such as site retargeting, frequency capping and content considerations (including restrictions). It allows media buyers to gather the requisite detail on items ranging from data segments and sources to audience specifications and universe estimates. How better to communicate creative unit specifications or cross device allocations and target consumption levels or to establish measurement requirements for everything from impressions and video completion rates to qualified site visitors, viewability levels and cost per completed view. What about identifying verification sources and costs, third-party tagging requirements and or establishing the level of reporting granularity.

Last, but certainly not least, the RFP serves a vital “accountability” role by clearly establishing advertiser expectations and communicating guidelines that a seller will need to adhere to, should a deal be transacted.

So while the RFP process is far from perfect, rather than scrapping it, I would advocate that the process be revamped to make it more relevant to all stakeholders, less onerous for media sellers and more productive for agency media buyers. In the words of the noted journalist George Will:

“The pursuit of perfection often impedes improvement.”

 

 

 

 

 

 

Keeping Pace with the Rate of Change in Ad Industry Can be a Challenge

31 Jan

lexiconDo you sometimes wonder how you will ever keep up with the dizzying array of change that has become a constant in the ad industry? The good news is that you may not be alone in your angst. Just take a look at how industry lexicon has evolved in recent years to reflect the technological changes that the industry is dealing with and one can easily surmise why practitioners feel stressed out…

Industry Lexicon for the 21st Century

Algorithm, artificial intelligence, programmatic media buying, header bidding, second-price auctions, big data, fraud, domain spoofing, viewability, demand side platform, Pinterest, supply side platform, data management platform. Ad tech, exchange, tech stack, human marketing, voice activation, block chain technology, deep learning, managed service model, the duopoly, GDPR, hyperlocal media, ad spoofing, biometric recognition, virtual reality, winning bid log metadata files, econometrics, transparency, martech, Facebook, linear TV, Snapchat, digital content production, ad tech integration, ads.text, brand safety, publisher addressable marketplace, blackhat SEO, walled gardens, proprietary tech integration, trading desks, principal-based buying, PII-based consumer ID’s, brand safe environments, push notifications, mobile-app fraud, spoof impressions, ad networks, e-commerce analytics platform, contextual fit, attribution fraud, HULU, curated inventory, general data protection regulation, CX strategy, cyber security, white list, multi-screen viewing, bid management fees, Instagram, PAM, PII based identifiers, automated monetization, onboard connected TV, app-install, exchanges, click spam, downstream metrics, dynamic creative optimization, sustainable ecosystems, dynamic personalization, performance media platform, extremist content, audience engagement, monetization, fake followers, hard news, enterprise brands, CPI, retargeting, data controller, software development kits, mediation products, combinatorial bidding, people-based marketing, waterfalling,  trust, content recommendation guarantees, Alexa, frequency capping, probabilistic methodology, addressable IDs, over-the-top video streaming, TAG, streaming environments, cross-channel messaging, influencer marketing, direct-to-consumer brands, brand activation, experiential marketing, growth hacking, social selling, fake news, user generated content, storytelling, illegitimate traffic sourcing, private marketplaces, sandboxing, non-human viewing, synchronized nodes, decentralized ad networks, voice assistants, cross-channel attribution, verification technologies, internet of things, personalization, social search, facial recognition platforms, 3-D printing, hyper-relevance, automated buying, voice activation, first-price ad auction, AI machine learning, in-home sensors, smart re-ordering services, digital workspace, multi-channel ecosystem, native advertising, organic posts, privacy settings and controls, FVOD free-video-on-demand, clearing price, net neutrality, invisible bots, Spotify, voice strategy, audio logos, autonomous vehicles, behavioral DNA, spot cloaking…

Never a dull moment for ad industry professionals to be sure. Consider the words of the twentieth century American writer, Alvin Toffler:

“Future shock is the shattering stress and disorientation that we induce in individuals by subjecting them to too much change in too short a time.” 

The questions to be considered are; “Can the industry sustain this rate of change, without compromising its ability to deliver? Can you?” Only time will tell.

 

4 Questions That Can Impact Your Digital Buys

15 Nov

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According to eMarketer, in 2017 advertisers will spend 38.3% of their ad budgets on digital media – in excess of $223 billion on a worldwide basis. Yet, in spite of the significant share-of-wallet represented by digital media, there is generally little introspection on the part of the advertiser.

Looking beyond the “Big 3” [ad fraud, safe brand environment and viewability concerns], the lack of introspection begins much closer to home. Simply, in our experience, client-agency Agreements do not adequately address digital media planning / placement roles, responsibilities, accountability or remuneration details.

Standard media Agreement language does not adequately cover digital media needs – specific rules and financial models need to be included in Agreement language that covering each potential intermediary involved in the buy process and to guarantee transparent reporting is provided to the advertiser. It is our experience that Agreement language gaps related to “controls” can be much costlier to advertisers than the aggregate negative impact of the Big 3.

And, regardless of Agreement language completeness, a compounding factor is that too few advertisers monitor their agencies compliance to these very important Agreement requirements.

To assess whether or not your organization is at risk, consider the following four questions:

  1. Can you identify each related parties or affiliate that your ad agency has deployed on your business to manage your digital spend?
  2. Does your Agreement include comprehensive compensation terms pertaining to related parties, affiliates and third-party intermediaries, that handle your digital ad spend?
  3. Is your agency acting as a Principal when buying any of your digital media?
  4. What line of sight do you have into your ACTUAL media placements and costs?

If you answered “No” to any of the questions, then there is a high likelihood that your digital media budget is not even close to being optimized. Why? Because the percentage of your digital media spend that pays for actual media is likely much lower than it should be, which is detrimental to the goal of effectively using media to drive brand growth.

Dollars that marketers are investing to drive demand are simply not making their way to the marketplace. Often a high percentage of an advertiser’s digital media spend is stripped off by agencies, in-house trading desks and intermediaries who have been entrusted to manage those media buys. A recent study conducted by AD/FIN and Ebiquity on behalf of the Association of National Advertisers (ANA) estimated that fees claimed by digital agencies and ad tech intermediaries, which it dubbed the programmatic “technology tax” could exceed 60% of an advertiser’s media budget. This suggests that less than 40 cents of an advertiser’s investment is actually spent on consumer media.

A good place to begin is to ask your agency to identify any and all related parties that play a role when it comes to the planning, placement and distribution of your digital media investment. This includes trading desk operations, affiliates specializing in certain types of digital media (i.e. social, mobile) and third-party intermediaries being utilized by the agency (i.e. DSPs, Exchanges, Ad Networks, etc.). The goal is to then assess whether or not the agency and or its holding company has a financial interest in these organizations or are earning financial incentives for media activity booked through those entities.

Why should an advertiser care whether or not their agency is tapping affiliates or focusing on select intermediaries to handle their digital media? Because each of those parties are charging fees, commissions or mark-ups for services provided, most of which are not readily detectable. This raises the question of whether or not the advertiser is even aware charges are being levied against data, technology, campaign management fees, bid management fees and other transactional activities. Are such fees appropriate? Duplicative? Competitive? All good questions to be addressed.

When it comes to how an agency may have structured an advertiser’s digital media buys, there is ample room for concern. Is the affiliate is engaged in Principal-based buying (media arbitrage)?  Is digital media being placed on a non-disclosed basis, versus a “cost-disclosed” basis where the advertiser has knowledge of the actual media costs being charged by the digital media owner?

Evaluating your organization’s “risk” when it comes to digital media is important, particularly in light of the findings of the Association of National Advertiser’s (ANA) “Media Transparency” study released in 2016, which identified agency practices regarding non-transparent revenue generation that reduces an advertiser’s working media investment.

The best place to start is a review of your current client-agency Agreements, to ensure that the appropriate language safeguards are incorporated into the agreement in a clear, non-ambivalent manner. Once in place, monitoring your agency and its affiliates compliance to those contract terms and financial management standards is imperative if you want to assure compliance, while significantly boosting performance.  

“Today, knowledge has power. It controls access to opportunity and advancement.” ~ Peter Drucker                                                                                                                    

Interested in learning more about safeguarding your digital media investment? Contact Cliff Campeau, Principal, AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on this important topic.

 

Media Agency Estimated Billing Should Be Eliminated

24 Oct

accountspayableLet me start by saying that Advertising Agencies are not banks and should never be asked to settle vendor obligations, made on behalf of clients, with their own funds. That said, the long-standing practice of “estimated billing” is a relic of a bygone era and one which should be abandoned.

In a day and age where the electronic transfer of funds is commonplace and where most media owners invoice agencies based upon “actual” activity, following the month of service, the notion of an advertiser being billed upfront on an estimated basis is no longer necessary for the vast majority of media being purchased. From an advertiser’s perspective, this antiquated system results in burdensome levels of paperwork, drives up accounts payable processing costs, needlessly extends the invoice reconciliation process, restricts client use of funds, results in lost interest income opportunities for the advertiser and perhaps one of the less apparent benefits, eliminating the apprehension/reliance on an agency to accurately track and timely reconcile such estimated billing.

Can anyone cite a single benefit that accrues to an advertiser from this approach? If an advertiser were to purchase inventory directly from the media seller they would pay based upon actual costs, so why should it be any different when purchasing media via a client-agent relationship?

The move to final billing has but one drawback, to one stakeholder… the loss of agency float income on pre-billed activity. While conceptually we don’t believe that it is appropriate for an agent to make money on the use of client funds, we do understand that eliminating this non-transparent source of revenue would have a negative impact on an agency’s bottom-line. This, however, should not be the concern of the advertiser community, as this was never the intent of the estimated billing process to begin with. After all, it is the advertiser’s money and as such, they should be the only stakeholder to benefit from access to and the use of those funds.

Transitioning to actual billing makes good sense from both a treasury management and a transparency accountability perspective. It is more efficient, can reduce payment processing costs and can potentially improve days payable outstanding performance for the media seller.

As it is, advertisers generally have little to no insight into the time gap between remittance of their funds to their agency and in turn the time it takes for the agency to reconcile media activity and remit payment to an advertiser’s third-party media vendors. If client-side CFO’s were aware, there would certainly be significant interest in reforming the estimated billing system and the stewardship of an advertiser’s media advertising investment.

When it comes to financial management within the advertising sector, we have always been cognizant of the words of Robert Sarnoff, past president of NBC and RCA in the mid-twentieth century:

“Finance is the art of passing currency from hand to hand until it finally disappears.” 

Interested in learning more about improved financial management practices across your marketing agency network? Contact Cliff Campeau, Principal at AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on this topic.

Lawsuits Expose the Seemly Underbelly of Programmatic Digital

25 Sep

fraudsterAt the rate things are progressing in digital media and programmatic trading, the tenuous relationships between advertisers, agencies, ad tech providers, exchanges and publishers are about to come unglued.

While many in the ad industry have had their doubts about programmatic digital, this sector has grown unabated for the last several years. According to eMarketer in 2014 advertisers invested 28.3% of their ad budget in digital media. Their projection is that this will grow to 44.9% in 2020, likely topping $100 billion in total spend. eMarketer estimates that 80% of U.S. digital display activity in 2017 will be transacted programmatically. 

Interestingly, since 2014 the industry has become much more attuned to the risks encountered by advertisers when it comes to optimizing (or should we say safeguarding) their digital media investment. Yet in spite of the findings regarding unsavory practices emanating from the ANA’s seminal 2016 study on “Media Transparency” advertisers continue to pour an increasing share of their advertising spend into this media channel.

However, not all advertisers are continuing to embrace digital media quite as readily as they once did. A handful of progressives, namely Procter & Gamble, have begun to rethink the share of wallet being allocated to digital media and programmatic trading. Marc Pritchard, P&G’s Chief Marketing Officer, has been very outspoken in summing up his company’s position quite succinctly; “The reality is that in 2017 the bloom came off the rose for digital media. We had substantial waste in a fraudulent media supply chain. As little as 25% of the money spent in digital media actually made it to consumers.”

Given Mr. Pritchard’s comments it has been quite intriguing to monitor the legal developments in two high profile lawsuits that have recently been filed.

In the first case, Uber is suing Fetch Media, its digital agency suggesting that it had “squandered” tens of millions of dollars to “purchase non-existent, non-viewable and/ or fraudulent advertising” on its behalf. Uber has further alleged that the agency “nurtured an environment of obfuscation and fraud for its own personal benefit” and that of its parent company, Dentsu Aegis Network. To be fair, Fetch Media has denied what it says are “unsubstantiated” claims by Uber which it claims is designed to draw attention away from their “failure to pay suppliers.”  Allegations include that the agency acted as agent for Uber in some markets and executed principal-based buys in others and that they earned and retained undisclosed rebates tied to Uber’s media spend.

The second case involves RhythmOne, a technology enabled media company and its partner dataxu, a programmatic buy-side platform/ applications provider. RhythmOne originally filed suit regarding $1.9 million worth of unpaid invoices. Dataxu filed a counterclaim alleging that RhythmOne “used a fake auction to consistently overcharge” them and suggested that RhythmOne also “procured inventory from other exchanges, and then marked it up,” both violations of their partnership agreement. As an aside, for the $1.9 million in payments that dataxu admittedly and intentionally withheld from RhythmOne, going back to January, 2017, it is likely that dataxu’s clients had been billed and remitted payment to them. Which raises questions as to how and when their clients will be made whole.

Of note, both of these lawsuits delve into a range of topical issues that pose risks to most programmatic digital advertisers:

  • Agencies executing principal-based buys, rather than acting as agent for the advertiser.
  • The retention of undisclosed rebates tied to an agency’s use of advertiser funds.
  • Non-transparent fees and mark-ups being tacked on to the actual cost of media inventory by multiple middlemen (i.e. agencies, DSPs, exchanges).

These are issues that advertisers should familiarize themselves with and address through the development of a comprehensive client/ agency contract. In addition, advertisers must vigilantly monitor supplier compliance with the terms of those agreements to insure full transparency and, importantly, accountability when it comes to the stewardship of their digital media investment.

As these two cases highlight it is dam difficult for an advertiser to accurately assess the value of digital inventory that is being proffered on their behalf by their agency and adtech partners. Beyond establishing what percentage of an advertiser’s digital dollar actually goes toward media inventory, these separate, but related legal actions demonstrate that it is not just a lack of transparency that advertisers must worry about, but a lack of ethics. When it comes to programmatic digital media the American artist, John Knoll, may have said it best;

“Any tool can be used for good or bad. It’s really the ethics of the artist using it.”

There are steps that advertisers can take to both safeguard and optimize their digital media investment. If you are interested in learning more, contact Cliff Campeau, Principal of AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation.

Will AI Render Media Agencies Obsolete?

11 Sep

artificial_intelligenceArtificial intelligence (AI) is already reshaping how advertising is developed, planned and placed. The marketing applications being envisioned and adopted by agencies, consultancies, publishers and advertisers are nothing short of remarkable.

From the onset of “Big Data” it stood to reason that the concept of predictive analysis, the act of mining diverse sets of data to generate recommendations wouldn’t be far behind. Layer on natural language processing, which converts text into structured data, and it is clear to see that “deep learning” is on the verge of revolutionizing the ad industry. As it stands, algorithms are currently optimizing bids for media buying, utilizing custom and syndicated data to match audience desires (or at least experiences) with available inventory.

Effective, efficient, automated methodologies for sorting through vast volumes of data to evaluate and establish patterns that reflect customer behavior for use in segmenting audiences and customizing message construction and delivery holds obvious promise.

So, what does this mean for media agencies? Will they be at the forefront of automation technology? Or will they be swept away by the consultancies and ad tech providers that are already investing here?

If media agencies desire to remain in control as the industry evolves, there are real challenges that they will have to address to remain viable:

  • Re-establish role as “trusted advisor” with the advertiser community. Recent concerns over transparency, unsavory revenue generation practices and a failure to pro-actively safeguard advertisers’ media investments from fraud and from running in inappropriate environments have created serious client/ agency relationship concerns.
  • Attract, train and retain top-level talent to re-staff media planning and buying departments. The focus will need to be on bridging the gap between developing, and applying automation technology and providing high-level consulting support focused on brand growth to their clients. Presently, media agencies are not effectively competing for talent, whether in the context of compensation and or personal and career development options being offered by their non-traditional competitors.
  • Provide a framework for addressing the compensation conundrum. Whether this is in the form of cost-based or performance-based fees tied to project outcomes, commissions or hybrid remuneration systems, tomorrow’s successful media agencies will need to establish clear, compelling compensation systems. These systems will need to reflect value propositions that will differentiate them from an expanded base of competitors, while offsetting (to some extent) non-transparent sources of revenue that many media shops have come to rely on in recent years.

This will not be an easy path for media agencies, particularly for those that are hampered by legacy systems, processes and management perspectives that may limit their ability to more broadly envision and ultimately, assist client organizations addressing their needs and expectations.

Either way, the race is on, as management consulting firms are acquiring various marketing and digital media specialist firms and as media agencies raid the consultancies for personnel to build out their strategic consulting capabilities. The key question will likely be, “Which business model holds the greatest promise, in the eyes of the Chief Marketing Officer, for improving brand performance?

 

 

 

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