Q. It seems like the industry press is continually heralding the decline of media agencies, but they seem to be very much alive. What’s your take on the current landscape?
For a very long time, agencies have been dependent upon using low-cost labor for media planning and other low-value operational tasks.
While there are many highly-skilled digital media practitioners – strategists and the like – agencies still work against “cost-plus” models that don’t necessarily map to the new realities in omnichannel marketing.
Over the last several years as marketers have come to license technology – data management platforms (DMP) in particular – agencies have lost some ground to the managed services arms of ad tech companies, systems integrators, and management consultancies.
Q. How do agencies compete?
Agencies aren’t giving up the fight to win more technical and strategic work.
Over the last several years, we have seen many smaller, data-led agencies pop up to support challenging work – and we have also seen holding companies up-level staff and build practice groups to accommodate marketers that are licensing DMP technology and starting to take programmatic buying “in-house.”
It’s a trend that is only accelerating as more and more marketer clients are hiring Chief Data Officers and fusing the media, analytics, and IT departments into “centers of excellence” and the like.
Not only are agencies starting to build consultative practices, but it looks like traditional consultancies are starting to build out agency-like services as well.
Not long ago you wouldn’t think of names like Accenture, McKinsey, Infinitive, and Boston Consulting Group when you think of digital media, but they are working closely with a lot of Fortune 500 marketers to do things like DMP and DSP (demand-side platform) evaluations, programmatic strategy, and even creative work.
We are also seeing CRM-type agencies like Merkle and Epsilon acquire technologies and partner with big cloud companies as they start to work with more of a marketer’s first-party data.
As services businesses, they would love to take share away from traditional agencies.
Q. Who is winning?
I think it’s early days in the battle for supremacy in data-driven marketing, but I think agencies that are nimble and willing to take some risk upfront are well positioned to be successful.
They are the closest to the media budgets of marketers, and those with transparent business models are really strongly trusted partners when it comes to bringing new products to market.
Also, as creative starts to touch data more, this gives them a huge advantage.
You can be as efficient as possible in terms of reaching audiences through technology, but at the end of the day, creative is what drives brand building and ultimately sales.
Q. Why should agencies embrace DMPs? What is in it for them?
It seems like yet another platform to operate, and agencies are already managing DSPs, search, direct buys, and things like creative optimization platforms.
Ultimately, agencies must align with the marketer’s strategy, and DMPs are starting to become the single source of “people data” that touch all sorts of execution channels, from email to social.
That being said, DMP implementations can be really tough if an agency isn’t scoped (or paid) to do the additional work that the DMP requires.
Think about it: A marketer licenses a DMP and plops a pretty complicated piece of software on an agency team’s desk and says, “get started!”
That can be a recipe for disaster. Agencies need to be involved in scoping the personnel and work they will be required to do to support new technologies, and marketers are better off involving agencies early on in the process.
Q. So, what do agencies do with DMP technology? How can they succeed?
As you’ll read in the new guide, there are a variety of amazing use cases that come out of the box that agencies can use to immediately make an impact.
Because the DMP can control for the delivery of messages against specific people across all channels, a really low-hanging fruit is frequency management.
Doing it well can eliminate anywhere from, 10-40% of wasteful spending on media that reaches consumers too many times.
Doing analytics around customer journeys is another use case – and one that attribution companies get paid handsomely for.
With this newly discovered data at their fingertips, agencies can start proving value quickly, and build entire practice groups around media efficiency, analytics, data science – even leverage DMP tech to build specialized trading desks. There’s a lot to take advantage of.
Q. You interviewed a lot of senior people in the agency and marketer space. Are they optimistic about the future?
Definitely. It’s sort of a biased sample, since I interviewed a lot of practitioners that do data management on a daily basis.
But I think ultimately everyone sees the need to get a lot better at digital marketing and views technology as the way out of what I consider to be the early and dark ages of addressable marketing.
The pace of change is very rapid, and I think we are seeing that people who really lean into the big problems of the moment like cross-device identity, location-based attribution, and advanced analytics are future-proofing themselves.