The shock statistic for agencies from the research we carried out amongst global CMOs (released at the end of last year) was that only 27% of advertisers feel that having the most talented media agency will contribute to the success of their digital advertising campaign.
With the global digital advertising sector estimated by Emarketer to have a value of almost $140 billion this is a very big pie, and one of the biggest slices is currently owned by agencies – however, the results of our survey (carried out with BSB Media and The Vision Network and in conjunction with the International Advertising Association and Warc) suggest that the balance of power may be changing, especially where programmatic and RTB trading is concerned.
So where is the power shifting to? It seems that advertisers are 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. In addition, 43% of advertisers plan on bringing more responsibility in-house for digital planning within the next 12 months.
The biggest catalyst for this shift is advertisers’ recognition of the issues around the opacity and over-complexity in the way that their digital advertising is bought. 69% of them feel that media trading transparency across the industry has stayed the same or declined and 43% believe that there are still too many vendors and middlemen associated with buying digital advertising space.
As they 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 multiplicity 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.
In reality, this type of reporting has limited value in any case; not only because it’s ignoring 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 which 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 up-front 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, as for any SAAS-based service, 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 shift 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 partnership 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 – providing long-term media strategy and planning and the execution of media that is not being transacted through programmatic channels. They are recognising that it is better to invest in making themselves invaluable in sustainable ways that make them indispensible to clients long-term rather than fighting for the day-to-day management of audience and data, targeting and trading that is proven to be handled more effectively by technology.
I guess it’s better to have a smaller slice of a bigger pie than to become irrelevant.