A manual for the brand-agency-vendor relationship

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The fall of the agency

Five years ago, I found myself as an executive of an ad serving business in Europe, competing against the likes of Atlas and DoubleClick for mostly agency clients. The pitch was about delivery speed, reporting functionality, and how quickly one could traffic 30 placements with 20 creatives after a martini lunch. The agencies spoke our language and the brands did not, allowing the agencies to not only make a handsome profit from our technology (often $0.05 to $0.50 CPM above cost), but also to own the client's data and the pixels on their site, making it hard for the client to move their account in the future.

A manual to the brand-agency-vendor relationship

Most clients failed to understand why that could become a problem, and most agencies failed to see how quickly it would change. By my estimation, ad serving contracts have gone from being 90 percent held by agencies just five years ago to perhaps only 30 to 40 percent today.

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The enablers of this change are the demystification of what ad serving is and the influx of cheap labor that understands how to use it. Ask most CMOs and they can tell you their ad server gives them independent reporting, view-thru measurement, and campaign management. And chances are they've found a low(er)-cost resource to manage the entire process for them.

More importantly, ask the smart CMOs and they will tell you that taking control of their ad serving gives them the power to switch agencies if and when they want to without losing historical data or needing to re-pixel their website. To this day, Dart does not have a feature for porting a client out of one agency's account into another's, and probably with good reason.

Meanwhile, ad serving isn't the only aspect of digital marketing that CMOs are looking to bring in house. Brands are now also well positioned to negotiate the best rates. While some agencies still hold guaranteed access to certain inventory sources at preferred rates, the percentage of media that is being bought through auction tools is rising sharply, and where an auction exists, so does "equal" access (and therefore CPMs).