Matt Spiegel is CEO of OMG Digital. This is the second part of a two-part interview. The first is here.
AdExchanger.com: Given the speed of technological innovation today, some might say that media agencies will need to be more entrepreneurial, but they’re going to have a hell of a time because they’re just not built like that. What’s your reaction?
MS: No big business moves as fast as any small business. That’s just the nature of having scale in your business. So at a certain level, new startups are going to have the advantage of being able to take a look at the new and get there sometimes faster than we can as a big holding company. However, we have the advantage of when we move, we can move really big and move really strong. So our job isn’t necessarily to be anyplace first, but to be there a close second if we’re not going to be there first. And when we get there, to bring our size and scale to the marketplace.
Will any of the big agency companies be the most entrepreneurial startup environments? Probably not. But that doesn’t mean that we’re dinosaurs. We’ve got plenty of opportunity. And I think folks like myself, sitting in the agency, are going to be a tribute to that reality.
Regarding scale, why are demand-side buying platforms making sense in the agency world?
There are a couple of reasons. The first is control.
One of the things that we know happens today is that agencies turn to a lot of ad networks, and those ad networks take a fairly large commission for providing us access to reach some type of audience. Great, that’s a been a valuable exchange for us from a buy-side perspective for many years. The challenge, though, is that we don’t have a lot of visibility into what those decisions are that those ad networks make for us. We tell them targeting, and certainly rules, and we decide from a broad perspective what we’re buying.
But when it comes into, “Hey, listen, I need better performance, Mr. Ad Network. Change something,” we don’t really see what happens there. We don’t’ really get a lot of reporting out of the ad networks. It’s more like, “You’re running this many impressions, you got this many clicks, you’ve got this many transactions.”
Now, none of that’s bad, but that doesn’t really help us from a future-state perspective. It keeps us very reliant on ad networks.
So, the exchange technology enables us to become a more direct buyer of that inventory, because now it’s on a technology platform that we can directly tap into. When we do that, all of the sudden we have much more visibility into what’s going on. We can see the audiences we’re buying, we can see the contextual relevancy that we’re buying.
And, we now make the decisions on how to optimize the dollars in a much more visible and transparent way. This this idea of control, is directly linked to visibility.
I think another reason that demand platforms make sense is the need and want for buyers to bring to the table much better, more advanced targeting. Again, now with the exchange technology enabling us, enabling the industry to separate inventory and targeting criteria, it allows us from an agency perspective to look more broadly with clients’ data and with historical performance data, and judge what types of audience and context we need to buy against.
And so as that happens, certainly as strategic advisors to our clients, we’ve got to be in a position to house that information. And “house” I use loosely. I don’t necessarily mean technically house. But, we have to have that information -and at our fingertips.
If we’re going to be these investment managers, if we’re going to have people sitting behind terminals moving money around, then we have to have a direct access to that information which makes those decisions. And the way to do that is to create a buy side platform.
How do you make the pitch about utilizing your buy-side platform for your clients display ad campaigns?
Generally speaking, our view is that what we’re uniquely good at is leading marketing strategy and marketing exeuction. Our job on behalf of our clients is to improve their media performance. And we know how to do that – strategically – through data analysis, through our creativity, through our understanding of their business. We also know that to do that we have to leverage technology.
But, we don’t we don’t need to build it. So, let me use this search analogy again. We can’t be good search buyers without bid management tools. There are a ton of bid management tools in the marketplace and we, from a search perspective, have not built our own bid management tool and don’t plan to.
I look at the demand platform space as the exact same thing. There are plenty of technology companies that are out there spending millions of dollars in inventing and creating technologies that manage the direct access to media, the realtime bidders, the algorithms. Great, love that. And we want to leverage that in a very deep and integrated way. And as a big buyer we’ll be able to have unique partnerships with some of those companies.
We say to our clients, “Our job is to improve your media performance. What we’re going to do is develop a service layer that has people that understand data and optimization, that are leveraging technology on your behalf.”
And ultimately we say, “Let’s take a look at where your best performing media source is and decide where your media dollars should go.” Certainly, in many cases the low hanging fruit is to compare ad network buys to that of the inventory that we can acquire on more open trading platforms like the exchanges.”
And we’re seeing lift. And so I think that’s the message to clients, and clients love it.
What are you hearing from clients in terms of pushback? Brand safety?
The brand safety conversation is certainly out there. But I don’t think that for most marketers it is any different than the brand safety issues that already exist. For examples, we don’t have any clients that want to run on prohibited content (gambling, adult content, etc.). Well, with ad networks this issue has been addressed. Now, we’ll have to address that same thing within the exchange space. I think there are good tools to protect brand safety. But clearly the industry needs to continue to evolve, which is something we will continue to monitor.
There’s another level of brand safety which is important to discuss. What I mean is marketers getting comfortable with the fact that as a marketer you’re not running on a branded site. That’s a large part of a “brand safety” conversation, I believe. It’s really more a comfort level with the idea that for purchasing an ad unit there’s no difference between the number one site in the sports category, a well-branded site, versus a site called SportsPro that you may have never heard of before but enables you to reach your very specifically defined target audience.
I think that there’s already a level of comfort for direct marketers – which is no surprise. Look at who came into search first. The first people on search were direct marketers looking for transactions, and it was wildly successful and they spent more money. What happened next? The brands followed.
I think you’ll see a similar trend in this buy-side trading platform space. You’re going to have the direct marketers go first, and they will be most concerned about transactional and easily measured performance. They are already comfortable with the idea of, “I don’t care if I run on the top branded site or the 20th site, I just care about transactions,” with, again, a certain level of brand safety.
The brand advertisers – clearly will come later, once they see the performance gains reported by more direct focused marketers. But to reiterate, and back to your main question, I’m pretty impressed with where we stand already with brand safety tools.
Can you see clients begin to take their media buying in-house – especially as some of these buying platforms become commoditized and available to all?
I think you can break up the marketplace into three, maybe four sections. I believe you’ll have some really big clients that really have a culture of data optimization and decide to do a lot of their media buying in-house. And by the way, this exists today.
I think then you’ll have your next segment of big clients that’ll continue to turn to the big agencies. And, yes, I think all the big agencies are well-positioned to have unique access into some form of buy-side trading platform. I don’t think what will make us unique versus the others is that technical infrastructure. I’ll come back to this point in a moment.
Then you’ll have smaller clients which will use more independent agencies, midsize agencies. Those agencies will probably not have custom-built platforms or custom things on top of their platforms like larger agencies will. But they’ll know the space pretty well and they’ll help that next level of clients.
And then you’ll go further down-market and you’ll have clients that go directly to Google and self-serve, much like you have today.
So I think all those things will happen. And, none of it’s bad for the industry. None of it’s bad for us. We just have to make sure we’ll work with the right clients that have the need for our skills and access, beyond what you could get buying directly and bringing the media buying in-house.
In terms of competitive differentiation, what I think is critical is going to, again, be the tying of planning and insights into buying and optimization. Where we have to win – and we’re focused on winning – is being able to take that data which is available whether it’s planning data, research data, performance data and/or client transactional data, and, working with our team of experts in research and analytics and insights, come up with a consumer communications plan which outperforms the competition. And then our ability to execute on it will be important, but, yes, plenty of people will be able to execute on a well designed plan. Do we think that we’ll have proprietary opportunities? Absolutely. But, we know what we have to win at is the combination of the art and science.
Our science has to be top notch, but if we don’t provide the art to it, then clients won’t find the value. And again, simply having a platform which enables these things isn’t in and of itself interesting over the longterm.
