Since Merkle began in the ’70s as a database marketing agency, its purview has expanded to include creative services, CRM and search and programmatic ad buying.
It’s been an active year for the agency, which has 3,400 people across 21 offices in the US, Europe and Asia. Formerly one of the biggest independent agencies in North America – Merkle was acquired by Japanese holding company Dentsu Aegis Network in August.
Internally, quite a bit is changing as well. Chief Growth Officer Adam Lavelle hopes to see Merkle build out fully integrated marketing strategies that reach customers and prospects throughout the sales funnel.
“Increasingly, clients are hiring us to do customer acquisition, retention, loyalty or find new customers, then blend those tactics into an integrated platform,” he said.
Merkle will also continue to grow internationally. “In the last three years, we’ve put 500 people in the UK and EU,” Lavelle said. “We have offices in Asia and we’ll see growth there – then make our way into South America.”
Lavelle, who joined Merkle in 2015 after a stint as iCrossing’s chief strategy officer, spoke with AdExchanger about walled gardens and life after acquisition.
AdExchanger: When we look at content and data today, is the movement around automation or is it simply around using data to inform creative?
ADAM LAVELLE: It depends. Traditional agencies are hungry for better data to inform their planning, but they’re still in the business of coming up with ideas.
For Merkle, and in the world where ad tech and mar tech meet, our clients are desperate to scale. The idea that a brand has to be a daily publisher of content is difficult if you sell insurance or hotel rooms or movies.
To do that efficiently, at scale, in a way where that content will be consumed by audiences takes a lot of work. So tools to make that happen are important.
Are the marketing clouds or ad tech vendors producing those tools, or do you guys build them for in-house use?
Where Oracle comes from, the cloud is where the data lives. Where Salesforce comes from, the cloud is how you manage your CRM and contacts. Adobe’s cloud powers content and brings the authoring tools and targeting together. So Adobe is probably the one, among those, with the heritage in content development.
What hasn’t been developed yet that could help scale data-driven creative?
The biggest issue is not the technology. The biggest issue is organization and workflow. Very few brands have figured out how to run their own publishing organization. What does a brand newsroom look like and how does it run?
Brands often hire some journalist hotshot and a year later, that person inevitably leaves. Why is there such a problem building that team?
There’s tension between in-house and the agency. Often, there isn’t a direct relationship between the investment made in content and the analytics to determine if there’s ROI against it. Brands get excited about being a publisher. Content is created and people either do or don’t consume that content. If they don’t, that’s a problem. And if they do but you can’t connect it to revenue-driving actions, then you don’t know if it’s worth the investment.
I don’t know if the KPIs are set up well.
How about when agencies form a unit dedicated to a client, like Team Detroit or Hearts & Science?
Well, I’ll talk about Merkle. We have over 200 people in the creative department. That group is focused on optimizing for response. It’s not a surprise we focus on the bottom of the funnel and increasingly we’re moving up.
Our creative department has 375 rules in our bible of creative, and every person in that department is trained on them. Those rules run from being very channel-specific to being cross-channel. Some are tactical: Don’t put white serif text on colored backgrounds. Headlines shouldn’t be all caps. Calls to action should be this size and at this place on a page.
Over the last four years, we’ve added rules for engagement. That’s how we moved from the bottom of the funnel up.
Regularly, our clients use us for creative and content creation because we can tie that content to customer behaviors and performance.
Now that Merkle is part of Dentsu Aegis Network, how does that impact what it can do?
Well, we’re only three weeks in. To be clear, Dentsu Aegis Network made a majority investment in Merkle, and Merkle continues to run as its own company and will for the next several years. So we can tap into Dentsu in any way that’s appropriate for our clients. But at the moment, we’re not spending a tremendous amount of time on back-office integration.
Merkle has phenomenal performance media capabilities. Search. Our programmatic business has grown tremendously. We’re managing $1.5 billion worth of media this year. Those capabilities have let us take over responsibilities for clients, where we’re managing all of their digital media buying and their performance media buying.
The relationship to Dentsu connects us to other creative agencies and offline media-buying agencies and allows Dentsu to bring our capabilities to their existing clients.
Where does Merkle need to grow in terms of new capabilities?
We’re growing in the area of integrated campaign planning and strategy.
And that’s because we market to people, not proxies. If you use panel information to index and make your media-buying decisions, that’s a proxy. If you use cookies to target and reach individuals, that’s a proxy because I can be one person on five devices or five people on one device.
But with tools like Facebook Custom Audiences and Google Customer Match and our product, Publisher Addressable Marketplace, there is more addressable inventory – ID-matched impressions – to be bought.
How do you reconcile that with scale?
Today, we can reach that audience ID sync to ID sync. To reach that audience at scale, we can take that ID and match it to a cookie and purchase via cookie. Our precision decreases, but our cost also decreases.
And we’ve still used a much higher-fidelity definition for that audience, compared to if we just used cookie data, because that initial definition comes from a known ID and other attributes that are real. I might know your FICA score, your car purchase history, your household income. I know a whole bunch of things about you that’s very different than your cookie, which just tells me your recent browser behavior.
If you want to target auto intenders, and your definition of that is a cookie that’s been to Autotrader over the last couple of days, that isn’t a sufficient definition.
Many of the principles of direct mail and marketing are very relevant in this world. What’s old is new again.
Let’s talk about the walled gardens and how you navigate either around or through them.
We have no issue at all with the walled gardens owning their own audiences. That’s fair. We are very happy those platforms are creating conduits for us to bring our own clients’ IDs into those platforms to reach known individuals.
We don’t always get all the data to close the loop, but we can bring a list of known individuals, target them, buy inventory against them, and when they take an action and come back out of the walled garden into our clients’ content, we know it’s a person we targeted.
Will fallout from the recent Facebook viewability counting incident create backlash that forces more openness?
We’d love to see that. Facebook has gone on record as saying they wish they’d been more transparent earlier on that issue. They’re all on a march to provide more insight, analytics and visibility. The only reason they don’t go all the way is because they don’t want anyone outside to reverse engineer their graphs and expose their users to advertisers blindly or openly. And I think that’s fair.
But they all recognize they need to provide more value to advertisers. How transparent they get is still in question.
