“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Mendel Senf, CEO at Yieldr.
There’s been plenty of commentary on the problems that exist within digital advertising, spanning from fraud and viewability issues to opaque practices and brand safety concerns.
But, instead of rallying together to find a solution, we seem to be passing around the blame, and in particular, throwing agencies under the bus.
While creating a central villain is a great storytelling element – and the criticism aimed at agencies certainly isn’t undeserved – this is not alleviating the problems that exist. Either we unite to improve our digital marketing and advertising world or we all go down because these black eyes leave us all in a bad place.
Know Your Role
Challenges inevitably arise in this era of new technology and approaches, forcing everyone to adapt. I believe the best way to tackle these obstacles is by all parties doing what they’re best at, within clear and focused roles.
That means tech companies should devote their time to building exceptional products while agencies remain committed to advising and servicing clients, not building tech or practicing black box trading.
Most tech companies don’t have the resources to manage advertisers. Agencies don’t have the technical understanding of emerging digital solutions, which is where consultancy companies are more experienced.
For instance, not enough agency talent understands the fundamentals of programmatic and technology implementation in order to onboard and integrate first-party data and build user segments. Additionally, more attention needs to be given to the very important – albeit unpopular – discussion about advertisers’ client privacy, specifically how to inform and consent users on data collection.
A Beneficial Intersection Point
This is an area where the marketing tech vendors and agencies can unite. A marketing tech-agency partnership is beneficial for all concerned parties. The marketing tech vendor provides the agency with the platform for a specific advertiser, along with the know-how so that the agency can help advertisers take control of their data via their own technology.
This is key nowadays since advertisers’ biggest RFP topic is a data-management platform (DMP), largely driven by consultants who are instructing organizations to make sense of and activate their data. It’s clear that agencies, with their current DMP capabilities and approach, can no longer be independent technology providers as they try to onboard data from various advertisers.
In this case, tech companies produce platforms that provide advertisers with all of the tools needed to carry out successful and transparent campaigns, including first-party data onboarding and integration, data mining and segmentation, transparent billing with supply chain partners and marketing and advertising cloud services. All of these tools allow the keys to be handed back to agencies or consultants to service advertisers.
Knowledge Is Power
Education is vital to the success of the marketing tech vendor-agency partnership. Agencies must make an honest effort to understand the technological basics and nuances. Conversely, tech vendors must understand the trends and needs of both agencies and advertisers.
An open dialogue and a professional cooperation between agencies and marketing tech can go a long way in the education process. Agencies must advise vendors on advertiser needs and market requirement, while vendors much teach agencies about the technology and data integration processes.
Changes must be made to improve the digital marketing and advertising ecosystem. The proof is in the financial numbers.
Both marketing tech vendors and agencies are struggling. Rocket Fuel, for example, is reeling after a $36.9 million loss in the first quarter of 2015, while other demand-side platform vendors are grappling with generating revenue because of damaged agency relations and questionable cash flow games from working directly with advertisers.
Meanwhile, some large agencies are also trending downward. Industry analyst Brian Wieser has downgraded all four of the biggest agency holding companies.
“Behind our favorable long-term view on agencies over the years was the notion that fragmentation and reliance on digital advertising helps agencies – especially those with heavy exposure to media trading – given the reliance on labor required for digital media and value-added services, such as branded content production, barter and programmatic trading,” he noted.
Don’t be surprised to see more merger and acquisition deals this year. I also expect large agencies to continue seeking the help of marketing tech vendors as they look for better ways to service clients. Generally speaking, M&A deals can be good for the industry because they can bring continuity and clarity to a very cluttered space.
For the industry to continue growing growth, we must improve public perception before investors become sheepish. Fortunately, there is a solution in sight that begins with cooperation between marketing and advertising’s moving parts. Agencies and marketing tech must unite and align.