“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 Stuart Meyler, principal and co-founder of Beeby Clark+Meyler.
In a recent request for proposal, I was surprised to see a question that asked what “proprietary agency technology” firms were using to manage client campaigns. I thought the proprietary vs. third-party technology debate had been settled years ago. But the RFP made me realize there is still a misconception that proprietary tech is somehow better.
Looking back on the history of digital media, it is not. And that’s why agencies should focus on producing effective campaigns and leave the tech to the technologists.
A lesson from history
When agencies pursue proprietary solutions, they ultimately abandon them for a superior market-based one. They then offer agency services using commercially licensed software but not before having locked clients into a subpar platform. At the same time, they wrangle with the decision to abandon their proprietary solution.
This was the case for early paid search agencies like DidIt, iProspect and iCrossing.They were all market leaders that touted their paid search tech but abandoned it in favor of solutions from companies like Marin Software, Kenshoo (Skai) and DoubleClick (Google SA 360).
When the solution is actually a solid one, the agency stops being an agency. DoubleClick is one example. Designed to solve a tracking problem, the technology evolved into what is now the de facto ad-serving and tracking platform for digital media and search. But this is a rare scenario.
Acquiring tools isn’t any better
Agencies don’t always develop their own tech. Sometimes they buy it. Publicis Groupe, one of the largest agency holding companies, announced in May that it acquired Profitero, an analytics platform that helps brands optimize eCommerce and spending, for $200 million.
That is a lot of money. Until you compare it to the billions invested in ad tech and marketing tech – markets where a Darwinian product development battle ensues as innovative solutions emerge and are continually tested, furthering their improvement.
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But once inside agency walls, these newly purchased assets cease to feel the market’s continuous pressure. Their muscles atrophy, and the products become weaker.
Another consideration is privacy and compliance. Software and SaaS companies that provide solutions to the commercial market have liability and IP protection support baked into their business models. Plus, fines and legal penalties for noncompliance can be substantial.
The market speaks
Open, transparent and competitive markets produce winning products.
Early on in paid search, especially with demand-side platforms (DSPs) and data management platforms (DMPs) being used in programmatic advertising, large holding companies touted their trading desks and data tech as competitive advantages. We know what they really offered was a lack of transparency and flexibility.
But the market evolved, and most agencies moved onto publicly supported solutions like The Trade Desk or DMPs from companies like Neustar.
Those companies focused exclusively on their SaaS-based products. They spent millions on research and development. They “won” in this highly competitive space by providing consistently better products that met the market’s evolving needs.
The net-net
The thought that a single company, an agency no less, could thrive in this marketplace without the same focus and investment is foolish.
In short, it’s wise to leave the tech to the experts and focus on developing a nimble 2023 advertising strategy instead.
Follow Beeby Clark+Meyler (@GoBCM) and AdExchanger (@adexchanger) on Twitter.
