Just ten years ago, media agencies were simply the middle man between the publisher and the advertiser. Their task was simple but time consuming: buy advertising impressions from publisher sales teams, create a media plan containing various different publishers and send this onto the client.
The task for the publisher was also simple: aggregate an online audience, create online ad-serving systems and evangelise the benefits of the online medium to brands and agencies. Everyone knew where they stood and what role they had to play in the supply chain.
Fast forward a few years and advancement in advertising technologies has significantly altered this. The display media buying model is moving towards that of the search engine model. The development of programmatic buying and trading desks had made the buying process more efficient. Programmatic buying can be done through what is known as an 'ad exchange'; a neutral ad platform where advertisers meet publishers. They offer advantages over buying inventory directly from a publisher sales team, including natural price optimisation for publishers and fewer irrelevancies for consumers.
So how does this affect a media agency? And does the development of neutral platforms where advertisers can directly connect to publishers endanger the media agency model? The answer lies in the agency's ability to innovate on outdated business models. There are various ways in which an agency might innovate to avoid extinction:
Create their own trading desk
Media agencies can create their own trading desk as a
department or subsidiary of the main agency. The 'Agency
Trading Desk' is viewed as an internal centre of excellence for
digital advertising buying on behalf of agency clients. The
advantage that the agency has is that it already has a strong
existing client base. However, the agency will need to up-skill in
different areas by employing software engineers and algorithm
specialists: roles which are not typically the reserve of media
agencies.
Focus on content deals
Although it is becoming possible to buy and sell more
premium ad formats (such as interactive ads, dynamically targeted
ads etc.) through programmatic buying, there are some packages that
an algorithm can't buy, such as content deals and deep site
integrations. The agency's involvement here can be minimal
though, as many publishers have both the expertise and project
managers to develop the content and site integration for these
clients.
Further develop 'non-core' propositions
Despite a media agency's key function having
historically been in planning and buying, agencies have also
offered additional services. These include brand strategy
development and marketing mix modelling, such as using econometric
modelling to predict the best future investments of media spend.
Developing such areas will change the agency's focus and
increase existing revenue streams to offset a potential decline on
the planning and buying side.
Create 'digital business' proposition
As digital has becoming increasingly important over the
years, 'digital media' has become 'digital
business'. Something which was once a small sub section on a
marketing plan for a client can now dictate their entire customer
lifecycle and business model. There is a potential opportunity here
for agencies to develop new revenue streams by advising the client
on areas such as online user journey, website design and digital
customer service. However, others are already active in this space
and have high delivery credibility, such as design agencies and
specialist divisions of management consultancies.
In conclusion, it is highly unlikely that advances in independent advertising technology platforms will signify the end of the media agency, as there are many other ways to make money besides media planning and buying. The digital space is cluttered and the lines continue to blur between the offerings of agencies, publishers, technology companies and management consultancies. However, at the end of the day, there will be space for anyone who adds value to the client's pursuit of profitability.
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