The changing role of media agencies in the advertising food chain
The World Federation of Advertisers (WFA) kicked up a storm in ad land last month, with new research suggesting that brands are clawing back control over their digital ad campaigns by bringing programmatic in-house.
According to a survey of marketers working at 35 multinationals, 65% of brands have improved their in-house marketing capabilities over the last year.
A fifth have employed an in-house programmatic specialist, while another 18% have plans to do so over the coming months.
There’s no denying that brands are upping their game with programmatic hires. Take a look at major FMCGs, whose marketing teams have all got closer to programmatic strategy and execution.
But the question this leaves on everyone’s lips; if brands are taking charge, how do agencies fit into the equation?
Upskill to understand
It’s absolutely right that brands are upskilling and educating their marketing teams to have a deeper understanding of programmatic.
last year, £2.71 billion was spent on programmatic display campaigns
Last year, an outstanding £2.71 billion was spent on programmatic display campaigns, according to the IAB’s latest digital ad spend report – that’s 72% of the UK’s £3.8 billion display ad pie. And by 2019, up to 90% of all UK digital display advertising is expected to be traded programmatically.
When programmatic accounts for such a huge portion of brands’ ad spend, it’s very sensible to ensure the right brains understand where this money is going.
Every brand that trades programmatically needs an expert in place who will ask the right questions and is well equipped to demand transparency right up the advertising supply chain.
Moving beyond execution
But bringing programmatic in-house will not render the media agency obsolete. These programmatic hires will complement agency expertise, rather than replace it.
And far from reaching their shelf life – as many have speculated could happen - media agencies will never lose their place in the advertising supply chain. Their technical expertise, maintained by constant exposure to our quickly evolving industry, and ability to achieve economies of scale simply cannot be rivalled by an in-house team.
In fact, if anything, agencies are moving up the food chain. Media planning and buying still sits firmly within their remit, of course. But with fears around ad fraud and brand safety springing into the spotlight, digital advertising has worked its way onto many c-suites’ priority lists – creating an opportunity for agencies to take on a more consultative role.
Today, many agencies are involved in conversations at the top, offering their expertise on a more strategic level to help build campaigns from the start.
By being more consultative, agencies are strengthening their position in the market and circumventing the competition presented by some of the big consultancy firms – like Accenture and Deloitte - that are moving into the marketing space through the acquisition of smaller agencies.
Delivering on data
As well as being more consultative, many agencies are also becoming a back channel for data aggregation.
Brands are sitting on the most valuable data possible – their own first party data – and the WFA’s research suggests that they are finally catching onto this. Over the past year, 38% of brands have added clauses into their media agency contracts securing sole ownership of their data, while a further quarter (24%) have plans to do so.
Brands are absolutely right to take control – after all, it’s their own data.
brands aren’t taking control of their data away from their media agencies
But there’s a big misperception here. Brands aren’t taking control of their data away from their media agencies. More often than not, that data was simply sitting, redundant – with agencies not having access to it in the first place.
First party data is gold that needs to be mined. Media should always be powered by data to make sure brands are targeting the right people with the right messages, at the right time. Knowing that your most valuable audience is predominately male and also highly likely to be into cooking or extreme sports can be key to creating advertising that resonates.
Now that brands are waking up to the power of their own data, the next step to improve the use of programmatic – and this is already starting to happen - is for more brands to trust agencies to interpret and use their data for them, and become that back channel for data aggregation.
The new agency model
Far from the drab picture painted by the WFA’s findings, agencies are fighting fit and stronger than ever. Rather than being pushed to the sidelines, they are adapting and evolving – and becoming more holistic - to meet the changing needs of the brands they work with.
As agencies take on a more consultative role, they can help restore brands’ confidence in the advertising supply chain. And as that relationship evolves from a service to a transparent partnership, brands will trust agencies to take on their data.
This will, in turn, enable agencies to plan and execute more effective advertising campaigns, drive up the quality of advertising – and ensure that brands get the maximum bang for their marketing buck.