Agencies, Ad Networks, and Disintermediation

InterClick president Michael Katz had a nice writeup in MediaPost today entitled Ad Budget Crunch Puts Pressure On Supply Line. I believe that ad networks are going to be disintermediated in some capacity over the next few years and Katz sheds some light on this notion (from an opposite perspective.

Advertisers and agencies are shifting budgets away from publishers that deliver high-price real estate and “shifting the money to guys like us who deliver ads to target audiences,” Katz said.

My friends over at the AdExchanger (a great read btw) talked about my comments that I made at the OMMA Behavioral event held this past week in Manhattan. I didn’t write up the event on this blog but it was essentially most major ad networks including AudienceScience (formerly RevenueScience), Platform A, Yahoo!, Specific Media, Acerno, Akamai, etc, all sitting in a room talking about the future of digital media. My peer, Ed Montes, Managing Director of Havas Digital, took the stage in front of every ad network and told them that they may very well be disintermediated over the next few years from his perspective. Obviously, I agree to a large extent.

During the OMMA event, Darren Herman of Varick Media Management and Media Kitchen fame twittered “ed montes (Regional Manager, Havas) just pissed off every ad network in the room.” And then added, “I totally agree with him as he said that ad agencies are acting as tech players now and disintermediating.”

In terms of disintermediation, this means that agencies will have to build, adopt, and execute on technology that they’ve historically never had, nor rolled out. Agencies are not technology companies and don’t even come close to acting like them today. In order to fully disintermediate, not only will agencies have to learn code, but they’ll also have to switch culture a bit. I’m not saying the agency world is going to become Yahoo!, Google, and MSFT-like, but it’s going to have to switch around a bit. The interesting part of this is to see which agencies built it themselves and fail, which agencies acquire technologies, and which agencies partner.

I have a white paper that I’m releasing about this in the coming week or so, which was written back in November. I’m looking forward to sharing.

  • http://about.me/clouvi Christien Louviere

    DH, I’ve asked several friends at agencies this very question. So far the only consistent response I’ve received is a blank look on their faces as if to say, “Why the hell would we want to do that?” In my mind, it seems like it would be a relatively easy transition (or addition). Look forward to the white paper…

    • http://www.darrenherman.com dherman76

      I don’t think it’s a relatively easy transition at all. The stereotypical media planner is not setup to run technologies nor yield manage… steep learning curve. Plus, large entities will have to roll out this new culture and that could take years.

      • http://about.me/clouvi Christien Louviere

        Maybe I painted too broad of a brush with my comment. Amongst some smaller agencies, I have begun to see a few develop more robust VC arms. That is what I meant by “addition.” I would think more agencies would start integrating these arms into their agencies rather than keeping them separate.

  • clouvi

    DH, I've asked several friends at agencies this very question. So far the only consistent response I've received is a blank look on their faces as if to say, “Why the hell would we want to do that?” In my mind, it seems like it would be a relatively easy transition (or addition). Look forward to the white paper…

  • andyc

    Couldn’t agree more Darren. That’s exactly why we set up Infectious Media in London. Media Exchanges and smart technologies that plug into them will become critical components in the future infrastructural ecosystem. Also, as agencies are generally closer to advertisers and their data than the networks, they are in a much better position to make intelligent buying decisions (in real time) across these new platforms. This is a very interesting and exciting time for agenies, advertisers and publishres alike, who will all beneifit from greater market efficiencies.

    • http://www.darrenherman.com dherman76

      Sounds like we’re going to be fighting similar battles for years to come – but could share the experiences while doing so. Would love to connect. Will reach out.

  • andyc

    Couldn't agree more Darren. That's exactly why we set up Infectious Media in London. Media Exchanges and smart technologies that plug into them will become critical components in the future infrastructural ecosystem. Also, as agencies are generally closer to advertisers and their data than the networks, they are in a much better position to make intelligent buying decisions (in real time) across these new platforms. This is a very interesting and exciting time for agenies, advertisers and publishres alike, who will all beneifit from greater market efficiencies.

  • http://www.darrenherman.com dherman76

    I don't think it's a relatively easy transition at all. The stereotypical media planner is not setup to run technologies nor yield manage… steep learning curve. Plus, large entities will have to roll out this new culture and that could take years.

  • clouvi

    Maybe I painted too broad of a brush with my comment. Amongst some smaller agencies, I have begun to see a few develop more robust VC arms. That is what I meant by “addition.” I would think more agencies would start integrating these arms into their agencies rather than keeping them separate.

  • http://www.userinsight.com 508 compliance testing

    There are agencies who fails because of their own fault or disintermination.

  • http://www.cliqology.com scotthoffman

    Darren, your comments and theories are spot on! I think that this wave is coming (or in your case, has already arrived.) I look forward to reading your white paper. I also look forward too watching in the upcoming months how this plays out.

  • http://www.lotame.com/blog scotthoffman

    Darren, your comments and theories are spot on! I think that this wave is coming (or in your case, has already arrived.) I look forward to reading your white paper. I also look forward too watching in the upcoming months how this plays out.

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