Maybe the title of the post is hyperbolic but at least this idea could put a big dent in their agency revenues.
Note: these are my thoughts, not necessarily reflected of my employer.
We talk about agencies having a digital backbone. Yet, for the most part, the technologies are licensed. For today’s and yesterdays reasoning, this made somewhat sense. Moving forward, I think I lie on the other side of the fence and could argue that agencies or their holding co., should own/operate their infrastructure.
For todays post, let’s focus on the most essential part: the ad server and data store.
I’m skeptical of Google and MSFT, specifically with the hundreds of billions of impressions they serve collectively. It would make sense that every campaign served thru them would make them smarter. Hey Toyota, did you know that your campaign for the Toyota Camry just made Honda’s campaign for the Accord much smarter?
There is the above issue and now an important one. MSFT and GOOG can see every advertisers campaign that uses their system including cpms, impressions, conversions, etc. Being that MSFT and GOOG sell media too, they have a huge advantage if they were to use that data in the way they pitch us and price us.
Google has the ability to do the above in search extremely easily thru Google Analytics. They know every search term leading to our site and can price appropriately.
I’m not saying that MSFT and GOOG are doing any and all above but its certainly an opportunity for them.
In talking with one of the other holding company execs, he mentioned to me that we need to rethink our competition and Google is a serious threat to Madison Ave.
So I have outlined a few reasons above that we (as agencies) should be scared of our partners or frienemies. Now, let’s focus on why having this technology structure in house makes sense.
Every ad served today in display, search, rich media, online video and others puts off data exhaust. Some of this is extremely relevant for clients/campaigns and some useless. However, a good team with the data within the walls of the agency/holding co (ie like Varick Media) can reap tremendous benefits. Also, the data from within holding co or agency walls can become a friendly co-op and can become a major new business strategic advantage.
Think of tmorrows data exhaust when most media is served and tracked with a digital backbone.
While every media company out there wants to service as many advertisers as possible, different agencies have different relationships with different media companies and the opportunities brought forth vary. If agencies controlled their ad server, they could build custom integrations wit certain (not all) publishers that provide opportunities beyond where the market is today.
Ad servers will quickly morph into planning tools as well. Within the agency is where this needs to Iive. Once television ads gets served and tracked, planning will be forced into these systems (because of the sheer dollars chasing) and every agency planning team will want their own customizations. We have some tools like Quantcast that help with audience planning but imagine a custom tool of Quantcast-times-ten on the desks of all the agency staffers.
Agencies and holding companies will have to continue to differentiate and if we wanted to put a dent into Google/MSFT, then MDC, IPG, Omnicom, WPP (first mover with 24/7), Publicis, and Havas should be certainly thinking in this direction. The writing is on the wall.
The argument will be made to say that agencies cant run technology companies which i’ve publicly aligned with that in the past, but I’m going to argue it and say… Go and hire the right people. If we don’t, someone else will.