• by Daniel Ambrose , February 24, 2011

It is fascinating to me that large agencies are investing so much in their own demise.

It's no surprise that agencies are leery of crowd-sourced creative. Agencies whose secret sauce is the perception that big clients need expensively produced TV commercials, that only they can make, find it very disconcerting that someone might replace them with a post to a site where hundreds of wanna-be TV directors will be inspired to create a commercial for a few hundred or even a few thousand bucks.

But, agencies are investing in so-called demand-side platforms, DSPs, for the real-time, auction-based purchase and management of advertising media across networks. These networks can only lead to the enabling of smaller, even one-person, shops being able to compete on a level playing field with the big, bloated, agencies that helped created the commoditized media environment in the first place.

Clients want creative and tightly integrated campaigns. And yet the agency holding companies create more and yet more specialized business units that that don't talk to one another. First, it was "digital agencies," separate from those for analog media; and now separate search-marketing business units. What inspired this column is the creation of stand-alone "DSP" that would operate alongside a media buying service in a agency holding company.

DSP technology and systems that aggregate internet media ad-networks for the purchase and optimization of online display, or video, advertising sound like the client-lure-du-jour. But in time they will enable little guys to buy media just like the big guys. It is just like the digitization of the financial markets that now allows me to trade stocks or bonds from my home when I used to have to call my broker, who made a fat percentage on the trade, not to mention that I had to rely upon him for information.

One effect of clients wanting well-thought-through and integrated campaigns is that media companies have begun to compete directly with agencies by offering complete multiple media 'integrated' campaign for millions, even for tens of millions of dollars in client investment.

In Balkanized agency holding companies, the digital unit doesn't know and doesn't care that the print unit bought magazine brand x in the print planning process. There isn't even a mechanism for them to find out, despite the fact that research from Dynamic Logic and others conclusively shows that integrated campaigns are more effective and efficient and that buying the same brand online and in print makes financial sense. I call it hybrid media because it represents two media (print and digital) from the same brand working separately and together to give the client more return on its investment. It's a direct analogy with a hybrid car, whose two engines work separately and together to give the driver more miles per gallon.

Because advertisers want the most effective advertising packages they can get, more and more they are open to integrated packages from media companies. And media companies are becoming more like agencies in order to provide them. In the last couple of years, Hearst purchased iCrossing to bring in search engine expertise, and Meredith purchased six new business units, including an interactive agency and a mobile solutions provider.

We know that the most powerful thing in advertising is not media buying clout, or TV production expertise, but an idea. A single powerful idea, created and communicated by a single individual can change the fortunes of even the biggest brands. Individuals, and small groups, with the distribution power of a DSP at their disposal, will undermine the foundation of the very large agency groups that invested in networked-real-time-advertising bidding and management platforms.

The demand for "big ideas" that will move the needle for advertisers will always be there. The DSPs will further enable individuals and media companies with those big ideas to undermine the old role of agencies.