Agencies As DMPs
Winds of change are blowing down the halls of major media agencies. The race to develop data management and audience buying platforms is on. Does this surprise anyone? I hope not. It's a logical evolution and has been underway for a few years now.
The recent announcement of WPP's Xaxis is just the first in what we should expect to be similar announcements from all of the holding companies. Surely Publicis will be next.
On the one hand, this is just another re-org of agency assets around a new subdiscipline -- an evolution of the trading desk to a more full-service solution. On the other hand, it reminds us that "agencies as end-to-end audience buying firms" is a trend with far-reaching ramifications for reshaping the media-buying world. Operational scale, coupled with centralized systematic processes and analytics services, present a number of benefits for both agencies and their portfolios of clients.
Is this the Media Agency Structure of the Future?
Of course developing the capabilities of a next-generation, audience-buying agency is not an overnight endeavor. A true end-to-end solution requires first-party data management, third-party data access, real-time bidding, ad serving, analytics, dynamic creative, and I would argue that attribution reporting and modeling would be required to round it out. Developing systems that manage, bid, analyze and optimize terabytes of data in real time is no small task. Expect agencies to be the newest suitors of some of the ad tech firms that are leading the charge in their respective specialties.
The holding companies have been under scrutiny lately regarding the ways in which their trading desk units have fit into a client's bigger picture. They have been accused of mandating spending, double dipping on fees, and a lack of transparency and conflicts of interest in upfront media commitments. While I don't have the space to go into this issue here, I don't believe the intentions are to deceive or gouge. After all, we are still in a transitional period -- from the way it was, to the way it will be.
Is Proprietary Better?
While "proprietary" is at face value a competitive positioning for an agency, it is not always the best solution, as technology requires a significant ongoing investment in staying relevant and ahead of the curve. Investing in upgrading older technology may not always be a company imperative, and clients will never be aware of this shift in priorities. That said, agencies have every motivation to build and buy technology that helps to serve the best interests of their clients.
Generally, clients should perform a better due diligence when their agencies claim to have proprietary technology and tools. Often what is claimed as proprietary is simply a white-labeled version of existing third-party technology. I wish agencies were more transparent about this; there's no shame in choosing the flexibility to work with the best third-party technology in market at a particular time.
The privacy debates rage on. As agencies' assume a data management platform role on behalf of marketers, privacy compliance must become more of a priority. But who will oversee the agencies? Doesn't third-party objectivity and enforcement make sense? We may see the rise of PCPs: privacy compliance platforms (yes I just made that up, but it seems logical). As an industry, we must ensure that personally identifiable information, or ties back to it, are scrubbed and never accessible for inappropriate means. We really all need to take this issue more seriously.
Data and Branding - Finally in the Same Sentence
The growth of audience buying, ad exchanges, DMPs, DSPs and trading desks have predominantly been focused towards direct marketing, removing context and environment from the equation. However, brand marketers and their agencies will not argue the value of media environment. Private exchanges have emerged to balance the best of both worlds -- environment and audience. In theory and promise, the next iteration of agency audience buying and data management platforms will incorporate premium inventory and bridge this gap in new ways.
The ramifications for brand marketers are substantial. Applications of targeting data are now beginning to transcend beyond online and mobile channels and into TV. It's only a matter of time before the improved targeting and predictive modeling enables cross-channel insights and improved media mix modeling.
I'm eager to hear what you think. Is this trend agency hype or a major evolutionary shift? Privacy concerns? A new platform for branding in addition to DR? Chime in on the comments or hit me on Twitter @jasonheller.