• by Matt Straz , February 13, 2012

There is a war taking place in advertising, one that will determine what the industry will look like for years to come. This battle is being waged on multiple fronts, but the outcome will be based on one question: What technology will marketers use to create, target, deliver and measure their ads? The winning software will make its makers rich and powerful. The losers will fade into history. Everyone else in advertising will be inexorably linked to the technology that wins, perhaps for generations.

The coming ad technology revolution will create efficiencies at such a scale that it will remake whole parts of the advertising landscape. For example, some of the independent data management platforms are attempting implicitly to make media agencies obsolete. Some believe that all of the “middle-men” -- agencies, ad networks, etc. -- will be made redundant once the technology platforms are in place. These absolutists see their software, used by marketers and publishers alike, replacing the need for agencies.

They also claim that the signs of this future are already here. Marketers are becoming quite sophisticated when it comes to data and software, and how could they not? Once you cut your teeth on self-serve ad-buying platforms like Google and Facebook, it’s impossible not to adopt a more technological approach to marketing. And a few marketers -- retailers, in particular -- appear to be bringing some marketing activities in-house thanks to software.

The war extends inside the walls of the marketers themselves. Companies like Microsoft have recently cut hundreds of traditional marketers from their ranks as they put data-driven product teams in charge of marketing.

The media agencies aren’t taking any of this lying down. After years of letting ad networks do some of their grunt work -- planning and buying ads from thousands of Web sites using a potent mix of people and software -- they’ve decided to get into the game. Most of the major agencies now operate trading desks with software that allows them to buy online ads in real time. As with Google pay-per-click campaigns in the previous decade, the trading desks are a training ground, readying the ad industry’s next generation for a time when most media will be bought via software rather than through handshakes and insertion orders.

The biggest battle for the future of advertising right now is in television. Media agencies are loath to implement any technology that might cut them out of the lucrative business of planning and buying TV ads. This is why they have thwarted attempts by companies like Google to get into the TV ad business. The technology companies, on the other hand, argue that television buying needs to be modernized with online-like targeting and frequency capping. They are right, of course, and in exchange they want their own piece of the multibillion-dollar television ad market.

Also, MediaOcean, the result of a pending merger of back-office agency software companies Donovan and MediaBank, wants to build the operating system for advertising. The company positions itself as the anti-Google, an independent software platform that is not in the media business. This enemy of the agencies’ frenemy intends to be Madison Avenue’s ally in the battle for the future of advertising.

Meanwhile, next-generation media companies are launching their own assault on Adland. Facebook’s ad platform has been wildly successful and turns over a billion dollars every three months. Apple, Twitter and others have also created proprietary ad systems. With the proliferation of platforms, it would be ironic if the old-line media agencies, with their extensive ad ops and analytics expertise, emerge from the war in power.

The pacifists in the ad war, the creatives, will eventually be drawn into the battle whether they like it or not. New cloud-based platforms that optimize the production of ads are now within reach. Agencies will have to decide if these systems are friend or foe, reducing billable hours for production work, but freeing up creatives to do what they do best: producing content and telling great stories for brands. But the big creative shops don’t have much choice. If they don’t adopt the tools, someone else will jump in and seize the software. Technology is relentless.

While the outcome of the war has yet to be determined, we do know one thing right now: Software will irrevocably change the current landscape and usher in a new age of advertising.