In High-Stakes Ad Game, Agencies Losing Cards

Ad agencies are risking obsolescence. In a business world driven more by interconnected data ecosystems than ever before, many ad agencies -- even the biggest multinationals -- are still operating with systems more linked to the Seventies than the 21st century.

At such agencies, the flow of information is lagging. Reports are taking too long to produce. New media can't be integrated into media buying systems or it's taking too long to accomplish. Data from disparate sources aren't being compared, measured and integrated. Change is not easily supported.

In short, key agency data -- whether from media, research, accounting or scores of other sources -- isn't yielding total value. And let's be honest, after the creative product, data is possibly the single best reason there is to keep agencies at the table. It holds all the wisdom -- but no one is asking what it thinks.

When an agency's data is held in silos, it can't generate the insights and efficiencies clients demand. Analysis is fragmented and requires enormous amounts of human effort to uncover. Requests from clients for tailored information aren't met. Crucial statistical summaries are locked up in solitary spreadsheets on someone's laptop, where they can't be put to broader use.



Legacy mainframe media systems lie at the heart of the data problem. To understand these systems' inherent limitations, remember their peak in the late 1970s. The media landscape was a much simpler: five media types (TV, radio, billboards, magazines and newspapers), 11 national networks, a few sources of research data, and a couple of metrics.

No one could have anticipated the exponential growth and change we have seen since. Media types have nearly quadrupled through the introduction of search, display, VOD, mobile and satellite TV. There are now 125 national networks -- and where there were 18 million local and national spots sold in 1980, that number has grown to 12.5 billion. These mainframes and their applications -- yes, many such systems are actually still in use -- were not built to accommodate whole new classes of media.

Another limitation is that when these siloed, mainframe systems were designed, the idea of leveraging data to provide business intelligence was incomprehensible. That's one of the main reasons most other industries have converted off these mainframes and their dinosaur applications. The other is personnel: Those who understand mainframes and their antiquated architecture are dwindling; most are past retirement age. Since media evolves, who will keep these systems operating?

Despite these realities, too many agencies continue to buy into the idea that automation is too expensive, or too complicated, to be profitable. As a result, routine media buys still require huge amounts of manpower and paperwork. And business economies are lost because the agency cannot trade or leverage critical information with its vendors.

Now is the time to step up and embrace what's happening in the world of business data. Agencies have the opportunity to gain new and valuable relevance -- not to mention competitive advantage -- by implementing systems that turn information into insight.

With the new class of applications available, media buying and planning can become more efficient than ever, creating efficiencies that benefit both sides of the equation. Campaign analytical tools can integrate buy data with a host of online and offline sources -- ratings results, CRM data, store sales, Web site behavior, even social media buzz -- to create amazingly accurate and verifiable measures of campaign effectiveness.

Simply put, by extracting understanding and situational awareness from multiple sources of data, agencies can not only hold more cards, they also can increase the value of the cards they hold. The first step is to kill the mainframe media application, which, like the dinosaur, simply cannot adapt quickly enough to today's rapidly changing ecosystem.

In today's business landscape, data is the best defense an agency can have against those that would separate them from the marketing process. The stakes have never been higher. It's time for agencies to ante up.

8 comments about "In High-Stakes Ad Game, Agencies Losing Cards ".
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  1. Bill Gloede from the late Mediaweek, March 26, 2010 at 9:48 a.m.

    This must be why no one can write a good ad anymore.

  2. Stephen Schwartz from Vanguard Systems Inc., March 26, 2010 at 10:08 a.m.

    I am very familiar with this problem, as I wrote a competitive system to the largest supplier of "media buying" mainframe applications. Although we handled some of the largest clients I could never get a large organization to back me up (financially) so that we could move to a true integrated desktop application. This would have produced real competition that would have saved money in the long run. Furthermore, the proper data architecture would have provided the exact insights you have mentioned in a flash. Instead, through inevitable mergers my entire operation was squashed.
    There is a lot more about the inflexibility of existing systems that the average person doesn't know. But it is the organizations that are truly inflexible. New software means training and learning and time. These are not available where most people over 40 are being drummed out to increase profits for these publically held companies.
    I could write a book.

  3. Mike Einstein from the Brothers Einstein, March 26, 2010 at 11:27 a.m.

    Brands don't survive and/or thrive on the basis of how they interpret data about us, but rather on how we're made to feel about them. The agency's job, as the brand steward, is to promote the message, not the medium.

    But then, as Bill suggests below, that would require a good writer, not an MBA.

  4. Terrah Kocher from ThinkVine, March 26, 2010 at 12:13 p.m.

    Data is King! "When an agency's data is held in silos, it can't generate the insights and efficiencies clients demand." When this happens, an incredible opportunity for the client and agency is lost. Data can be used to determine the value of a facebook friend or how sales might be effected if a client were to turn their TV spend off for a quarter. When an agency, or any company for that matter, can use data to forecast and simulate marketing plans, before a client spends against them--the agency brings incredible value to the table. It's time to trade the dinosaurs in for keys to a hybrid.

  5. Mike Einstein from the Brothers Einstein, March 26, 2010 at 4:40 p.m.

    What can I say, Terrah? P.T. Barnum was right!

  6. Kelly Smith from The WebSmith Group, March 26, 2010 at 6:02 p.m.

    Having never worked for a real Ad agency and only been a supplier to them in the past, I can see where they would have a hard time adapting to these changes. Just a few years ago I mentioned to one of my good friends who OWNS and Ad Agency about the concept of using PPC on Google to direct some of his customers through, and he didn't know what I was talking about! Now many have ceased to exist in my home town and have combined with others just to survive. And this surprises me too. They should have been the ones driving the Bus! They should have recognized better than anyone what was happening in the world of advertising but instead, are peddling as fast as they can to try and catch up.

    My friend sold his agency last year and now may have to take it back for lack of payments from the new owner.

  7. Rob Frydlewicz from DentsuAegis, March 26, 2010 at 7:04 p.m.

    I don't think it's the type of data, amount of data or the systems used to manipulate or link the data that's the issue. Rather it's the serious depletion of the talent pool (mostly from layoffs than retirement). Sadly, as staff cutbacks of the the past few years demonstrate, agency CFO's seem to see little value in experienced & talented researchers who can skillfully direct the analysis of the proliferating amounts of data.

  8. Ken Nicholas from VideoAmp, March 26, 2010 at 10:23 p.m.

    Written from this perspective [and your viewpoint], John, what you write makes sense. To me, it's more a 'Yes & No at the same time' argument. So this is true in one sense...but then you have VivaKi out of Publicis, and MediaLab out of Initiative [many others, too], which makes less true in another. Also, the Digital guy just named CEO at JWT is a major, huge, big deal.

    Last, clients are going to need MORE help with Social Media implications, and the 'big idea' there...along with still needing all the other 'big ideas' make Agencies go away.

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