Tomorrow's Media Agency Is A Modular Tech Platform

  • by , Op-Ed Contributor, September 3, 2021

Right now, more than half of media dollars are digital, with 80% bought programmatically. And yet, agencies are still leading media investments using a model built before digital. At a time when the media agency business is at a visible tipping point and growth and margins continue to decline, we must explore ways to reinvent the media agency business model. Either we decide now, or the way forward gets decided for us by new market leaders.

One of the biggest barriers to evolution is that most agencies are trying to survive as a managed service. Managed service focus entails thesame standardized products and service model across all clients, which allows no flexibility to build bespoke services that adapt around client needs. 

But what qualities might allow for a little bit more agility as we attempt to steer such a large business in a new direction? Here are some considerations. 

Identifying The Right Model 

Tech-enabled models create data-led solutions offering more transparency to the media ecosystem – which is a key demand from major advertisers. Similarly, modular models also offer direct, adaptive value, as they create opportunities to generate revenue from multiple scopes, as a marked transition away from an all-or-nothing commercial model. The way forward is also shaped like a platform model, which will generate new revenue streams outside of the traditional, full-service agency model.



By contrast, staffing-based models are no longer sustainable. Turnover, instability, performance issues, low margin and high overheads continually makes for an uphill climb.

Given that inspiration and direction, media agencies need to evolve from a managed service provider to a technology-enabled modular platform.

If you look at the external forces pushing us to the brink of change, it becomes clear how a modular platform model provides relief and answers...

Understanding Demand Forces

Linear spend is declining at 4% year-on-year. 2021 programmatic spend is set to reach $100 billion. We’re seeing 24% growth year-on-year in programmatic media buys. DSPs are the fastest growing media companies, and advertisers are outsourcing media directly to tech companies. If the old model can’t bend to manage these new forces, it’ll snap. 

A tech-enabled modular platform not heavily reliant on manual processes moves towards efficient client business solutions. A platform would allow an agency to establish a data spine that powers client solutions across a broader range of services, from audience targeting to bill pay, and move away from a commoditized offering driven by media cost. These new demand forces would drive a platform to open/generate new revenue streams while supporting client needs outside of traditional agency scope. This means minimized staff turnover and increased service quality with precision and speed. 

The first thing you should ask is whether your current ad tech and systems can meet the demands of the new media ecosystem. Depending on your answer, determine a solution for an integrated system that connects seamlessly across these tech-enabled services.

Analyzing Competitive Forces 

Agencies are losing market share to in-housing, consultants, and tech companies. In fact, the top four global digital agencies are now consultancies not media agencies, with a higher value proposition enabled by technology platforms. This competitive dynamic commands higher margins. 

What a new model allows is a flexible, integrated offering that puts the advertiser in control. As a differentiated offering within the media ecosystem, a platform will offer a solution to clients where they can opt in for self-service or managed serviced models around their needs. And a modular quality simply allows clients to select services around their needs only. This opportunity to reinvent the staffing-based-only approach to commercials also promotes long-term client contracts by minimizing service inconsistencies. 

First step towards action: Adjust mindset and assess market position to embrace a modular approach to servicing clients. Then, tactically, ask how the commercial approach needs to evolve to enable this service model so you’re a player in the game. 

What About Efficiency Forces? 

Simply put, efficiency forces are stretching old models thin. Incremental value generation in a data-enabled ecosystem is becoming more difficult, and automation is eliminating the need for managed service models. And so, advertisers are seeking low cost, high yield media models. Luckily, there are solutions that work. 

Modular technology platforms enable low-cost high efficiency service models, with interoperability across the media ecosystem unlocking a highly efficient, automated service model that reduces overheads and increased margins. Willfully automating key agency functions and processes would remove inefficiencies, enabling resources to focus on upstream services that command higher fees. 

To mobilize: Map what parts of the media service model can be automated to drive efficiencies – and then decide which ones should. 

We’re in position to reinvent ourselves if we’re willing to let go of the traditional model archetypes ill-equipped to handle changing winds. We can recreate media agencies to effectively compete against consultancies and tech providers, by offering the flexibility that advertisers are demanding. 

After all, a little flexibility can deal with a lot of force.


5 comments about "Tomorrow's Media Agency Is A Modular Tech Platform".
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  1. Ed Papazian from Media Dynamics Inc, September 3, 2021 at 11:11 a.m.

    Adil, doesn't your approach---if I understand it---conflict with the media planning function which should involve cross platform considerations? Also, isn't it necessary for the agency clients as well as the media sellers to be organized in the same way? Finally, are you saying that a  "modular tech platform" approach would yield lower media planning and buying costs for advertisers or that it would cost more but deliver so much more value that the added fees were worth it?

  2. Jim Meskauskas from Media Darwin, Inc., September 7, 2021 at 11:09 a.m.

    I agree with the framework of this article. But it's important to interrogate the meaning of "efficiency."  I've always said to clients -- unfortunately often to no avail -- that efficiency is not necessarily lowering costs: you don't determine the efficiency of your car based solely upon the cost of the gas you put into the tank.  The amalgamation of modular systems needs to improve outcomes, not simply lower costs.  The preponderance of tools and data sets available have become increasingly democratized, in so far as they are available to anyone with the resources (time, intelligence, money).  What's become more important is the skills of those who are handling them.  Every chef can purchase the best knives and spices; it's how they are wielded that makes the difference between Michelin star or slop house.

  3. Adil zaim from Carat replied, September 7, 2021 at 8:48 p.m.

    Ed, core agency functions including media planning won't fundamentally change however we need to evolve how they are delivered to clients. Cross channel media planning would remain at the core of an agency offering however it needs to evolve and embrace a marketplace that is fast converging to a biddable inventory pool where a traditional media planning approach may not be executable - we are already seeing this with the rapid growth of connected TV. I believe a modular approach to the agency service model enabled by tech would change the current currency that determines agency fees, where each funciton would be valued independently instead of a bundled approach linked to media pricing - this would result in clients willing to pay more for services they need and offer a qunatifiable value.

  4. Adil zaim from Carat replied, September 7, 2021 at 9:05 p.m.

    Jim, share your thoughts on efficiency and the value differentiation coming from the experience and skills of those handling and not just the tools. In the article I am referring to operational efficiencies at the agency that can be driven through automation. 

  5. Stewart Pearson from Consilient Group, September 8, 2021 at 10:46 p.m.

    Adil, I like your call to arms for agencies.  Taking a step back, the fundamental problems for agencies are (1) our inability to measure and value creativity; (2) the separation of media from creativity, organizationally as well as conceptually.  Agencies can add value through your modular tech platform and media planning, if that platform integrates emotional engagement  data, for example Digital Character, which is what my colleagues and team at is proposing. It is not the tech that will save agencies. It is finding data to represent creativity.

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