Advertising Technology

Strategic Services from Sellers Causing Agency Headaches

The-Makegood_Chris_Tuleya_260When programmatic display first started getting really hot in 2010, the pundits all looked at the Display LUMAscape and agreed that things couldn’t stay this way forever.  Every company in the space was chasing a very small slice of what was a growing, but still tiny market.  By and large, most agreed that the programmatic space was ripe for consolidation.

You might have come out of 2010 thinking, “we’ll see massive rollups, followed by big buyouts.”  (That’s what most investors were thinking, too.)  But what you might not have considered is that many ad tech companies would add services and change the focus of their businesses.

Strategic services seem to be a big add-on.  That’s counterintuitive because it brings ad tech companies directly into conflict with agencies that might be giving them client business.  Whereas tech companies were dedicating resources toward getting agencies to be better programmatic buyers, the trend now is toward handling programmatic buying turnkey for advertisers.

If all this had been happening 20 years ago, it never would have gotten off the ground.  Advertisers knew the difference between agencies and media sellers, and advice coming from a seller would have been taken with a grain of salt.  But it seems to be getting traction in 2014.  Here’s why:

  1. Programmatic is confusing to advertisers.  Few and far between are the advertisers who have the time to invest in understanding the programmatic marketplace and the roles of each company involved in it.
  2. Fewer advertisers can tell the difference between an agency and a seller.  Many marketers have adopted models where the people in charge of managing agencies aren’t classically-trained marketers, but may have expertise in other areas of the organization.  Some of these people quite simply don’t understand the conflicts that arise in taking advice from sellers.
  3. Programmatic is still a drop in the bucket for most advertisers.  We know that the marketplace is confusing and still in its infancy.  For the vast majority of marketers who aren’t spending a tremendous percentage of their marketing budgets in programmatic display, it doesn’t make sense to invest time and money in becoming experts.  Expertise is costly, and many would rather dabble with some informal instruction from the tech companies in the trenches than hire an expensive consultant or have their agency spend time on it.

For many agencies, strategic services that are based in media-selling organizations aren’t just a competitive threat.  They’re a headache.  Sellers are in the game to sell more media.  And as we’re fond of saying around the office here “When you’re holding a hammer, every problem looks like a nail.”

Google is a perfect example of this approach. For years Google has had a seat at client tables as the strategic leader within search marketing. However, their internal goals directly contradict those of clients, which is to efficiently and effectively meet defined objectives. Google’s sole objective and internal metric is to bolster spend by employing Google owned and operated channels. This divide emphasizes the role an agency plays as a strategic partner whose objective aligns with the clients and has a true seat at the table.

If the conflict isn’t obvious to you already, think of it this way: A media seller in the display space isn’t going to recommend that you cut your display budget because, for instance, paid search is reaching your goals more efficiently and effectively.  They’ll recommend more display media.

Without a partner that has a comprehensive understanding of an advertiser’s mix, as well as an unbiased compensation model, advertisers can get into trouble here.  It’s wise to be cautious.

This column was written by Chris Tuleya, Vice President, eDR, at Underscore Marketing, a boutique firm that creates and manages digital marketing programs. Look for their column the 1st and 3rd Friday of every month.