Shifts in digital advertising and marketing are changing how brands source specific services and skills through their traditional agency partnerships.
Allocating 27% of their budgets to technology, CMOs now spend nearly as much on tech as their CIO counterparts – 3.2% vs. 3.4%, according to Gartner’s 2017 CMO spend survey (registration required). Then there’s the ballooning martech landscape, which has increased from 150 solutions in 2011 to more than 5,000 this year, as ChiefMarTec has captured in its annual supergraphic.
As advertising and marketing continue to become more technology-enabled, data-driven and results-focused, brands need a greater understanding of where and how their marketing dollars are spent. Coupled together, these factors have resulted in an increased desire for greater ownership and transparency. This might mean taking ownership of technology contracts (rather than agencies owning them), reviewing and streamlining mark-ups and margins, and evaluating skills that should become a core competency.
So what’s the best way forward for advertisers to achieve their goals in light of their existing agency relationships and the current technology landscape?
The short answer is that there is no one-size-fits-all solution. To better understand the trade-offs, brands can start with asking themselves these fundamental questions:
- Are we prioritizing cost above everything else?
- Are we acting as approvers or decision-makers?
- What knowledge, skills, technologies and data do we need to develop and/or own?
What Is the Highest Priority? Cost Reduction or Results?
My colleague, Fiona Davis, Infinitive’s EMEA Managing Director, spoke on a panel at ExchangeWire’s ATS London that explored some of these key questions. Fiona and her fellow panelists discussed the implications of the changing dynamics between agencies, brands, vendors and consultancies in today’s media and marketing landscape. You can watch the full video below for some insight into the question, “Is the traditional media agency model dead?”
From ad serving to verification to demand-side platforms, the prevalence of hidden fees limits just how transparent things can get. Identifying all the specific fees – resourcing, media, etc. – across the buy-side ecosystem does not necessarily change the total costs.
While full transparency sets a baseline, an exclusive focus on costs may overlook other factors, such as brand vs. agency liability and other trade-offs that are justified by current spend levels.
Brands are asking their agencies to do more and provide strategists, consultants and specialists. Yet many still try to seek and push for the lowest rates possible. Advertisers who focus solely on getting work done at the lowest possible price likely limit the value of their relationships.
Brand Marketing Staff: Approvers or Decision Makers?
At a recent meeting with a technology company, I met someone who previously worked in marketing at a Fortune 500 company. One of her reasons for leaving that company was her feeling that she lacked authority to make decisions and was only an approver.
I found this surprising as I typically view brands as having the power and the control; after all, it’s their money being invested in advertising. But in entrusting digital investments to agencies, brands often become approvers. The agency asks for approval (on media plan changes, technology tests, optimization, etc.) and the brand either approves or denies, potentially without understanding the context or significance of the decision.
A quick refresher on the definitions highlights why the distinction is important.
Approve: (v) to officially agree or accept as satisfactory
Decide: (v) come or bring to a resolution in the mind as a result of consideration; to make a choice from a number of alternatives
A certain level of knowledge is necessary to make a good decision. If brands bring in smart and experienced people, they will be able to ask better questions about their strategies and dig deep into existing processes. This, in turn, gives the brand the ability to push the agency, and in response, agencies will put their best people on that account.
An advertiser’s ability to both challenge and work effectively with its agency is constrained by its own knowledge of and skill level with programmatic media buying, technology and data.
What Should Brands Own? What Should They Outsource to Agencies?
Recent headlines suggest that there is a general trend in digital advertising and marketing toward brands in-housing, and as mentioned above, a changing agency model. I believe that agencies, consultancies and brands can all co-exist and are complementary to each other, assuming basic tenets like accountability and transparency are upheld by all partners.
The question becomes, what do brands need to develop, and what do they need to own?
- Is it the knowledge to make better decisions?
- Is it the skills to execute?
- Is it the tech to get better rates and transparency?
- Is it the data to understand performance and increase control?
- Is it some combination or all of the above?
While it’s not an easy answer, companies considering in-housing must consider whether they have sufficient talent availability, data and technology to take on key tasks and activities. Both agencies and consultancies can advise on the skills, capabilities and toolsets they may benefit from.
The Bottom Line: Collaboration and Transparency Breed Trust
High degrees of collaboration, transparency and information-sharing help build trust and strong, mutually beneficial relationships. As the complex world of adtech and martech continues to evolve, advertisers need to carefully craft the best combination to meet their goals.