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Ad Tech Is An Opportunity for Agencies…If They Move Fast Enough

Last week, Ad Age published a guest column by Bob Ray, “Ad Tech Isn’t a Threat to Agencies, It’s an Opportunity.” While I agree with this title and most of the article’s content, I have to ask, “What took you [the agency industry] so long?!”

 It’s hard to avoid the notion that ad tech is killing agencies, rather than helping them to remain relevant.”

Yes, ad tech presents huge opportunities for agencies…but only if agencies embrace ad tech, continue to be students of it, and move swiftly enough in adopting it to realize its benefits before clients become impatient and move on. Even Ray acknowledges, “It’s hard to avoid the notion that ad tech is killing agencies, rather than helping them to remain relevant.”

Ray used an example of a recent “run-off” between three programmatic ad platforms (DSPs) executed by his media buying agency on behalf of one of its clients. The thing is, programmatic ad buying has been around for five-plus years now. In technology terms, five years is ancient history!

“Ad Tech” ≠ Media

Another issue:  “Ad tech” does not equal programmatic media buying. Maybe the agency world is fixated on programmatic because media planning and buying has been such a huge part of the way agencies have historically delivered service to and made [huge sums of] money from advertisers, but by no means is programmatic the be all and end-all of ad tech. Ray’s article points out the Lumascapes that detail technology areas relevant to marketing and advertising, but in my opinion, agencies should pay attention to them all, not just seven. (There are actually 11 Lumascapes to date, 10 of which seem relevant to me for agencies: display, search, video, mobile, social, commerce, gaming, strategic buyer, content marketing and marketing technology. If you also want to follow the money – a smart move to know who’s funding new technology and what that technology is so you can know about it early stage – also take note of the Digital Capital Lumascape.)

Here’s the thing:  In my mind, the word “ad agency” is no longer really appropriate in today’s complex world of reaching consumers. Companies providing solutions for persuading consumers are really “advertising and marketing agencies” because these days it takes more than just paid media, which the word “advertising” implies. Agencies need to look at holistic solutions and be able to speak to all the various facets of marketing, as the varied Lumascapes indicate. Beyond merely also providing social media, organic search, mobile development and other off-line solutions, agencies need to be thinking about solving problems like data collection (and protection); tracking, reporting, and data analysis; cross-channel/cross-device attribution; and being partners in innovation.

The Talent Question

The type of person required to execute today’s marketing and advertising is also changing. With CMOs being held to ever-higher standards of accountability and performance, today’s advertisers seek out the best and brightest analytical as well as creative minds. In his article, Ray quotes WPP’s Sir Martin Sorrell as recently saying, “I don’t think that good people will want to work in something like an in-house agency. They want variety.”

He has a point, particularly for creative minds, but working client side has its upsides as well:  better salaries and benefits, stability, better hours, and, as someone I know who recently switched from agency side to client side put it, “I’m so happy I don’t have to deal with asshole clients anymore.”

Sorrell went on to say, “The war for talent is tough now and it’s going to get tougher.” On this point I couldn’t agree more. Agencies will not only need to fight each other to win the best and brightest creative talent, but also to woo the best marketing quants and techies. To fill these positions, they might be battling the very brand advertisers they’re trying to serve because they need this talent in-house, too. Anyone who also read last week’s scuttlebutt between Nancy Hill of the American Association of Advertising Agencies and Bob Liodice of the Association of National Advertisers, played out in the Wall Street Journal, knows this is a hot topic.

Lighting a Fire

Ray concludes by saying, “We’ve witnessed an incredible flowering of innovation during the past five years. But we’re nowhere near done.” Sorry Bob – the innovation has been happening around you for the past 25 years. The moment the first websites launched, marketing was altered in irreversible ways. Agencies paid little attention in those early years so digital specialists cropped up (I ought to know – I was one of them). Perhaps it has only been in the last five years that the agency business has been significantly hurt by digital as more dollars shift from traditional channels into digital and as clients’ demands have forced agencies to pivot.

Agencies will survive because as Ray says, “…clients are going to need agencies to curate this incredibly vibrant and confusing market on their behalf,” but I say only the fastest and most adroit will win. Brand advertisers cannot sit around and wait for their agencies to play catch-up or they will look elsewhere for solutions.

Believe me, some folks in ad tech would love to have just a fraction of an agency’s business to take it direct.

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