November 19, 2015 Darren Paterson

Disintermediation in Media Services

The journey of corporate digital transformation has heralded the age of Big Data and the opportunity to better manage it in order to drive clearer and commercially valuable insights through smarter analytics.  If you’re a business looking to take advantage of this trend, a plethora of agencies and adtech companies offer you an outsourced solution or managed service to help you get underway. In the advertising sector, this often means allowing third parties to place tracking pixels on your website which allow them visibility of web user behaviour on your company pages.  Amongst other things, these pixels allow them to cookie your web traffic and then follow these users around the web, delivering targeted promotional messages. This approach comes with the promise of greater ROI from media investment, thereby justifying the external involvement.

However, along with this model comes a necessary intrusion from analysts, traders and account managers from outside of your organisation, ingesting your commercially sensitive data to help you drive the insights and returns you are seeking.  For companies preferring to safeguard their first party data integrity from external risk, the only viable option appears to be for you to take matters into your own hands, building the right tech stack and employing a new breed of marketer (highly analytical) tuned to the changing needs of data driven marketing.  So what of this trend? Well, as the marketer brings control and expertise in-house, there are ramifications for the media industry that could threaten the status quo. The adtech landscape has evolved with mind-boggling complexity, but there are platforms and software arriving to simplify much of this.  In-house DMPs are being installed, data sets plugged in and programmatic teams recruited. In other digital areas, such as social media and community management, larger companies (such as NAB and Telstra) have set up their own in-house social media command centres to listen, digest and respond in close to real time, 24/7. Organic search has been in-house for a long time, as has PPC for smaller companies, but increasingly PPC is being contemplated by larger companies too.  Here’s a possible scenario:

9am Monday morning, some years from now.  The bank’s Customer Marketing team are set for a day of media workshops in preparation for a new product launch. The CCO launches proceedings with her vision for the next 12mths and explains where this launch fits into the product portfolio.  In the audience are the bank’s Tier 1 media vendors, three Primary Data Partners (Virgin, Coles and Telstra) and creative partners.  The bank’s CDO takes over the briefing and then hands on to the team of marketing analysts who break everybody into groups for the day’s workshops.  By day’s end, there’s a good start at a framework for messaging, a rough approach for creative and a skeleton brief for data partners to work with.

What’s unusual with this depiction of the future marketing model? Well, a number of things.  It’s led by a Chief Customer Officer, supported by a Chief Data Officer and then orchestrated by a team of analysts. Publishers are present from the outset. And there’s no media agency in the room.  In this hypothetical scenario, the bank has dropped that relationship in favour of a more direct approach.  Their journey of digital transformation has reached a point where all digital media activities have already been brought in-house and with more than 60% of its media investment now digital, it felt like the right move.  Also, there had been issues of trust around data use and pricing transparency that undermined the relationship and led them to question the value being delivered.

This is a worrying portrait of the future if you’re a media agency.  It won’t happen overnight and not every industry vertical or company will take this big step, but some will, and some already are. While the attraction of doing away with the media agency may seem clear to some, it is certainly not without its challenges and risks.  These are just a few:

  • Highly skilled digital people are already in short supply in the current centralised agency model. Should 100 major advertisers take the above approach then this talent shortage will become extreme
  • Agencies can spread costs across a wide base of clients and as such afford to employ teams of specialists in tightly defined disciplines such as media research, implementation planning and trading. Advertisers may find it hard to warrant more than one or two in each discipline, leaving them exposed during sickness, holidays and departures.
  • Power shift. A handful of agencies and their holding companies control billions of dollars of client money, a negotiating position that keeps prices in check.  Devolving these billions to the client level and breaking them into hundreds of smaller parcels will unquestionably open the door for publishers to drive stronger returns.
  • Tech is expensive to install and often quickly superseded. Staying current and maintaining competitive advantage could be costly.

There seems to be little time for complacency if you’re a media agency head.  A host of new players are trying to eat media lunch and some clients are even inviting them in.  Creative agencies, management consultants and ad tech companies have all succeeded to some degree in biting off projects and demonstrating value add. One thing seems certain… the next 5 years will bring considerable change to this sector.

(This post was originally published on LinkedIn.)

Darren Paterson is Principal of Digicentric and is Expert Consultant – Digital and Media for Jamecam Consulting.


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