The calm after the tsunami – a new agency world order
The period of disruption that many have been anticipating for the past five years is about to arrive, writes DataXu’s Chris Le May.
If one thing is clear from the historic tidal wave of media agency reviews that are due to come full circle – estimated to reach a record high of £26bn in business by the end of the year – it’s that business as usual is no longer good enough.
For those agencies whose business has been called in for review, they have learnt the hard way that, thanks to the way in which tech platforms have transformed how marketers work, they now have an unwavering desire for greater transparency, efficiency and ROI. The bar has been set high for 2016 and come the New Year, a new agency world order with technology at its heart will be ruling the roost.
The array of accounts on the slate is surely a sign of how technology is ruling our times, with programmatic at the centre. 21st Century Fox, for example, is soon expected to reveal the results of its estimated £648 million media agency review; its hunt driven by the search to find “the right agency partners”.
So what constitutes this perfect fit? Well, just weeks ago, Mondelèz International-owned Cadbury cited the need for improved “data-driven insights” as fundamental to centralising its media accounts into Aegis and SMG.
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Omnicom CEO John Wren told investors in July that the reviews were mainly driven by the fact that technology has radically changed media planning and buying – with advertisers wanting to know, in this new cross device, multichannel, always on world, that their agency has sufficient expertise in data, technology and digital targeting.
Certainly the shift in spend towards digital has been so significant that marketers have upped the ante on interrogating where their money is going, especially when you look at IAB stats that estimate that up to 80 per cent of all digital advertising spend will be channelled through programmatic by 2018.
DataXu CEO Mike Baker has, rather philosophically, attributed this year’ agency review phenomenon to “discontinuous change”, defined as “non-incremental, sudden change that threatens existing or traditional authority or power structure, because it drastically alters the way things are currently done or have been done for years.”
According to him, this is the period of disruption that many of us have been anticipating for the past five years, as the business of advertising is changed by data, analytics and software. His own insider agency consultant contact weighed in on what’s driven this review wave, and in their words, it’s:
– the growing importance of user level data and the technology to manage it
– media cost transparency
– media agency goals around ROI taking stronger priority
This unprecedented level of review activity will no doubt have an irrevocable impact on media agencies – their processes, practices and what they stand for. But it also paves the path for normalisation of the three legged stool model of client, media agency, and tech platform.
In this ‘holy trinity’, agencies have as much value to offer as the tech platform and it is not a case of either or, or one trying to undercut another.
Agencies can position themselves as trusted partners to help educate brands about technology, which is about much more than simply buying media and achieving campaign results. I for one witness some of the smartest brands coming to us together with their agency.
The brand wants to own the relationship so that transparency is in their court. They also want full control and ownership of their data, but rely on the advice and expertise of the media agency. The three legged stool is increasingly becoming the ideal solution for marketers who aren’t looking to hire additional resources to run programmatic marketing in-house.
While many have interpreted this tidal wave of media agency reviews as a threat, MediaCom COO Toby Jenner was quoted earlier this year saying this review surge is a once in a lifetime opportunity for agencies in terms of the amount of business and type of brands that are up for grabs.
Whether this will result in overall lower media agency fees remains to be seen, but there is no doubt that it will put existing agency models to the test. Those who understand the value of transparency, efficiency and data-driven insights by working closely with trusted tech partners will stand to gain a march on their competitors.
Chris Le May is SVP & MD Europe and emerging markets, DataXu