Home Agencies The Disintermediation of Ad Agencies

The Disintermediation of Ad Agencies

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The Disintermediation of Ad AgenciesDarren Herman of MDC Partners‘ Varick Media Management recently published his thoughts on the disintermediation of online display advertising and, by extension, ad networks.

Though it cannot be said we’re in complete agreement, it is a well-conceived argument that plots a path to success for savvy ad agencies who are ready to bring ad exchange technology and thinking to their media buying.

Unfortunately, most agencies will not follow Darren and MDC’s path. And, clients, networks and technology providers will realize that the expertise of the exchange trader has been largely dismissed, if not reviled, by their former agency partners. (For proof, just go to an IAB event to hear the vitriol sometime.)

Oddly, many agencies appear annoyed by the prospect that technology can affect their futures and, most importantly, their margins, which agencies are accustomed to taking for granted.

Agency stubbornness in maintaining proprietary, walled garden strategies will create the next big change in digital media buying: ad networks will bring their expertise, service and technology directly to clients who are looking for a bigger bang for their marketing dollar with the transparency and control of the exchange.

Networks such as Platform-A’s Advertising.com, SpecificMedia, ValueClick, Casale Media, TribalFusion, InterClick, Federated Media, Undertone Networks, and Revenue Science (or do you say, Audience Science) will have the opportunity to fill the void as ad exchange liquidity improves and begins to traffic a larger share of online media.

Replacing Media Buying Agencies

In his white paper, Darren Herman suggests that the better networks will become data providers and cites the superior data on the automotive vertical captured by SpecificMedia. In our opinion, this is exactly why SpecificMedia will be able to replace relationships in the supply chain that many agencies fill today by providing directly to clients the data, analysis and delivery they need without the agency mark-up.

And, SpecificMedia can still sell the data separately on the exchange, too. Ch-ching.

The account management side of ad networks will no doubt grow in response to the steady migration of marketers working directly with networks who are using the latest technology and the ad exchange to implement efficient, digital strategies. Also, marketers will begin hiring in-house ad exchange managers who can interface between the “exchange agency” (the ad network) and creative.

Most media buying agencies will respond to the continuing advancement of technology and advertising exchanges and fall into two buckets:

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  • Reject technology advances and/or move way too slowly to take advantage of it.
  • Try to build their own own proprietary system a la WPP Group, Group M and 24/7 Media.

Both are closed paths traveling in the opposite, open-to-all direction of the ad exchange model that provides unparalleled insight on media and improves ROI for all parties. By not partnering with technology and members of the exchange, many “closed path” agencies will not have time on their side.

For networks, a natural transition is ahead as the disintermediation of agencies brings networks – the super traders of the exchange – and clients together.

We welcome your comments.

Final tally of “Who will be disintermediated?”:

  • Agencies (49%, 24 Votes)
  • No one (27%, 13 Votes)
  • Networks (24%, 12 Votes)

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