IBM IX’s Babs Rangaiah Says Agencies Need To Move The Needle On Business, Not Just Marketing

Before he tried on agency life, Babs Rangaiah was a bit of a star on the CPG circuit.

After more than a decade driving media innovation for global CPG Unilever, a shakeup in Unilever’s marketing org last spring led Rangaiah agency-side.

Now, as a partner leading global marketing solutions for IBM’s in-house agency, Interactive Experience (iX), Rangaiah is working on the problems he, as a brand marketing leader, used to hire agencies to solve.

IBM iX recently acquired new capabilities like commerce and design, but Rangaiah predicts the next wave of agency services will focus on artificial intelligence and innovations like blockchain.

“We are very much about looking at a client or brand’s problem and seeing what we can do with technology not as this shiny object, but to really solve problems for consumers,” he said.

Rangaiah spoke with AdExchanger about his first year at IBM after a long stint at Unilever, the trend toward zero-based budgeting and the changing dynamic between agencies, brands and publishers.

AdExchanger: What’s the biggest shift moving from brand to agency-side?

BABS RANGAIAH: The big ad agency used to house everything and it even managed, to some extent, below-the-line agencies. It was fairly straightforward for CMOs and heads of marketing to manage the creative product that came out of the agency and all of the measures that were used to amplify it.

Over the last few years, because of the volume of digital, social and mobile agencies [under one umbrella], it became very difficult and highly complex to put together an integrated program for any brand. 

One of the things I really wanted to do was work at a company that was at the center of a revolution and spaces like artificial intelligence and IoT and blockchain, which will have a giant impact not just on marketing but business at large. Because we’re a management consultancy at heart, as a company, we operate on a problem-solution basis versus making the best creative for creative’s sake.

How is an agency owned by an enterprise technology company different than one owned by a holding group?

IBM iX has all the technology and data components that are crucial to brands today, strategic management consulting and creative. We can do a program that runs across digital all the way through to ecommerce and it can be done with an expertise in technology and where the future is going.

We have a number of great cases in personalization leveraging AI and blockchain, which would only be white papers in the more traditional world.

If you look at a big holding company, they may have similar capabilities across several of the agencies either directly or through acquisition, but I still found, on the brand side, it was difficult if not impossible to work with who you wanted to within the holding company. You couldn’t just cherry-pick.

Having steered media investments at a CPG for years, what’s your take on zero-based budgeting and increasing calls for transparency?

Part of it is pretty basic. In the heyday of advertising, there were basically three steps.

Clients [had the dollars] and went to the agency [and] to [the] publisher. In whale times, agencies got the 15% commission and things were less complex. Even when it moved to more fee-based pricing, we had a better idea about the exact amount of money going to each step. So even when the commission went from 15% to 12%, the publishers still got 80%-plus of that money, which was used for working media to reach consumers.

In today’s world, you have client, agency, trade desk and then you have six or seven ad tech players and the publisher getting 37 cents on the dollar, but no one really knows what’s working because there’s less transparency and there’s less working dollars. On top of that, we have ad blocking, viewability and fraud to contend with.

What’s the outcome from all of these changes?

There are a lot of issues [like transparency and supply chain efficiencies] that need to be fixed in order to gain those big dollars from advertisers. They’ll just spend more with what they view as the safest options, whether that’s Facebook or television, even though television continues to erode in performance because of shifting viewer habits and Netflix.

Is it part of your purview to help brands select preferred partnerships?

We definitely look at partnerships with the marketing stacks and have data partnerships with companies like Twitter and even Apple. But no company can unilaterally be everything to the advertiser. Because we’re also a brand – we have a rare and unique [lens into] being a brand, consultancy and agency world to some extent. We have the chance to see suppliers, agencies and [brand clients] from all aspects.

Are more brands going to bring programmatic capabilities in-house?

Most companies do not have this as a core competency and, even if you look at what Procter did with Hawkeye, they’re looking to move more of it outsourced. It’s very hard to build this from scratch just because of the sheer capital and investment in people and experts required. It’s difficult. I don’t think you’ll see a lot of companies build in-house trading desks without significant agency help.

 Interview edited for clarity and length.

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