Ad Tech Survival: Partner With Ad Agencies

davecurrie“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Dave Currie, chief marketing officer at The List.

Within three years, the average chief marketing officer will spend more on technology than a chief information officer. Approximately22% of global ad spending already goes toward digital marketing, a figure estimated to reach 27% by 2017.

Clearly, there are lucrative possibilities at the intersection of marketing and technology. Growing budgets have sparked a gold rush. In the competition for market share, traditional advertising agencies have started offering digital marketing services to clients, although ad tech companies are uniquely poised to provide digital solutions.

The reigning belief seems to be that unless you’re a one-stop shop, you won’t survive.

This mentality is present at the other end of the spectrum, too. Many ad tech companies are approaching brand marketers directly, selling clients tools to self-administer and manage their digital marketing programs. Unfortunately for the client, few ad tech companies are capable of implementing an integrated marketing campaign.

In expanding beyond their core competencies, agencies and ad tech companies are actually restricting their respective growth potential. Each has a specialized set of skills, and neither can effectively do what the other does.

Instead of competing, collaboration makes more sense for these highly specialized but diverse companies. In a partnership, an agency and an ad tech company become greater than the sum of their parts.

It’s like an ’80s buddy cop film. Although the protagonists’ personalities clash, they eventually realize their skills are complementary, and when they work together instead of against each other, they can solve any crime.

Collaborate For Greater Market Share

Some ad tech companies are already identifying the benefits of such a partnership. French advertising company Havas SA recently announced its partnership with AOL and shared that its programmatic ad-buying service will now be integrated into AOL’s web browsers, ultimately creating a golden opportunity for both companies. Havas SA gains access to interested marketers in more than 100 countries and AOL gets to dip its feet in the $58 billion programmatic ad-buying industry.

Other companies should consider emulating this mutually advantageous dynamic. Havas SA leveraged its position at the cutting edge of advertising technology into a unique offering – something that would benefit both AOL and its affiliates.

Like AOL, agencies have access to networks and budgets that could yield explosive growth for an ad tech company. Pursuing collaborative partnerships that allow companies to focus on their specific expertise will set them up for new, lucrative opportunities.

But landing the ideal agency partner isn’t easy. There are a few things to consider when trying to get a foot in the door.

When speaking with a lead, expect to encounter hurdles. A seasoned agency rep, for example, will grill you about the value of your proposal. Understand the potential areas for pushback and plan a rebuttal. Neutralize the situation with statements such as “Of all the agencies we speak with, we’re really only a fit for about half of them.”

Hold off on the hard sell. Before you pitch, ask clear questions about the digital marketing challenges the agency is facing. What effect do these have on growth and client satisfaction? What’s the urgency in addressing these challenges right now?

Once you’re ready to pitch, make sure you clearly demonstrate that integrating your technology into the agency’s existing product offerings will be a seamless process. You should also show the agency how to proactively identify the need for your product and how to present your solution to clients.

Your technology will create new substantial earning opportunities for the agency and boost client retention. With your product, the agency will also be able to differentiate itself in a crowded market and possibly gain exclusivity in a certain category or region, so it’s important that you outline these attractive benefits.

Develop Profitable Insights

The ad tech companies that currently enjoy a competitive advantage know how to leverage big data into profitable insights. Take OwnerIQ, for example. It uses information on customer behavior, such as browsing history, to better understand and market to the right audience at the right time. The company also delivers a lot of that data to the client. Because of OwnerIQ’s ability to analyze and monetize customer data in a way that is meaningful to marketers, it has the upper hand on its competition. As this skill becomes a commodity, creative advertising expertise will become even more valuable.

“Companies like Flite, InMobi and Adacado are wedding programmatic buying and dynamic ad serving with more of a creative element and an open data environment that all parties can access,” Kence Anderson recently pointed out. In this emerging model, agencies provide ad tech companies with feedback on which creative elements are working; brands can then apply these insights across multiple channels.

As the silos continue to crumble and many ad tech stocks head south, the incentive to collaborate is becoming more urgent. Developing strong partnerships with agencies now can give companies the competitive edge they will need in the future. So find your match and discover what you both bring to the table.

Follow The List (@The_List_Online) and AdExchanger (@adexchanger) on Twitter.

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  1. I totally agree with the gist of this post, but I don’t think it’s the ad tech in jeopardy of surviving — it’s the agencies that don’t adopt ad tech who’ll be most threatened. Dave writes, “Many ad tech companies are approaching brand marketers directly, selling clients tools to self-administer and manage their digital marketing programs. Unfortunately for the client, few ad tech companies are capable of implementing an integrated marketing campaign.” This is true, but more and more clients are hiring in-house talent and building internal teams to execute upon the promise of digital. The industry group, Association of National Advertisers’ survey last year bore this out: Since 2008, “The penetration of in-house agencies has increased 16 percentage points, to 58 percent” with ad tech being a primary driving factor: “The growth of digital/social/mobile and the need for quicker turnaround for those media has played a role in the increased penetration and responsibilities of in-house agencies.”

    Collaboration is definitely the key to the success of both ad tech and agencies going forward.

  2. It’s my experience that AdTech companies are selling directly to Brands because it’s down right impossible to sell or partner with an agency. The apathy to new technologies is pathological and engrained in the culture. There have been even “meta” type of companies that have tried to aggregate and curate the the better AdTech solutions in the marketplace so they can present a clear perspective to the agencies but even those fail to get the them to move in a new direction.

    Evidence: The entire industry is still building Flash based ad units that don’t work on mobile.