“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 Maciej Zawadziński, CEO at Clearcode.
Agency-client trust has never been more tenuous.
The Association of National Advertisers’ recent report on transparency highlights a range of problems, such as publisher kickbacks, inventory credits and other shady practices.
While the controversy applies to a whole range of media sources served by ad agencies, it shines a light in particular on the relationship between ad agencies and ad tech in the battleground of digital advertising.
The controversy reveals that agencies have in many cases authored their own misfortune.
Agencies traditionally had the upper hand. Their creative resources and expertise, combined with publisher connections, made them indispensable to advertisers. Then came ad tech.
The explosion of digital publishers and the need to maximize their ad inventory gave rise to the digital advertising ecosystem of today, fueled in large part by programmatic media buying.
Faced with a threat to their hegemony, agencies fought back and created their own trading desks with programmatic options for their clients. Many agencies saw this as an essential move to combat the growing number of brands taking digital ad buying in-house.
The agencies’ ability to offer a clear and transparent connection between advertisers and publishers – even while using new technology – was seen as a great advantage, given that the digital advertising industry is estimated to lose more than $7 billion this year due to fraud.
Now, agencies find themselves under fire for the very thing that was supposed to be their advantage.
The blow to their reputation may not be the death of ad agencies, but it will have serious consequences.
A greater lack of trust will hinder agencies from playing to their strengths. What brand will continue to believe that an agency is working in their best interests with the knowledge that it might be skimming money off the top?
Broken trust could affect agencies in two areas that should theoretically prove their superiority: programmatic direct and native advertising.
Armed with their networks of premium publishers and programmatic trading desks, agencies could have taken advantage of the lack of transparency in open exchange environments that caused increased interest in automated guaranteed inventory.
Now the cloud of mistrust is hanging over them, and their direct relationships with publishers may actually be viewed as a reason for suspicion rather than an advantage.
The success of native advertising also presented an opportunity for agencies. They could offer their skills in creating long-form articles crafted to promote brands on premium publisher sites. But again, it’s unclear if their expertise in this area will be enough.
The Way Forward
While some large agencies may believe their dominant market position allows them to conduct business as usual, the truth is that the way forward will require real change.
A big part of the answer for agencies with the resources lies in diversifying their technical offerings. This could include things such as integrating their brand client’s marketing tools with media buying platforms or using data from CRM/marketing automation tools to run better targeted and personal media campaigns. They may also consider helping clients report campaign performance across different media and connect web analytics data with cost data from campaigns.
Not only would such initiatives make agencies more attractive by giving them the tools to complement their inherent upsides, it also serves to give advertisers more choice and therefore more control – something that will be key to restoring the advertiser-agency bond of trust.
At a more fundamental level, agencies must accept that even in areas of premium advertising and the niche of programmatic direct buying and selling, the days of wide margins may be gone.
This means that agencies need to become more agile, responsive and client-focused. In the end, that may work to their advantage: Being more responsible toward their own clients should make them more responsible toward those they target with advertisements.
Obviously, it won’t be easy for agencies to rebuild the trust they may have forfeited. But the alternative is to lose one of the greatest currencies of their trade – without which they will find it harder and harder to survive.
Follow Clearcode (@clearcodehq) and AdExchanger (@adexchanger) on Twitter.