Why Ad Tech Challenges The Industry’s Traditional Roles

richardsharp“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 Richard Sharp, UK managing director of ValueClick Media.

Nearly 20 years ago, Procter and Gamble CEO Ed Artzt foresaw decades of turbulence within the advertising industry as technology changed the way it works.

“The advertising industry may be headed for trouble – or it may be heading for a new age of glory,” Artzt said. “Believe it or not, the direction – up or down – is in our hands.”

In the digital advertising space, the most recent bump in the road revolved around whether ad networks really have a future when agencies can buy audiences through new stock exchange-style trading desks, selling ad space freely in real time to the highest bidder.

Agencies, or their sister online trading desk companies, had in effect started to become like media owners by sourcing audiences across many different media and selling it to the highest bidder.

Technology has deconstructed the traditional relationships between the advertiser, agencies and media owners in the offline world, but this has worked both ways. If agencies and their trading desks have become direct gatekeepers of media inventory, ad networks have also reinvented themselves by offering brands access to audiences in a highly targeted way using vast quantities of unique data not available to agencies.

A Changing Landscape

Old terms like “media strategy” are beginning to look redundant as brands can buy an audience and amend their “strategies” according to real-time data feedback.

Meanwhile, the roles of the media agency and media owner have become increasingly blurred when the key to successful online advertising boils down to an audience-targeting technology race. This race is all about audiences and individuals’ behavior across multiple media touch points, not the traditional approach of planning media according to its audited, analogue audience reach.

Some agencies struggle with figuring out where they fit in the digital, programmatic advertising universe. Some are bringing technology in-house, while others are specializing in just one technology.

Agencies that find themselves outsourcing their technology may not necessarily be providing the best service for their clients. Without the knowledge and insight into what the technology can do for a client and the ability to ensure it keeps pace with the ad-tech arms race, how is the agency going to be able to offer the best possible advice? It may well be a case of clients losing out.

The mirror image of this evolution sees networks offering a far deeper level of service to brands and the development of bespoke data analysis and optimization technologies, as well as the capability to buy additional audience reach just like an agency.

Ad networks buy audiences through exchanges and directly from premium publishers, while weaving their own data and optimization offerings into the mix. This is a vital capability when we see media owners, such as News UK, News Corp.’s UK newspaper operation, setting up its own global ad exchange to handle both online and mobile for The Wall Street Journal, The Times, New York Post and The Australian.

So, are ad networks, in effect, a new kind of agency?

Well, yes and no. They will continue playing the role of an ad network in the sense that they will deliver audiences directly to brands and work closely with agencies to achieve brand media strategies.

But the role is shifting far more toward that of a supplier of optimization and analysis technology, combined with the ability to offer brands unique audience behavioral data on a truly big scale. This means that the role has shifted into the territory of advisor, bespoke data supplier and technology provider. The ability to integrate campaigns across multiple channels from desktop to mobile is another must-have attribute.

The key change is the shift from aggregation to adding value to audience delivery through cutting-edge data optimization. Ad networks always have a future if they can deliver better results for brands.

What should ex-ad networks call themselves? Perhaps that’s not important. What is important is what happens as brand marketing teams realize that with the digitization and integration of nearly every medium, the role and importance of different suppliers in the mix has changed dramatically and will continue to do so.

Today the media game is all about which supplier can deliver the right audiences, across every channel and with the technology to achieve the best return.

But the old advertising supplier categories just aren’t relevant any more.

Follow ValueClick Media (@ValueClickMedia) and AdExchanger (@adexchanger) on Twitter.

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