How will Ad agencies manage Ad exchanges?

Marco Bertozzi: 18.11.09
I mentioned how important ad exchanges are becoming but not the difficulties they will bring both to sellers and buyers.

By some they are touted as an impression by impression targeting opportunity where at last you can optimise your ROI against a very specific audience, this may well be true. However to achieve this campaigns need to be managed day in day out, who will do this in an agency? It’s closer to running a search campaign than a display campaign but I can’t see the search teams running it, so that leaves the buying teams.

Buying teams don’t do what the search teams do and on the whole would rather not. Those guys tend to buy idea based campaigns, Ad exchange activity will need optimising, not weekly or twice weekly but hourly, the buying teams won’t do that, they have too much else to do.

I know that companies like google struggle with this, who are we talking to; buying, planner buyers, search teams, account teams, digital teams? Their problem gets worse when you add in video, with tv and digital departments grappling over who owns it. This is the fundamental issue agencies face, Damian Burns at a recent Monaco Media event challenged Nikki Mendonca on how an agency should adapt and I am not sure she really had an answer, it’s clearly still a difficult situation.

Let’s say we do sort all that out, the bigger issue remains that this all takes resource and therefore decent salary budgets. Digital media commissions have stayed relatively strong with many clients still paying 10+ percent but any decent sized account is now half that and below, where is the agency going to make money on these new time consuming approaches and that includes social media.

I hope that slowly agency payment methods evolve to one closer to paying for a premium service, monthly fees being a norm rather than an exception, even better monthly fees with a commission, I think these new channels will make agencies have to reevaluate how they charge and establish exactly who will do the work!

The new model agency

Marco Bertozzi:11.11.09
Its starting, the momentum is gathering towards the true ‘new model agency’. First we had media agencies that were all in silos by department with TV being the dominate in most. Over time that has merged into cross media departments with TV, Press etc buyers all working together, makes me think of ZULU the film, closing ranks to protect themselves from the onslaught. Are we seeing the end of the buyer as we know it?

Digital has thrown everything up in the air and then on top of that technology has thrown digital up in the air and everyone is trying to cope, the one thing that is true though is that more and more technology will do the best job of ‘buying audiences’ as its becoming known. I have just come from an agency that was very commercially aware that low value, high volume accounts and the people who worked on them are not needed in central London, stick them somewhere cheaper was their idea. With agency margins being squeezed this can make a genuine difference.

Buying has that feeling about it, do media agencies really need 40-50 buyers, buying media that has already either been agreed in an overarching deal or is being supported by technology. The arrival of ad exchanges from Google, Right media and many others will change everything. You need to buy impression by impression, audience by audience and in real time, ‘paying’ the right price by impression millions of times an hour – no media buyer will do that.

The planning of TV, Press, digital or outdoor is all possible through technology so I suspect in five years time we are looking at media agencies that focus on strategy, some key trading heads to do the deals and a lorry load of computers. Agencies will be paid for adding value not buying media.

I will be interested to see which agency is brave enough to embrace this new model ahead of the pack and decide that things really can be done differently..lets see.