The Agency of Procrustes

Is Your Media Shop the Right Fit for the Digital Age?

Nassim Taleb’s marvelous book of aphorisms is called The Bed of Procrustes, named after the myth of Procrustes, a cruel owner of a roadside estate between Athens and Eleusis in ancient Greece. According to Taleb,

He abducted travelers, provided them with a generous dinner, then invited them to spend the night in a rather special bed. He wanted the bed to fit the traveler to perfection. Those who were too tall had their legs chopped off with a sharp hatchet; those who were too short were stretched.

Taleb’s point is that we humans tend to “squeeze the world into crisp, commoditized ideas.” In short, we try and fit things we don’t understand into our particular worldview. But, what if the new things don’t fit?

As a digital media agency owner faced with keeping up with the times and (more importantly) earning margins from notoriously labor intensive digital campaigns, it is tempting to fall back on time-worn models. If you think about the tried and true “agency” model, it is exactly what the dictionary says it is: “a consensual fiduciary relationship in which one party acts on behalf of and under the control of another in dealing with third parties.” In other words, the client can do the work himself, but would rather stick to making widgets or selling plane tickets than have 300 different media and technology relationships to contend with.

The problem? That’s not enough anymore. What clients want—and an increasing number of them expect, is a different definition of “agency.” Maybe even a legal understanding of the term: the person or thing through which power is exerted or an end is achieved. Is your digital agency exerting true power on behalf of your clients, or are you just buying media? I believe that, in a world where technology enables most agencies to have ubiquitous access to media and software tools, the modern digital agency needs to go beyond traditional notions of “agency” and provide their clients with unique expertise.

The traditional agency “bed” is still rather misshapen for the world of emerging technology. Most shops still don’t have a cohesive social strategy (beyond Facebook); the technology to properly target audiences through exchanges; or the ability to leverage technology to wring performance from digital creative. Some do, and are leveraging relationships with social technology providers, DSPs, and creative optimization companies. The problem here is that many of those technology providers are going directly to your clients as well.  So, how do you defend against disintermediation and start building proprietary expertise to enable you to win and retain digital business in the future?

  • Data: Create it, analyze it, tie into your clients’ data, and make it actionable. I know an agency in upstate New York that only gets paid every time its client performs an oil change. The agency is tied into their client’s POS system, and gets a true end-to-end view of attribution. They know how they are getting people to the business, when, and how they are getting them to return. I know other agencies that, through tools like Datran’s Aperture, are getting a household-level view of who is converting on their online campaigns, and using online data to go offline to seek new customers and reengage them. If you are not leveraging the data you currently have—and seeking to partner with your client to create or get access to new streams of data, then you are not being an extension of power to your client.
  • Technology: How is your shop leveraging available technology to gain efficiency? Media platforms like Transis, Facilitate, and TRAFFIQ (disclosure: I work for TRAFFIQ) offer agencies the ability to let workflow technology handle the blocking and tackling of digital media (RFPs, AdOps, billing, etc) so agencies can work on things that have value (strategy, creative execution, data analysis).  What about real time bidding technology that uses machine learning to auto-optimize campaigns based on performance data? If you are not leveraging technologies like these, then you are already in danger of becoming extinct.
  • People: If you are in fact going to leverage data and technology to transform your agency business, then you are going to necessarily need different people. In the good old days, you could hire a 22-year old for $25,000 and bill them out at $40,000. Unfortunately, the 22 year old wants $35,000 these days, and by the time you train them to be a “digital media expert,” a larger shop will pay them $50,000 to take advantage of the free training you gave them, and start billing them out at $75,000. Also, that 22 year old media person who used to good at collating spreadsheets and ignoring publisher e-mails is not the person who is going to transform your business. Someone who can dive into data to determine media placements—or someone who is passionate about the social space and understands the new social technology ecosystem are the folks that are going to make a difference (and profit) for your agency now.

In the end, Procrustes faced poetic justice. One of his guests was the mighty Theseus, of Minotaur-slaying fame. Theseus invited Procrustes to lie in his own bed and, seeing it slightly too small for his frame, decapitated him to create the perfect fit. Your agency may not currently be the right fit for clients that need advanced digital agency help. The answer, however, is to make your bed fit your clients better, rather than shrink them down so they fit into your legacy paradigm.

[This article originally appeared in Adotas 3/16/11]

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Agencies: Working Hard or Hardly Working?

A recent meeting with a large agency’s digital planning team left me wondering who is doing the real work these days: agencies or ad networks? I was there to talk about our solution for making sense of an increasingly crowded and complicated digital space. Today’s media planners and buyers have to be able to navigate through a 300,000 channel world for their clients — and be able to take advantage of dozens of new creative executions, placements, and targeting capabilities. Their clients trust them to find a receptive audience wherever they are on the web — and deliver enough scale and performance to make it effective and affordable.

One of the planners in the room was responsible for a seven-figure pharmaceutical budget. When I asked him how he was evaluating new traffic sources, he said, “I buy on two networks. They find me headache suffers and my client is satisfied, why would I want to risk it by moving money around?”

“I buy on two networks.” Surely he couldn’t be serious.

After I left the meeting, I continued to be astonished by the reply. Sure, buying on those networks was easy (and probably pretty effective) but what was the agency bringing to the table? Why wouldn’t the client simply place those two network buys themselves, and gain an extra 10% in performance by eliminating the agency’s fee?

Furthermore, what if the client’s CMO asked that planner where his ads were running? He couldn’t tell him with any certitude. It seemed to me like a pretty expensive and risky marketing strategy.

The agency is passing along their job along to a network, who is keeping all the data from the campaign. Even if the company sold a ton of migraine pill prescriptions, they still don’t know how they were successful—and who responded to their ads. Even worse, that network can now go and pitch all of the client’s competitors, who now stand to gain for the investment they made building an audience.

If I were the client, I would be justified in firing this agency.

The successful agency not only continually works to discover new pockets of high-performing traffic for their clients but they actively manage the campaign, and share performance results with them. If I want to reach migraine sufferers, the easiest thing in the world is to call WebMD and sponsor their migraine section; I am guaranteed a contextually-relevant placement in a high quality setting. Easy.

Same thing as buying a car. If I want a really reliable German automobile that seats 5 adults, with leather seats, all-wheel drive, and impeccable handling, I just go the Mercedes dealer and pick up a new S-Class.

The problem starts to arise when I get my monthly bill. Is $1,200 a month too much to pay when I can get to work in the same relative comfort in a $600 a month Audi, or a $350 a month Volkswagen?

Maybe, as a media planner, I can find five health sites that target migraine sufferers and string together the same audience for a lot less money. In addition, maybe there are premium opportunities I can get on smaller, more vertically focused sites that the leading site cannot or will not offer me?

Don’t get me wrong, WebMD is a great place to advertise. But that’s something even my mother knows. Do you really need to pay 15% to an agency for them to recommend that strategy?

So, how hard is your agency working for you, anyway? Every advertiser who uses the services of a media agency for their media planning and buying should ask themselves and their agency this question every single day. If they did, I think they would unfortunately find in many cases, the answer to be: not very hard.

How can an agency then justify the fees that they are collecting? They can do it by continually looking for better performing traffic. The only way to do that is to spread dollars around, find pockets of traffic either through other networks, or direct-to-publisher sites. They can do it by deploying smaller per-publisher budgets, while benefiting from smaller incremental risk.

Sure, it will take more work, but that’s what the client is paying for.

[This originally appeared in Adotas on 3/9/2010]