Listen: Role of the Agency Panel

Check out a lively discussion of how agencies are coping with the new data-driven landscape, driven by marketer’s increasing ownership of their own data. Featuring L’Oreal, Mediavest | Spark, and Krux. Brought to you by Econsultancy.

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New Whitepaper: Agencies and DMP!

RoleOfTheAgencyInDataManagementWe’ve just published our latest best practice guide, entitled ‘The Role of the Agency in Data Management.’

The report looks at the challenges and opportunities for agencies that want to become trusted stewards of their clients’ data.

I sat down with the author, Chris O’Hara, to find out more.

Q. It seems like the industry press is continually heralding the decline of media agencies, but they seem to be very much alive. What’s your take on the current landscape?

For a very long time, agencies have been dependent upon using low-cost labor for media planning and other low-value operational tasks.

While there are many highly-skilled digital media practitioners – strategists and the like – agencies still work against “cost-plus” models that don’t necessarily map to the new realities in omnichannel marketing.

Over the last several years as marketers have come to license technology – data management platforms (DMP) in particular – agencies have lost some ground to the managed services arms of ad tech companies, systems integrators, and management consultancies.

Q. How do agencies compete?

Agencies aren’t giving up the fight to win more technical and strategic work.

Over the last several years, we have seen many smaller, data-led agencies pop up to support challenging work – and we have also seen holding companies up-level staff and build practice groups to accommodate marketers that are licensing DMP technology and starting to take programmatic buying “in-house.”

It’s a trend that is only accelerating as more and more marketer clients are hiring Chief Data Officers and fusing the media, analytics, and IT departments into “centers of excellence” and the like.

Not only are agencies starting to build consultative practices, but it looks like traditional consultancies are starting to build out agency-like services as well.

Not long ago you wouldn’t think of names like Accenture, McKinsey, Infinitive, and Boston Consulting Group when you think of digital media, but they are working closely with a lot of Fortune 500 marketers to do things like DMP and DSP (demand-side platform) evaluations, programmatic strategy, and even creative work.

We are also seeing CRM-type agencies like Merkle and Epsilon acquire technologies and partner with big cloud companies as they start to work with more of a marketer’s first-party data.

As services businesses, they would love to take share away from traditional agencies.

Q. Who is winning?

I think it’s early days in the battle for supremacy in data-driven marketing, but I think agencies that are nimble and willing to take some risk upfront are well positioned to be successful.

They are the closest to the media budgets of marketers, and those with transparent business models are really strongly trusted partners when it comes to bringing new products to market.

Also, as creative starts to touch data more, this gives them a huge advantage.

You can be as efficient as possible in terms of reaching audiences through technology, but at the end of the day, creative is what drives brand building and ultimately sales.

Q. Why should agencies embrace DMPs? What is in it for them? It seems like yet another platform to operate, and agencies are already managing DSPs, search, direct buys, and things like creative optimization platforms.

Ultimately, agencies must align with the marketer’s strategy, and DMPs are starting to become the single source of “people data” that touch all sorts of execution channels, from email to social.

That being said, DMP implementations can be really tough if an agency isn’t scoped (or paid) to do the additional work that the DMP requires.

Think about it: A marketer licenses a DMP and plops a pretty complicated piece of software on an agency team’s desk and says, “get started!”

That can be a recipe for disaster. Agencies need to be involved in scoping the personnel and work they will be required to do to support new technologies, and marketers are better off involving agencies early on in the process.

Q. So, what do agencies do with DMP technology? How can they succeed?

As you’ll read in the new guide, there are a variety of amazing use cases that come out of the box that agencies can use to immediately make an impact.

Because the DMP can control for the delivery of messages against specific people across all channels, a really low-hanging fruit is frequency management.

Doing it well can eliminate anywhere from, 10-40% of wasteful spending on media that reaches consumers too many times.

Doing analytics around customer journeys is another use case – and one that attribution companies get paid handsomely for.

With this newly discovered data at their fingertips, agencies can start proving value quickly, and build entire practice groups around media efficiency, analytics, data science – even leverage DMP tech to build specialized trading desks. There’s a lot to take advantage of.

Q. You interviewed a lot of senior people in the agency and marketer space. Are they optimistic about the future?

Definitely. It’s sort of a biased sample, since I interviewed a lot of practitioners that do data management on a daily basis.

But I think ultimately everyone sees the need to get a lot better at digital marketing and views technology as the way out of what I consider to be the early and dark ages of addressable marketing.

The pace of change is very rapid, and I think we are seeing that people who really lean into the big problems of the moment like cross-device identity, location-based attribution, and advanced analytics are future-proofing themselves.

Classic Wrap Up Article with Typical Next-Year Guru Predictions

 

Guru-Ram-Das-picture

Everything I predicted came true, but I still cannot grow a manly beard. 

2015 was a fantastic year for many data-driven marketers, with data management platforms (DMPs), consultancies and marketers getting something nice under their trees.

 

Unfortunately, 2015 also saw legacy networks, supply-side platforms (SSPs) and some less nimble agencies receive coal in their respective stockings for failing to keep up with the rapidly changing paradigm as marketing and ad technology merge.

In the great tradition of end-of-year prediction articles, here’s my take on the year’s biggest developments and what we’ll see in 2016, including a rapid technology adoption from big marketers, a continuing evolution of the agency model and an outright revolution in how media is procured.

Agency Ascendant?

I thought 2015 was supposed to herald the “death of the digital agency model.” As agencies struggled to define their value proposition to big marketers that were increasingly bringing “programmatic in house,” agencies were reputed to be on the ropes. Massive accounts with billions of dollars in marketing spend were reviewed, while agencies churned through cash pitching to win new business – or at least trying keep old business.

The result? Agencies swapped a ton of money, but were abandoned by no serious marketers. Agencies got a lot smarter, and starting spinning new digital strategies and DMP practices to combat the likes of system integrators and traditional consultancies. And the band played on.

In 2016, we will continue to see agencies strengthen their digital strategy bench, start moving “marketing automation” practices into the DMP world and offer integration services to help marketers build bespoke “stack” solutions. Trading desks will continue to aggressively pursue unique relationships with big publishers and start to embrace new media procurement methodologies that emphasize their skillset, rather than the bidded approach in open exchanges (more on that below).

Marketers Hug Big Data

Marketers started to “cross the chasm” in 2015 and more widely embrace DMPs. It’s no longer just “early adopters” such as Kellogg’s that are making the market. Massive top-100 firms have fully embraced DMP tech and are starting to treat online data as fuel for growth.

Private equity and activist investors continue to put the squeeze on CPG companies, which have turned to their own first-party data to find media efficiency as they try to control the one line item in the P&L usually immune to risk management: marketing spend.

Media and entertainment companies are wrangling their consumer data to fuel over-the-top initiatives, which put a true first-party relationship with their viewers front and center. Travel companies are starting to marry their invaluable CRM data to the anonymous online world to put “butts in seats” and “heads in beds.”

If 2015 saw 15% of the Fortune 500 engage with DMPs, 2016 is when the early majority will surge and start to make the embrace of DMP tech commonplace. The land grab for 24-month SAAS contracts is on.

Busy Consultants

It used to be a that a senior-level digital guy would get sick of his job and leave it (or his job would leave him), leading to a happy consultant walking around advising three or four clients on programmatic strategy. In 2015, that still exists but we’ve seen a rise in scale to meet the needs of a rapidly changing digital landscape.

Marketers and publishers are hiring boutique consultancies left and right to get on track (see this excellent, if not comprehensive, list). Also, big boys, including Accenture, Boston Consulting Group and McKinsey, are in the game, as are large, media-centric firms, such as MediaLink.

These shops are advising on data strategy, programmatic media, organizational change management and privacy. They are helping evaluate expensive SAAS technology, including DMPs and yield management solutions, and also doing large systems integrations required to marry traditional databases with DMPs.

Match Rates (Ugh)

Perhaps unpublicized, with the exception of a few nerdy industry pieces, we saw in 2015 a huge focus on “match rates,” or the ability for marketers to find matches for their first-party data in other execution systems.

Marketers want to activate their entire CRM databases in the dot-com space, but are finding only 40% to 50% of cookies that map to their valuable lists. When they try to map those cookies to a DSP, more disappointment ensues. As discussed in an earlier article, match rates are hard to get right, and require a relentless focus on user matching, great “onboarding services,” strong server-to-server connections between DMPs and DSPs (and other platforms) and a high frequency of user matching.

This was the year that marketers got disappointed in match rates and started to force the industry to find better solutions. Next year, huge marketers will take bold steps to actually share data and create an available identity map of consumers. I think we will see the first real data consortium emerge for the purposes of creating an open identity graph. That’s my big prediction – and hope – for 2016.

Head For The Headers

2015 was the year of “header bidding,” the catch-all phrase for a software appliance that gives publishers the chance to offer favored demand-side partners a “first look” at valuable inventory. I am not sure if “header bidding” will ultimately become the de facto standard for “workflow automation,” but we seem to be relentlessly marching back to a world in which publishers and marketers take control of inventory procurement and get away from the gamesmanship inherent in exchange-based buying.

Big SSPs and networks that have layered bidding tech onto open exchanges are struggling. Demand-side platforms are scrambling to add all sorts of bells and whistles to their “private marketplaces,” but the industry evolves.

Next year, we will see the pace of innovation increase, and we have already seen big trade desks make deals with DMPs to access premium publisher inventory. It’s nice to see premium publisher inventory increase in value – and I believe it will only continue to do so.

2016 will be the year of “second-party data” and the winners will be the ones with the technology installed to easily transact on it.

2015 was a great year for data-driven marketing, and 2016 will be even more fun. Stay safe out there.

This post originally appeared in AdExchanger on 12/17/2015

The Agency’s Role in Data Management

MadMen

Twenty years after the first banner ad, the programmatic media era has firmly taken hold. The Holy Grail for marketers is a map to the “consumer journey,” a circuitous route filled with multiple addressable customer touchpoints. With consumers spending more of their time on mobile devices – and interacting with brands like never before through social channels, review sites, pricing comparison sites and apps – how can marketers influence customers everywhere they encounter a brand?

It’s a tough nut to crack, but starting to become an achievable reality to companies dedicated to collecting, understanding and activating their data. Marketers are starting to turn towards data management platforms (DMP), which help them connect people with their various devices, develop granular audience segments, gain valuable insights and integrate with various platforms where they can activate that data. In addition to technology, marketers also have to configure their entire enterprises to align with the new data-driven realities on the ground.

The question is: Where do marketers turn for help with this challenging, enterprise-level transition?

Many argue that agencies cannot support the type of deep domain expertise needed for the complicated integrations, data science and modeling that has become an everyday issue in modern marketing. But should data management software selection and integration be the sole province of the Accentures and IBMs of the world, or is there room for agencies to play?

For lots of software companies, having an agency in between an advertiser and their marketing platform sounds like a problem to overcome, rather than a solution. Many ad tech sellers out there have lamented the process of the dreaded agency “lunch and learn” to develop a software capability “point of view” for a big client.

Yet, there are highly compelling ways agencies add value to the software selection process. The best agencies insert themselves into the data conversation and use their media and creative expertise to influence what DMPs marketers choose, as well as their role within the managed stack.

From Digital To Enterprise

It makes perfect sense that agencies are involved with data management. The first intersection of data and media added the “targeting” column to the digital RFP. Agencies have started to evolve beyond the Excel-based media planning process to start their plans with an audience persona that is developed in conjunction with their clients. Today, plans begin with audience data applied to as many channels as are reachable. Audience data has moved beyond digital to become universal.

Agencies have also been at the tip of the spear, both from an audience research standpoint (understanding where the most relevant audiences can be found across channels) and an activation standpoint (applying huge media budgets to supply partners). Since they are on the front lines of where media dollars are expressed, they often get the first practical look at where data impacts consumer engagement. During and after campaigns conclude, the agency also owns the analytics piece. How did this channel, partner and creative perform? Why?

Having formerly limited agencies to doing campaign development and execution, marketers are now turning to the collected expertise of their agency media and analytics teams and asking them to embed the culture of audience data into their larger organization. When it’s time to select the DMP—the internal machine that will drive the people-based marketing enterprise—the agency is naturally called upon.

Data Management Is About Ownership

Although a small portion of innovative marketers have begun leveraging DMP technology and taken media execution “in-house,” the vast majority stills relies on agencies and ad tech platform partners to operate their stacks through a managed services approach. Whether a marketer should own the capability to manage its own ad technology stack is a matter of choice, but data ownership shouldn’t be. Brands may not want to own the process of applying audience data to cross-channel media, but they absolutely must own their data.

Where Agencies Play in Data Management

The Initial Approach: Most agencies have experience leveraging marketers’ first-party data through retargeting on display advertising. In an initial DMP engagement, marketers will rely on their agencies to build effective audience personas, map those to available attributes that exist within the marketer’s taxonomy and apply the segments to existing addressable channels. Marketers can and should rely on past campaign insights, attribution reports and other data insights from their agencies when test-driving DMPs.

Connect the Dots: For most marketers, agencies have been the de-facto connector of their diverse systems. Media teams operate display, video and mobile DSPs, ad serving platforms, and attribution tools. Helping a marketer and their DMP partner tie these execution platforms together, understand audience data, and the performance data generated from campaigns is a critical part of a successful DMP implementation.

Operator: Last, but not least, is the agency as operator of the DMP. Marketers want their data safely protected in their own DMP, with strong governance rules around how first-party data is shared. They also need a hub for utilizing third-party data and integrating it with various execution and analytics platforms. Marketers may not want to operate the DMP themselves, though. Agencies can win by helping marketers wring the most value from their platforms.

Marketers have strong expertise in their products, markets and customer base – and should focus on their core strengths to grow. Agencies are great at finding audiences, building compelling creative and applying marketing investment dollars across channels, but are not necessarily the right stewards of others’ data.

Future success for agencies will come from helping marketers implement their data management strategy, align their data with their existing technology stack and return insights that drive ongoing results.

[This post originally appeared in AdExchanger on 2.2.15]

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The Role of the Agency in Data Management

Data management may seem like a high hurdle to jump for some agencies.

Data management may seem like a high hurdle to jump for some agencies.

Twenty years after the first banner ad, the programmatic media era has firmly taken hold.

The holy grail for marketers is a map to the “consumer journey,” a circuitous route filled with multiple addressable customer touchpoints. With consumers spending more of their time on mobile devices – and interacting with brands like never before through social channels, review sites, pricing comparison sites and apps – how can marketers influence customers everywhere they encounter a brand?

It’s a tough nut to crack, but starting to become an achievable reality to companies dedicated to collecting, understanding and activating their data. Marketers are starting to turn toward data-management platforms (DMP), which help them connect people with their various devices, develop granular audience segments, gain valuable insights and integrate with various platforms where they can activate that data. In addition to technology, marketers also have to configure their entire enterprises to align with the new data-driven realities on the ground.

The question is: Where do marketers turn for help with this challenging, enterprise-level transition?

Many argue that agencies cannot support the type of deep domain expertise needed for the complicated integrations, data science and modeling that has become an everyday issue in modern marketing. But should data-management software selection and integration be the sole province of the Accentures and IBMs of the world, or is there room for agencies to play?

For lots of software companies, having an agency in between an advertiser and their marketing platform sounds like a problem to overcome, rather than a solution. Many ad tech sellers out there have lamented the process of the dreaded agency “lunch and learn” to develop a software capability “point of view” for a big client.

Yet there are highly compelling ways agencies add value to the software selection process. The best agencies insert themselves into the data conversation and use their media and creative expertise to influence what DMPs marketers choose, as well as their role within the managed stack.

From Digital To Enterprise

It makes perfect sense that agencies are involved with data management. The first intersection of data and media added the “targeting” column to the digital RFP. Agencies have started to evolve beyond the Excel-based media planning process to start their plans with an audience persona that is developed in conjunction with their clients. Today, plans begin with audience data applied to as many channels as are reachable. Audience data has moved beyond digital to become universal.

Agencies have also been at the tip of the spear, both from an audience research standpoint (understanding where the most relevant audiences can be found across channels) and an activation standpoint (applying huge media budgets to supply partners). Since they are on the front lines of where media dollars are expressed, they often get the first practical look at where data impacts consumer engagement. During and after campaigns conclude, the agency also owns the analytics piece. How did this channel, partner and creative perform? Why?

Having formerly limited agencies to campaign development and execution, marketers are now turning to the collected expertise of their agency media and analytics teams and asking them to embed the culture of audience data into their larger organization. When it’s time to select the DMP, the internal machine that drives the people-based marketing enterprise, the agency is naturally called upon.

Data Management Is About Ownership

Although a small portion of innovative marketers have begun leveraging DMP technology and taken media execution “in-house,” the vast majority stills relies on agencies and ad tech platform partners to operate their stacks through a managed services approach. Whether a marketer should own the capability to manage its own ad technology stack is a matter of choice, but data ownership shouldn’t be. Brands may not want to own the process of applying audience data to cross-channel media, but they absolutely must own their data.

Where Agencies Play in Data Management 

The Initial Approach: Most agencies have experience leveraging marketers’ first-party data through retargeting on display advertising. In an initial DMP engagement, marketers will rely on their agencies to build effective audience personas, map those to available attributes that exist within the marketer’s taxonomy and apply the segments to existing addressable channels. Marketers can and should rely on past campaign insights, attribution reports and other data insights from their agencies when test-driving DMPs.

Connect the Dots: For most marketers, agencies have been the de facto connector between their diverse platforms. Media teams operate display, video and mobile DSPs, ad-serving platforms and attribution systems. Helping a marketer and their DMP partner tie these execution platforms together and understand audience data and the performance data generated is a critical part of a successful DMP implementation.

Operator: Last, but not least, is the agency as operator of the DMP. Marketers want their data safely protected in their own DMP, with strong governance rules around how first-party data is shared. They also need a hub for using third-party data and integrating it with various execution and analytics platforms. Marketers may not want to operate the DMP themselves, though. Agencies can win by helping marketers wring the most value from their platforms.

Marketers have strong expertise in their products, markets and customer base – and should focus on their core strengths to grow. Agencies are great at finding audiences, building compelling creative and applying marketing investment dollars across channels, but are not necessarily the right stewards of others’ data.

Future success for agencies will come from helping marketers implement their data-management strategy, align their data with their existing technology stack and return insights that drive ongoing results.

[This post originally appeared in AdExchanger on 2.2.15]

The Transactional RFP Business is Dying

Image“80 percent of the publishers getting an RFP don’t even stand a chance.” – Doug Weaver, Upstream Group

Direct mail is an amazing thing. It costs something like $750 CPM to put a glossy catalogue in the mail, but somehow direct marketers make those numbers work. Mailing lists are constantly optimized to make sure they hit the right houses, fresh lists acquired to create new demand, and non-performing lists ruthlessly culled if they don’t meet certain KPIs. Direct marketers actually can tell just how much money a mailing will produce in sales.

Contrast that with a banner campaign, in which “good” performance means a 0.05% click-through rate, 40% non-viewable inventory, and fairly dim transparency. Some of the greatest companies in the space, newly public and boasting hundreds of millions in run rates, are still challenged to justify spending to their marketing clients. Thankfully, last click attribution hasn’t gone anywhere. I recently overheard a marketer at a conference saying that 70% of clicks on her last campaign with a big, popular “platform” came from Yahoo Mail subdomains. It doesn’t take a genius to figure out that the marketer’s e-mail program was creating sales, but the fancy platform’s banners were making sure they were “last viewed” before the purchase.

So, how to get display advertising more like direct mail?

It must start with procurement. Marketers should be able to tell how much the media costs, who will view it, and who to buy it from. Unfortunately, unlike almost every other form of media on the planet, that doesn’t exist today for the digital marketer. Marketers can name their price in the programmatic RTB channel, but if they want access to directly sold inventory (making up as much of 70% of all digital media spend today), they need to purchase via the “transactional RFP” process.

I don’t know whose fault it was, but publishers didn’t help themselves when they decided to hide pricing information from agencies. With an endless supply of inventory (some 5 trillion impressions per month, according to Eric Picard), banner sales has always been a bit more art than science. Buy 1,000,000 homepage impressions at $20 CPM, and I’ll throw in 5,000,000 “ROS” impressions. Presto! You get a reasonable eCPM of just over three bucks. Everybody’s happy….except for publishers. In the long run, such practices devalue their inventory.

Media prices are still opaque in the transactional RFP channel, and agencies like it that way. In order to get basic pricing and availability information, they send out “requests for proposals,” which send publisher sales teams scrambling. According to recent research by Digiday and Adslot, publishers spend an average of 1,600 man hours a month on RFPs, and 18% of their revenue churning through RFPs that have an average “stick rate” of about 25% (campaigns that will deliver the contracted amount).  Ouch! A lot can happen in 1,600 hours.

Peter Naylor, the IAB’s Publisher in Residence, speaking to publishers at a recent conference summed it up nicely when he said, “Agencies take the information they receive in RFP’s to get a view of the market.”  In other words, agencies get access to all the pricing information, and publishers are left to wonder who they are competing with—and at what price.

Despite this, agencies would also like to see this procurement methodology perish also. They want to buy impressions at scale, control the price they pay, and be able to “out-clause” on demand. Programmatic RTB offers all of the above—but only on lower classes of inventory. New programmatic direct technologies seem to be the answer to the problem of transactional RFPs. Whether they leverage existing RTB pipes (private deals) or are API-driven solutions connected to the publisher’s ad server, more and more higher-class inventory is starting to find its way to programmatic channels. That’s a good thing. Sure, there will still be RFPs for sponsorships, but sooner or later, all commoditized banner inventory (including “mobile” and video) will likely be purchased programmatically.

The question for publishers is whether or not they are going to take a part in deciding what the next stage of digital media procurement looks like. Will it still be driven by the demand side, or can publishers have a bigger seat at the table, and help build the process by which they expose and sell their “premium” inventory?

The RFP is dying, and publishers may applaud the last breaths of an over complex and inefficient process. But they should be careful of what may take its place.

[Originally publisher in AdExchanger on 1.2.14]