25 November 2010 in ExchangeWire EMEA 7 Comments

That TechCrunch Piece And The Vagaries Of Mainstream Media Coverage

I have been one of Google’s biggest critics since I launched this blog back in the day, but I have to say yesterday’s TechCrunch piece on the rise of the DSPs was embarrassing. Sure it highlighted some interesting points about the agency’s growing dependency on Google technology. In my view this over-dependence is a short-sighted strategy going forward, but some of the allegations in the post were ill-informed and possibly libellous.

To suggest that Vivaki is getting kick-backs as part of the Google deal is a total slur. And to state that all the Vivaki spend going through Invite is going straight into Google’s back pocket is also absurd. I get slightly worried when the mainstream press decides to tackle a beefy subject like the Google and agency relationship. It invariably ends in a mess of accusation and misunderstanding.

Whoever was whispering in Techcrunch’s ear at Publicis must now feel a like a complete fool by this cack-handed piece of journalism. My favourite bit was where the writer suggested that Vivaki clients would be pissed off if they realised Google was pocketing the majority of their media spend. Look, clients invariably don’t really care as long as campaign results are meeting agreed KPIs and their ads are appearing against brand safe content. Fact.

Despite its lop-sided analysis, the Techcrunch post has again highlighted the growing dominance of Google in the display space. I think some of the holding agencies need to seriously debate the merits of throwing their lot in with a company that dominates every piece of the display eco-system. Maybe it’s time some of them looked at acquiring some ad tech – DSP, yield optimiser, etc – to give them a point of difference and reduce their dependency on the Google infrastructure.

But it’ll never happen. The truth is agencies want convenience not the headache of tech integration – and if Google can build Invite into the DFA stack it’s going to be hard to resist a multi-channel buying point despite the best efforts of rival offerings. That for me is the blinkered approach. If agencies decide to double down on the Google DSP model won’t they leave themselves open for disintermediation. A client might well ask what an agency actually does, if Google is underpinning its entire ad trading infrastructure. The client might decide to take its display buying in-house and use Google’s buy-side platform on a self-service or managed service basis.

And what’s to stop a tech and data focused ad network, which has been cut out of the buying chain by DSPs. pitching for client direct business? Nothing. Sure you’ll get agency chiefs talk about “integration” hokum – and why it’s their God-given right to maintain the client direct relationship. There is no doubt that a Specific Media could do a better job on DR for a brand advertiser than most of the top agencies. The question here is do agencies run the risk of becoming irrelevant by remaining a pure service business and relying too heavily on one particular vendor? TechCrunch’s “investigative” piece might have unknowingly started a wider debate on the future of the agency model.

Agency, Online Advertising
  • Anonymous

    Interesting analysis, Ciaran, particularly regarding Google’s dominance.

    So why do you think agencies don’t automatically decide to increase their spend with Yahoo! and Microsoft in order to bolster the competition? Long-term, strengthening these competitors will be good for their clients, even if there is a short-term decrease in ROI.

  • http://twitter.com/DannyHopwood Danny Hopwood

    Does it not come down to the fact that Yahoo! and Microsoft just don’t have historic performance to warrant a commitment that will level the playing field in this space? i.e Yahoo! only stopped selling off remnant last year and their DR Network has seen the benefit. But thats one of many steps they need to complete before even entering the playing field.

    Google’s domination hasn’t come from kickbacks and rebates, its come from their ability to buy the tech, products, companies that are spotting the holes or steps forward in the market. Which in turn benefits Google’s performance, which then benefits the agency and pleases a client. Its been hard work for both parties, but hard work thats justified spend I’m sure.

    As Ciaran said “clients invariably don’t really care as long as campaign results are meeting agreed KPIs and their ads are appearing against brand safe content. Fact”. It’s true, I have clients who are much happier to have a simple but effective and performing media buy rather than a ballache.

    Agreed the domination is a worrying factor, but short of someone entering the playing field with a rigorous and progressive plan of development, not to mention a shedload of cash. Options are limited to the current best and easiest performer for some agencies.

    If they have a good partnership like Vivaki do with Google. Good on them for taking the steps to bolster themselves into the market and a clients business. I’m jealous.

    Tech Crunch should probably do another piece without the slander.

  • Uriah

    Interesting analysis, Ciaran, particularly regarding Google's dominance.

    So why do you think agencies don't automatically decide to increase their spend with Yahoo! and Microsoft in order to bolster the competition? Long-term, strengthening these competitors will be good for their clients, even if there is a short-term decrease in ROI.

  • http://twitter.com/DannyHopwood Danny Hopwood

    Does it not come down to the fact that Yahoo! and Microsoft just don't have historic performance to warrant a commitment that will level the playing field in this space? i.e Yahoo! only stopped selling off remnant last year and their DR Network has seen the benefit. But thats one of many steps they need to complete before even entering the playing field.

    Google's domination hasn't come from kickbacks and rebates, its come from their ability to buy the tech, products, companies that are spotting the holes or steps forward in the market. Which in turn benefits Google's performance, which then benefits the agency and pleases a client. Its been hard work for both parties, but hard work thats justified spend I'm sure.

    As Ciaran said “clients invariably don’t really care as long as campaign results are meeting agreed KPIs and their ads are appearing against brand safe content. Fact”. It's true, I have clients who are much happier to have a simple but effective and performing media buy rather than a ballache.

    Agreed the domination is a worrying factor, but short of someone entering the playing field with a rigorous and progressive plan of development, not to mention a shedload of cash. Options are limited to the current best and easiest performer for some agencies.

    If they have a good partnership like Vivaki do with Google. Good on them for taking the steps to bolster themselves into the market and a clients business. I'm jealous.

    Tech Crunch should probably do another piece without the slander.

  • Directadvertiser

    Ciaran,

    I think you are spot on with your analysis that this will spark other problems with the model. There were some libelous claims, but the real problem still exists.
    Does vivaki not see that they are selling the soul of publicis group?
    The real concern is the agencies short term thinking. They are currently trying to stop anyone else from buying inventory in a supposed open market. They are bullying dirt clients claiming it is a breach of the agency contract if the advertiser bids on top of the agency in the exchanges. They are trying to stop networks from doing the same. It’s collusion and price fixing. Imagine if gordon gecko tried to stop other investors from buying a stock so they ensure the price stays low. How quickly would they be thrown in jail?
    Agency model is dead, and advertisers will learn. Agencies are trying to stop the ocean from sinking them with nothing more than a iced lolly.

    Networks will survive, publishers hold the prize and advertisers will get smarter.

    You are right saying that networks should go to advertisers direct, but short term the agencies will try their best to bully them and stop that too, because they know it’s a threat. At the end of the day a model without agencies acting as networks or dsps is a better place for advertisers. Good luck to them.

  • Anonymous

    So are you confirming my big prediction for 2011 that open competition will break out among agencies and networks for client direct budget is going to happen? Stay tuned people because WPP might be looking to bloody some ad network noses early next year.

  • Directadvertiser

    Ciaran,

    I think you are spot on with your analysis that this will spark other problems with the model. There were some libelous claims, but the real problem still exists.
    Does vivaki not see that they are selling the soul of publicis group?
    The real concern is the agencies short term thinking. They are currently trying to stop anyone else from buying inventory in a supposed open market. They are bullying dirt clients claiming it is a breach of the agency contract if the advertiser bids on top of the agency in the exchanges. They are trying to stop networks from doing the same. It's collusion and price fixing. Imagine if gordon gecko tried to stop other investors from buying a stock so they ensure the price stays low. How quickly would they be thrown in jail?
    Agency model is dead, and advertisers will learn. Agencies are trying to stop the ocean from sinking them with nothing more than a iced lolly.

    Networks will survive, publishers hold the prize and advertisers will get smarter.

    You are right saying that networks should go to advertisers direct, but short term the agencies will try their best to bully them and stop that too, because they know it's a threat. At the end of the day a model without agencies acting as networks or dsps is a better place for advertisers. Good luck to them.

  • exchangewire

    So are you confirming my big prediction for 2011 that open competition will break out among agencies and networks for client direct budget is going to happen? Stay tuned people because WPP might be looking to bloody some ad network noses early next year.

  • Mathieu Roche

    100% dependance on Google technology is not only risky for agencies, it can also be a bad move for quality of service & technology performance issue. DFA is not a cutting-edge adserving solution anymore, its integration with Rich Media & Search is poor and customization is non-existant. There are more innovative, better supported platforms out there, and agencies should get on top of these technologies to regain their independance from Google, buildup their technology expertise and integrate best-of-breed solutions into a custom technology stack -which, in itself, is a way to solidify their role towards advertisers…

  • Mathieu Roche

    100% dependance on Google technology is not only risky for agencies, it can also be a bad move for quality of service & technology performance issue. DFA is not a cutting-edge adserving solution anymore, its integration with Rich Media & Search is poor and customization is non-existant. There are more innovative, better supported platforms out there, and agencies should get on top of these technologies to regain their independance from Google, buildup their technology expertise and integrate best-of-breed solutions into a custom technology stack -which, in itself, is a way to solidify their role towards advertisers…

  • DSP Jockey

    There are so many eyeballs on Vivaki and its AOD product that there couldn’t be any opportunity for nefarious doings. Where in that process could Google be giving Vivaki kickbacks, and where would the money go? Curt Hecht’s pocket?

    It’s articles like this that give our industry a bad name. This isn’t the junk bond scandal of the 1980′s, people.

  • DSP Jockey

    There are so many eyeballs on Vivaki and its AOD product that there couldn't be any opportunity for nefarious doings. Where in that process could Google be giving Vivaki kickbacks, and where would the money go? Curt Hecht's pocket?

    It's articles like this that give our industry a bad name. This isn't the junk bond scandal of the 1980's, people.

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