ExchangeWire hosted a panel at ATS London 2011 discussing the death of the media plan. While it was hubris to suggest that its death was imminent, there was a lot of debate around the consequences of it departing from the landscape.
How would you work with agencies? How would you get spend? The realisation of what could happen, coupled with hyper growth in programmatic buying, prompted a lot of vendors to rethink strategy around their positioning.
Some pivoted to supply management (SSPs), and some went to the demand side. Since that debate nothing has changed much. The plan is still in rude health: networks, internal agency ad nets and managed service DSPs still get advertiser spend. It’s only in recent months that some interesting developments have happened at the agency-level that have forced a rethink around the idea of the media plan.
We rarely give Joanna O’Connell her fair dues, but she has consistently said that the trading desk function should be at the agency level, and that you can’t divorce planning and the execution of programmatic buys. Both should sit at the agency level. Now, there are plenty of arguments to support centralised buying, but there is a feeling, at the agency level at least, that its core competencies are being eroded by outsourcing execution.
It seems her views are coming to pass. The clamour to build a trading desk is not coming from an agency yearning, however; but rather because their hand is being forced by client requirements. A lot of conversations are happening at the client level around “user-centric” or data-driven ad buying, using first-, second- and third-party data. Clients now want customised tech – with data ownership.
These same clients are now looking to their agency to offer them something unique. Whether that’s around customised algos, or data, those conversations are happening. Effectively, the client wants to own the tech and data. The agency is employed to execute on a transparent margin.
The Media Plan is Dead. Long Live the Media Plan
Imagine some of the biggest display buyers in Europe (Sky, P&G, AMEX, et al) go down this route. Hundreds of millions are put through the automated channel, and all campaigns are executed by the agency. Price and inventory-transparency is a requirement. The agency, through its technology, plugs into all supply sources — SSPs, exchanges, and internal agency supply (!) — layering in its first-party data, as well as third-party sources. In this scenario there is no plan, and there is no way of executing on behalf of the agency. No outsourcing buys. No arbitrage. No undisclosed margin. The end of the ad network, essentially.
While the ad network will die off in this scenario, the traditional sales houses might still have a future selling high-touch “native” advertising campaigns. It was interesting to see Ad2One was a partner in that big BT win by Google. While Google will do all the scaled programmatic around BT’s digital properties, including its new BT TV services, Ad2One will do the bespoke high-end selling. Not glamorous, but pretty steady fare in an area where disruption is not likely to happen.
Vendor Nuclear Winter
The fallout of the plan disappearing will have consequences for vendors. If display and video are executed through technology owned by the client and operated by the agency, how do you partner with both? Many have already made their plays, either gone to aggregate supply (SSP, exchange) or else become the demand layer (DSP, data, etc.) for a client or agency. Even then, these are two areas in which it is tough to operate. Low-margin business and long sales cycles make it difficult to really scale.
Mobile could be the big growth area for vendors. While video is more or less tied up by the broadcasters, Google and the big holding companies, mobile offers a serious opportunity for third-party buyers to provide value-add for advertisers and agencies. Given the shift to mobile use, it’s an area that can’t be ignored by marketers.
Since our mobile event in February, there has been a growing sense that mobile is about to cut loose. Recent moves by Criteo, as well as progressive European networks, suggests that mobile spend is going to flow in a big way over the coming 12 months. An opportunity exists now for the next three years in the programmatic mobile space. If any ITDs/ad networks are struggling in desktop (and there are lots) you need to be getting into mobile, and owning it right now.
Customisation is the New Black – And the Agencies Will Demand More of It
You might not think it, but the agencies are becoming more sophisticated around trading. Talk to any of the leading agency trading people — particularly the senior operations people — and you’ll get a real sense of their ambition. Customised algos; build-out of analytics and data products for trading; interoperability of existing tech to deliver improved campaign performance. Real data-driven planning and execution can only be underpinned by technology that addresses the core requirements of individual clients. If we got to a world where agencies only execute, their data solutions and core trading skills will have to differentiate for each client to stay competitive. And there are only a handful of actual vendors that can do this. Consolidation of this market is inevitable.
Eric Franchi alluded to this in a recent piece in AdAge where he discussed consolidation, saying that big agencies would ultimately consolidate their infrastructure on a vendor level. With the recent merger of Publicis and Omnicom, you feel this is likely to happen even more quickly.
Future of Ad Tech Innovation Requires Open Platforms
If the agency chooses the platform option, there could be a huge opportunity for small and agile ad tech companies. Google might want to build everything, but it can’t; and the consolidated stack is not what everyone wants. The industry should push for the open API approach. Let small innovative companies plug in their unique tech to offer value-add to advertisers, agencies and publishers. In many ways the concept of the AppNexus app market was timely, given what’s going on in the space.
It promised a real opportunity to scale without going through the crazy fund raises that some point solutions managed to get during the ad tech blitz over the past three-to-four years. If the platform is to be the choice at agency level, it might not matter the plan has disappeared. Plugging an app into a scaled platforms like Google, AppNexus, IPONWEB and maybe even open-source stacks would give the adtech business a shot in the arm; but it all depends on how open they become. Inevitably competitive concerns will creep in, but you’d like to think that these platforms will be making enough money form sheer volume.
There’s been a lot written about this merger between Omnicom and Publicis. Not quite sure what difference it will have on the trading desk element of both holding groups. The bigger trend is not consolidation of spend, but more control by clients over proprietary data and technology. We are witnessing the slow death of the media plan – and with it the way our industry used to allocate advertiser spend.