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Starcom's Isabelle Baas on Ditching In-Housing, Woolworths, and CTV Over Linear Ad Spend

The MadTech Podcast

On this week’s episode of the MadTech Podcast, Isabelle Baas, managing partner at Starcom, joins ExchangeWire’s Rachel Smith and Lindsay Rowntree to discuss the latest news in ad tech and martech.
 
Together, they discuss:
 
– Brands are reconsidering ditching agencies in favour of moving operations in-house, according to a Digiday article by Kimeko McCoy and Seb Joseph. Brands’ plans to bid farewell to the agency were scuppered by the pandemic, which left marketers stranded in a financial limbo. Having proved a rock that advertisers could rely on due to their flexibility and adaptability, standalone agencies are increasingly seen as integral to future success.

This change isn’t just playing out amongst companies who had planned to take on more agency work – some brands who had almost completely shed themselves of the service layer are now beginning to reach out to agencies once again. Yet it would be a mistake to think that advertisers will depend as heavily on their service layer partners as they did in the past, and a growing trend of brands’ bringing more marketing expertise in-house reflects this. Therefore, a ‘hybrid approach’ which makes the roles and responsibilities of the brand and those of the agency more fluid has become more prevalent. 

The drift away from wholesale in-housing marks a recognition that companies must be willing to cede their power in some areas in order to have more control over their marketing budgets, say McCoy and Joseph. Yet some have become more selective about how they work with their agency partners, with many seeking partners who offer flexibility and capacity over those promising stability and scalability. As a result, marketers are having to reevaluate how they pay for these services, with value-driven pricing connected to performance apparently more appealing to the brand side.
 
 – Australian retail giant Woolworths are preparing to bolster their online presence by launching a virtual marketplace. Named “Everyday Market”, the expanded ecommerce service will be accessible via the Woolies’ website, and is set to make its debut later this year.

The technology behind the new service is being built by Melbourne-based platform-as-a-service company Marketplacer, a start-up that has received a “multi-million dollar” investment from Woolworths’ venture capital arm W23. In a statement, director of new business Faye Ilhan said that Everyday Market marks Woolworths’ effort to meet consumers’ growing ecommerce expectations and provide new partnership opportunities for producers and suppliers. 

The commerce heavyweight’s Big W discount brand will be the first to trial the new marketplace, where an extended range will be offered sometime this year. According to Ilhan, the strategy will enable Woolworths to simultaneously “gauge customer demand for an expanded range” and “test delivery logistics with another retailer in the group”. 
 
 – A number of leading TV networks are urging advertisers to redirect up to 30% of their live, linear TV upfront budgets to media company-owned CTV platforms. The appeal comes as incumbent TV-based media firms pump more investment into their own premium connected TV platforms in order to offset the rapid decline of terrestrial TV viewership.

With production on hold and live events cancelled or postponed, linear TV saw viewing figures and ad spend tumble as locked-down audiences flocked to streaming platforms for entertainment. Upfront networks brought in USD $18.6bn (£13.4bn) in ad revenue just ahead of the current TV season, a fall from the USD $21.9bn (£15.7bn) generated by the same point in 2019.

The redirected budget would equate to between USD $3.7bn (£2.7bn) and USD $5.6bn (£4bn) in additional funding for these networks’ streaming offerings. Those who agree to the move will have to be prepared to say goodbye to the low CPMs offered by TV advertisers over the past years, although media agency executives expect these costs to rise dramatically in the near future as live, linear TV continues to struggle. However, moving to CTV will also leave marketers liable to higher media costs, which networks will argue are justified by the lower proportion of ads on streaming services and the increasing demand for CTV content.

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