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I work in the industry in the industry and I working to change the industry (fixing it from one angle). So I'm going to try to summarize what's going on since A
by mtanski 10y ago
I work in the industry in the industry and I working to change the industry (fixing it from one angle). So I'm going to try to summarize what's going on since Adage manages to be both high level enough but not detail enough at the same time.
Despite all the technology that potentially available to drive marketing / advertising the large agencies have not really changed their own organizations to match this. Sure they've done a bunch of tech acquisitions but you can take a look at how poorly those were done. So today most agencies are still built to handle the model where clients pay fixed percentage on media and then hourly for the people driving it.
Hence agencies were built as a large shops of people, primary fresh out collage grads (lots of jokes about 24 year old media planers) with a few senior people on top.
Clearly technology has changed what's possible esp. in search, programatic (exchange) & automated execution (traditional). This has happen mostly online but the technology has been pushing into meat space where it's possible to do much more specific targeting on cable and folks are working on brining this all to other media. And now technology is making it possible to bring offline conversion datasets to the execution / planning process.
So agencies now need to become less people organizations with lots of people that produce forecast, media plans & reports by hand (happens all the time).
Agencies talk about focusing more on outcomes for the clients. It's a pitch that a lot of folks at the CMO office, obviously it sounds good. But they don't really have means of doing this, and if they do not a scale (automated) as that's not the model they are built for.
Obviously, I'm glossing over lots of details. Think of the money ball analogy... but the agencies in the situation that they right now are full of scouts, and they need to full of quants.
A lot of large clients are waking up to this fact have some of the more forward thinking companies have started taking some pieces in house. In many cases they have their own data about consumers that they can leverage, that already exists in their 4 walls. This leaves a opportunity to a lot of smaller, more specialized shops to come in and offer parts of what the agency offers. One shop can focus on media planing (using market data, real automated analysis) another company can focus on online-offline conversions.
I'm awaiting the day that companies start hiring behavioral economist as their CMO.
- exclusiv 10y agoGood points. Agencies certainly have their flaws, but a lot of change also has to do with the lack of loyalty that companies have. Back in the day, people stayed at their jobs longer. Since many decision-making roles are a revolving door, you end up with new people coming in that want to use their people (agencies). So even if you're doing a good job, you can lose a client. Companies don't hire for long term anymore either because they don't have to. It's a tough business model because you have to replace about 25% of your revenue every year. You also have specialist agencies as you mentioned that are taking a nice slice of business and companies aren't afraid to have multiple shops on their roster anymore. Smaller agencies are teaming up and pitching together and that allows them to compete with the old guard. The business fundamentals are really terrible but it's an exciting industry because you get exposed to a lot of technology, verticals and problems.
- 6stringmerc 10y agoAll that mention of technology and advertising and not touching on Acxiom - not even getting close with a 10 foot pole - kind of undercuts the notion that the article can speak with any authority regarding technology and advertising. I mean, this is just one person's experience from mid-market and Fortune-level experience, but it's a pretty noteworthy oversight. Agencies might still be in the advertising business, but if you want to lead off with tech in advertising, the gigantic elephant in the room is usually a good place to start. The company that went from clipping newspaper bits to tracking with scary precision is at the forefront of this 'field' and it is, for lack of a better perspective on my end, creepy as all get out and rather dark-stain on the concept of advertising as anything other than trickery and brainwashing.
- mtanski 10y agoWell, I was responding to the point of the parent and the article. If there's an article on targeting data I might comment if I have something to add. There's lot of other companies outside of Acxiom that do targeting tracking (it's a large field). Additionally lot of large marketer have their own first party data that they track from notice, engagement, conversion, lifetime etc... Finally, I feel like the data targeting companies have been so successful in marketing their capabilities that the whole world believes they will be able to unleash Skynet. Reality is much messier, data is much messier and capabilities are much more limited.