Death by Digital: Why some agencies may survive first-party data
I guess it’s hard to tell what the trigger was.
Was it the advertiser’s awakening to the fact that agencies were being both judge and party to their own media buying efforts?
Was it the arrival of privacy laws stamping the “personal data” label on any data that can be traced back to an individual no matter how anonymous in itself, rendering the previous PII (“personally identifiable information”) framework obsolete?
Was it the revolt of consumers against behavioral advertising and other third-party data powered, profile-sharing techniques bordering on the intrusive?
Was it the technical challenges of marrying first-party cookie information with ad server or email platforms?
Should we not just merit the natural works of digital transformation, that has simply made measurement and analytics available to anyone, thus doing away with yet another business model based on the lack of transparency?
However it has happened, we find ourselves in a brand new business scenario where:
Advertisers use their own data, which they can confirm as originating from clients or leads they already know.
Consumers have “agreed” to the manner in which advertisers directly collecting their data from them will share it for their benefit with the media they consume or platforms they use.
Media provide a service to consumers (social, video, web, mobile content) in exchange for permission to marry advertisers’ first-party data with their profile information.
Nowhere is this new scenario more patent than in the new Facebook Atlas –Datalogix play, where Facebook’s ad server is able to tap into advertiser-provided consumer data and match it with its own records. Of course, agencies and advertisers are still able to enrich these data pools with third-party sources. But such option may not remain open for much longer.
So what’s in it for the media-buying agency, as an entity that thrives in the brokerage between ad inventory and advertisers, in the pooling of resources and data, if:
Advertisers have the in-house technology to place their own bids
Analytics and measurement are not only available to advertisers, but they also become far more effective than those so far provided by external entities
The two largest digital media conglomerates (and investment destinations), Google and Facebook, work as closed, self-contained environments extremely prone to direct relationships with advertisers?
Well, here is where I believe it is wise to stop short from extracting the simplest of conclusions (“agencies are doomed!”), as a tremendous opportunity is clearly taking shape:
No advertiser is capable of surviving the technical challenges involved. Not for many years to come. And few media are really prepared to make the full transition.
When this is coupled with the fact that creativity is still required (even more so in a world with multiple personalized versions of the same message), the opportunity for agencies that span creative and media buying capabilities is undeniable.
Of course, a few questions would now follow:
Are existing media agencies really able to turn their businesses around to compensate substantial media buying margins with people-intensive technical support services?
Will they not be easily overtaken by a new breed of marketing tech and ad tech consultancies specifically built for this new purpose?
Will the pace of replacement of current CMOs (born and raised in the agency-client tandem culture) by a new breed of marketing executives (grown up in a digital, DIY environment) give them enough time to react?
Perhaps this is the rationale for Publicis’s purchase of marketing technology services giant Sapient a few weeks ago. Or perhaps not.
Founder & Chairman at Sweetspot. Author, speaker on analytics, marketing technology, privacy compliance. JD, LLM (Internet law). Once a dually-admitted lawyer. Father of three. I love surfing and cooking.