Looking Downstream Of The Agency: How European Marketers Are Approaching Media-Buying In The Data-Driven Display Space
The recent furore over Agency Trading Desks in the US trade press and to lesser extent in the UK made me start thinking about how European marketers are buying media in the face of the seismic shifts occurring in the online display space here. Agencies running internal media buying units are relatively new for Europe, and it is a subject that’s only now starting to be addressed by advertiser-side marketers. There has been much written lately about the “moral hazard” of agencies making any kind of margin on media when their client is concerned. A lot of the coverage has been over-the-top, and a little bit disingenuous to agencies. But outside of the media-buying/ad tech bubble, what do advertisers really think about these innovations? Today, I want to focus on the marketer perspective and the types of data-driven display strategies from Marketing Directors that I see emerging in the European market.
Deliver Brand-Safe Environments, Hit Those KPIs And I am Happy To Use Your Trading Desk
Despite the prevailing opinion, most marketers are not “au fait” with how their display budget is being spent. Lots of money is still funnelled through black-box solutions offered by third party buyers – with a good chunk of brand and DR buys still being done blind. Marketers are mostly happy as long as their brand isn’t appearing alongside any inappropriate content, and their KPIs are being hit. With the arrival of DSPs/ATDs, agencies are now able to play in the ad network layer. The access to cheap inventory at scale is a game changer for the industry. With these new tools agencies can aggregate supply through SSPs and Ad Exchanges, leveraging client/agency data to deliver campaign performance that is comparable with the best of ad nets and third-party buyers. The key difference between the ad net proposition and the new ATD is transparency. Price and inventory transparency offered marketers something that was not wholly available before. Tier 2, 3 and 4 agencies unable to deliver this type of service are turning to a new breed of exchange buyers, working on transparent margins or dynamic pricing. Throw in the Demand Side Networks – less black-box, more open on buys – in to the mix, and you can argue the agencies are delivering better insight for clients than they could have 12-24 months ago.
Most holding groups and mid-sized agencies are now building out some kind of internal buying unit. Is it a “conflict of interest”? Should the agency act only as the advertiser’s “agent”, picking the right partners that will deliver performance? Of course. The reality here is that the agency will have to deliver for its client. And if an internal ad network or buying platform isn’t performing they will be dropped from the plan. There is a precedent for this type of agency buying. German agencies have been operating ad networks (TargAd being the most prominent) for years with the full knowledge and consent of clients. Most Marketing Directors, with marginal display budgets, are not overly concerned with DMPs, RTB or the latest three-lettered-acronym. They are worried about delivering the numbers for their boss and board of directors. There is a caveat to all this: once all the media channels become biddable advertiser-side marketers will have to get to grips with the key aspects of data-driven media buying. Maybe now is a good time to get up to speed.
The Hands-On Marketing Director Who Does Get It
There is of course a flip side to the Marketing Director who has rudimentary knowledge of what is actually happening beyond their agency in the display channel. These are the advertisers spending millions of pounds and euro per year on online/video/mobile display, such as Sky, Virgin Media, Zoopla, and MoneySupermarket. They are at the cutting edge of this industry – and have deep granular knowledge of audience-buying. Many are building bespoke analytics and attribution products around their buying for improved performance. While they would be working with big holding agencies, most would also work with third-party data specialists, retargeters and exchange traders. This is where agencies are likely to encounter fierce competition from new breed ad traders – and indeed more scepticism from clients around in-house trading desks. This market is likely to be the real battleground for agencies as they build out their new model – and it’s with these clients they will need to get the required buy-in to make their buying strategy a success.
Bringing It All In-House
This is something I am seeing more and more of: advertisers in-housing aspects of their media buying. While it has been mostly gambling and gaming advertisers – the likes of PKR and King.com – that have gone this route, there are bigger DR advertisers looking at possible move away from agencies. AmEx, for instance, is rumoured to be considering in-housing some of its media buying. It will look to work with external inventory and technology partners to scale its data-driven buying capability. These are isolated cases – but clearly a trend is developing here. These advertisers don’t want to work with an agency. In many ways, it’s a marketer trading desk. If you want to trade with us, plug your inventory and data in – or better still win us new customers further up the sales funnel. I would have to stress that this is not strategy looked to be copied wholesale across the market. Audience-buying is not easy. Apart from the underlying technology, you will need to hire the best people to make this strategy a success. Most of this resource resides in the ad nets, as it is still the best in the optimisation business. And these people don’t come cheap. Only a handful of big players will end up bringing all media-buying in-house. Despite this, the agencies recognise they need to do more for their client. Offering media optimisation services as well as the service layer will be key to retaining and winning the advertiser’s business.
Those are three different strategies currently being employed by European Marketing Directors in the evolving display channel. Despite hostility towards agency trading desks, I still think agencies are within their right to develop new business model. And if it delivers performance and the type of price and inventory transparency the client is looking for then it will be successful across Europe just as it has in Germany. But fear not ad networks and third party buyers I still see a big future for you. Your ability to offer prop data and inventory as well as deliver new customers will always be in high-demand. Prospecting will become the benchmark for all in the ad net industry. As I stated above there are still plenty of agencies and direct advertisers willing to work directly with you.
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