Ad agencies trying to lure marketers to use their programmatic ad units were tempted by short-term revenue gains at the expense of long term client relationships, one analyst says. And now agencies are paying the price.
Programmatic groups or “trading desks” have proved a bright spot for holding companies over the past few years, as marketers have steadily increased their spending through automated ad systems. But the opaque practices and pricing models of some of these agency groups have recently led marketers to question how their money is being spent, and in some cases to shun the groups completely in favor of building their in-house alternatives.
“Agencies didn’t really see the potential long-term implications of their decisions,” said AdExchanger director of research and former Forrester analyst, Joanna O’Connell, in reference to the trend. “Marketers’ hands are being forced because of the way holding companies and agencies are behaving… I feel that agencies essentially created this situation for themselves.”
In a new AdExchanger research report titled “How to Pick the Right Programmatic Media Management Model,” Ms. O’Connell suggests six major reasons marketers are questioning the role of agencies when it comes to programmatic ad buying: Their inability to invest in staff with suitable skills; their lack of transparency around pricing; ownership of data; the emergence of “alternative service options” or independent trading desks; the rise of self-service tools; and new efficiency pressures within marketers’ organizations.
Now more than ever clients are evaluating if and how they can minimize agency involvement in the media buying process, Ms. O’Connell argues: “Holding company-level decisions… have set the stage for a major upset in agency-client media relationships.”
No two trading desk models are the same, of course. But the fact they’re structured as independent entities separate to agencies has always made clients uncomfortable, Ms. O’Connell noted. “I don’t want to paint them all with the same brush… but even if a desk has a transparent model it’s still an alternative option to the agencies themselves. That’s always struck clients as a bit strange,” she said.
The report goes on to suggest a range of considerations marketers should make before choosing a programmatic strategy that’s appropriate for them. Its content was based on interviews with more than 20 marketers, agencies, and technology and services providers, AdExchanger said.