In another 12 months, 81% of marketers predict that they will take care of some or all programmatic buying in house, according to a report published in January 2018 by Centro. The report surveyed 153 professionals at the digital-media space working in brands and agencies, with ad spend of $5 million to $100 million each year.
Out of the poll participants, 51% of marketers manage their programmatic advertising entirely in-house, with this amount predicted to climb to 59% in the next 12 months.
One thing enabling this change to in-house to marketers is the improvements to advertising technology, which will only improve. It’s only a matter of time before someone with very little technical skills can leverage advertising and marketing technology to connect many data sources, analyze that data and create highly targeted sections, and implement high-performance media buys.
This brings us to the big question: As a media agency in 2018 and beyond, how can you survive this shift? Here are a couple tips that I’d like to share:
- Transparent fee structure: It’s no secret that media agencies are not always transparent in their fees, and transparency is the top-third reason for carrying programmatic advertising in house, according to the survey. Even if you’re attaining high ROAS (return on advertising spend) for your clients, once their ad spend grows high enough, they will become increasingly concerned that they are paying too much in fees. Put yourself in the shoes of your client. Imagine you are spending $10 million a year in media fees and do not know whether your media agency is charging you 10% or 30% of their total media budget in fees. Being very transparent about your fee structure is one of the best ways to gain your customer’s trust and be able to remain competitive in 2018 and beyond.
- Concentrate on building recurring revenue: If you’re like most media bureaus, you probably don’t have any business building your own products.
This brings us to the most straightforward approach to building recurring revenue: by reselling third party solutions. You can make a healthy five-figure yearly revenue (per active subscription) by reselling most business marketing and advertising technology solutions. This is predictable revenue you will generate year over year that will allow you to remain afloat if and when your big media customers cut you out.
- Develop niche expertise: This may seem like an obvious statement, but I see way too many media agencies who focus on too many markets and verticals, or I see them not having a specific industry focus to start with, just being the”top-rated… award-winning… data-driven…” media service that caters to everybody. Different markets have different needs, and it’s tough to understand the buyer’s character and journey and become an expert in understanding the customer inside out in case you’re chasing a lot of verticals.
If you claim to be vendor agnostic and display 50 distinct logos on your website of products you use for customer projects, this screams to me that you’re not focused rather than an expert in any particular technology.
A better positioning is focusing on working with just one or two important verticals (e.g. online clothing retailers) and leveraging just two or three advertising & marketing technology stacks (e.g. Adobe Marketing Cloud, Google, and Salesforce).
The report is worth a read if you are a media service whose clients are taking programmatic in-house. Understanding the reasons why they’re going the DIY route can help you reevaluate your current strategy to better accommodate the brands on your roster.