Software has been transforming and disrupting advertising for decades, certainly ever since our industry’s technology pioneers like media legend and longtime Group M leader Irwin Gotlieb began writing software to automate media planning and buying in the 1960s.
However, for anyone who thought that advertising’s path to a digitized and data-driven future would be a predictable and straight line, it has certainly not met those expectations, particularly in light of the industry’s recent tumult around measurement, environment and control of ad tech.
Advertisers and agencies, concerned about the accuracy of digital publishers’ proprietary measurements, have intensified their pressure on large digital marketing players like Facebook and Google to submit to third-party measurements and audits. Brands and agencies fear too much “grading of one’s own homework” by the large, data-driven marketing platforms.
Just this week, we’ve seen several of the world’s largest advertisers — AT&T, Verizon and J&J — suspend large portions of their ad spend on Google’s YouTube until their concerns over ads appearing within inappropriate content can be satisfied. Media agency Havas helped kick off this row by pulling YouTube spend for its clients in the U.K.
All of this parallels – and is related to – a development in the world of advertising technology that’s several years old. We’ve watched the technology backbone of digital advertising — ad-tech companies — continue their roller-coaster evolution from serving ad networks, brokers and exchanges to becoming proprietary targeting and optimization platforms. Wall Street might not like these companies — just look at ad-tech stock prices — but telecommunications companies do, eager to add value to their subscription and ad businesses to offset the declining profit margins of their commoditized teleco pipes. So, too, for enterprise technology companies like Adobe, Salesforce, Oracle and Neustar, who see ad-tech platforms as doorways into finally automating marketing at the enterprise level.
To understand the recent disputes between marketers and digital media suppliers, I would recommend you understand what’s happening in ad tech, and why. Basically, I wouldn’t take the rising issues of measurement transparency and content suitability on face value alone. Yes, those issues are certainly worthy of the attention they are getting.
However, there is a much bigger issue that is also playing out. What we are watching are just skirmishes in a long-term battle for control over the future of advertising, marketing and demand generation.
The wrestling over measurement, environment and technology is all about who will get paid when companies need help acquiring customers. To marketers and agencies, the large digital marketing platforms are “walled garden” oligopolies, which are getting stronger by the day. Marketers work with those companies because they are very efficient, delivering scale and results that they can’t find elsewhere. As you would expect, marketers want more competition among these suppliers. They don’t like being so dependent on these platforms.
Marketers would prefer to have their own predictive marketing platforms, helping them collect and activate their own proprietary data. Enterprise technology companies want that future as well. They want to be the ones to sell and provision those tech platforms, integrating and packaging them with all of the other systems they sell into the enterprise, from CRM to call center management to finance and sales force automation. Quite naturally, they worry that it will be easier for Google and Facebook to add their own CRM and related systems than it will be for them to replicate Google and Facebook’s digital marketing system.
Agencies? They just want to keep themselves in the middle. Whether as consultants, media brokers, system integrators or owners of syndicated data, agencies just want to stay relevant and find ways to reverse their declining margins.
How are all these competing agendas likely to play out? I don’t have a crystal ball, but one thing is certain: We will see more and more mergers and acquisitions all across the industry. Verizon bought AOL and is buying Yahoo. AT&T is buying Time Warner. Most of the data-management platforms have been scooped up. Big marketers will start buying ad-tech companies, just as they have acquired delivery and logistics companies in the past. Agencies will buy tech and data, if they can afford it.
We haven’t yet seen anyone match the scale of WPP’s acquisition of 24/7 Real Media and TNS, but certainly the big marketing service players need to get into the proprietary tech and data business, or find themselves on the outside looking in.
What do you think?