With each major technological shift, some companies evolve while others lag behind. Agencies in the face of programs is no exception. My advertising has changed for the better, yet it also puts pressure on traditional agencies to reform their operations.
Traditional agencies enjoyed long-term contracts that included recurring revenue, but programmed purchases and digital platforms such as Google and Facebook modeled this model, giving advertisers greater flexibility and one-touch access. There is no point in going against the tide. MoffettNathanson estimates that Google and Facebook have taken over $ 5 billion in ad spending growth and about 90 percent of online ad growth.
Agencies have always been slow to adapt, but there has been marked movement in 2018.
The automated program will keep changing the way companies buy and large agencies will have to increase their technical game.
Emarketer predicts that software spending will exceed $ 46 billion in the United States this year alone. They also expect 86.2 per cent of all digital display ads to be purchased via automatic channels by 2020. All of this automated, current and future dumping reduces the need for agencies to engage in direct selling. A recent study conducted by Centro and Forrester Consulting showed that three quarters of agencies have begun to unify their direct and program teams, while only 17% said their direct and program teams have been fully integrated.
But talking about the sales model does not tell the whole story. There are many other factors that agencies must take into consideration as they make the transition to digital.
The perfect storm can redefine the agency model
Gone are the days when the overall benchmarks have been settled. Brands now realize that programs offer a deeper level of detail, so they will ask for detailed and timely performance statistics about their campaigns. Agencies must work harder to ensure that customers have the customer service and the results they deserve, but this will increase the number of cracks.
Agencies will also experience greater competition from emerging boutique players. The world's largest holding companies were once big dogs, but the boutique agency is gaining strength. Smaller and newer agencies arm themselves with technologically skilled people who embrace a future programmatically. What is the key to its success? They are intelligent and support turmoil and change.
Finally, M & A activity is likely to continue in 2019 and beyond. An interesting new report from R3 Consulting found a 126 percent increase in mergers and acquisitions in the first three months of the year. Surprisingly, he was led by consulting.
Each agency will become a program agency
Rest assured that agencies will have to fight to maintain programming on the agency side. Trademarks outperform data and demand greater transparency and control, making agencies in a position to evolve or abandon them. Among the dollars saved and the ability to target their audience more easily, it has become difficult for agencies to sell the value of traditional buying methods.
The automated program will keep changing the way companies buy and large agencies will have to increase their technical game. The days of storyboard ads have disappeared on paper and on the phone. While it may seem obvious, each agency has jumped on a technology cart, and many of them are struggling to catch up.
One thing is certain: The days of buying traditional media are coming to an end. This past year has shown us that agencies need to decide how they want to handle these changes and continue to meet their customers' expectations before it is too late.