HOW INTERNET MARKETING KILLED THE AGENCY STAR Perhaps some of the greatest challenges ever faced by ad agencies over the years, were those of wining and retaining the client who most communication books have variously described as a king; but today, with the inexorable rise of digital advertising, the battle for relevance seems to have drowned all those. It is no longer news that Advertisers are beginning to hoist their flags around the online advertising platforms as they are perceived to be more precise at targeting the audience (with a particular demographic profile and browsing history) than, say, television or radio ads which may not be entirely trackable. Suffice it to say that with Internet ads, one can actually have a clear idea of the number of times a particular ad is seen. In the recent past, advertising agencies used to be indispensable when it came to advising clients on media buying. Those days may soon be confined only to the history books going by the wave of digital romance currently rocking the media world. Lots and lots of technology firms, like Adobe, Salesforce and IBM, offer analytical services and software to help advertisers achieve the best bang for each spend. Needless to say, it was a sort of cliché or sheer sarcasm those days, to hear agency stars proclaim again and again to whoever cared to listen, certain defeatist maxim which says ‘fifty percent of the advertising budget is wasted’. And true to type, this has remained a norm as no one was able to account for the wasted budget even with generations over. The best an inquisitive mind ever did was to conclude that the said 50 percent could have been spent on some media vehicles which were never deployed or scarcely consumed by target audience. Hence, Advertisers overtime had to live with the monstrous reality. But it was only a matter of time! Today, Digitization, with the instrumentality of internet marketing has doubtlessly rubbished the age long hypothetical claims by providing concrete answers, with records per clicks/gaze on every ad material placed on digital platform. Advertisers have never had it so good! Accounting for ad spend is now a click away – thanks to the internet age. Consequently, big time internet firms like Google and Facebook can readily provide a wealth of data about their vast audiences within seconds: this and many more offers has encouraged advertisers to deal directly with them to book slots, rather than going through a traditional ad agency’s media-buying division. Google alone now controls around a third of all online advertising spending. According to eMarketer, a research firm, most advertisers are now doing without ad agencies altogether, creating their own campaigns and slogans. Online advertising is getting speedier and smarter. Many online ads are now bought and sold automatically with “real-time bidding”. In days of old, ad executives would ring round various publishers to find good rates, and then consult the client before placing the ads. Now, advertisers can specify which sort of audience they want to reach and how much they want to pay, and use ad “exchanges” to buy space on websites that fit their requirements, all in a fraction of a second. Speaking on the future of Advertising in a forum recently, Susan Wojcicki, the senior vice president of advertising at GOOGLE, a leading online search giant bared her mind on several efforts her organization was making to enthrone online ads above all other forms of advertising. Wojcicki drives Google’s accelerating moves well beyond its search ad roots to display, video, and mobile ads. In the past year or so, Google has pushed hard to expand display revenues with a series of acquisitions in ad technology. At the same time, Google faces substantial challenges from Facebook and others pioneering new kinds of ads in the era of social and mobile. At the ad:tech conference in San Francisco, Wojcicki talked about her “five ideas for the future of advertising.” Not surprisingly, those ideas are somewhat self-serving for Google, which just happens to have answers for most of the challenges she raises. But they also provide clues to where Google will try to push the ad industry as more media goes digital. In the brief Q&A after her keynote, she was joined by Neal Mohan, Google’s VP of display advertising, who is well worth hearing in his own right. Here are the highlights of what they had to say: Advertising is the lifeblood of the Internet, she says. But it’s undergoing tremendous change. We need to move as fast as the users. So I spend a lot of time at Google thinking about the future of advertising and how we’re going to reinvent it. The first thing we do is think about users and where they’re going and how are they changing their behaviors. Imagine this woman in 2020, only seven years away. She’s going to wake up and read her news on a screen, listen to her music, watch TV on demand, use a mobile assistant when she’s on the go, etc. Her life is going to be all digital. So a lot of the ad dollars need to move online. Wojcicki see five core ideas shaping the future of digital advertising: 1) Choice: Ad views will be voluntary. We want to move to a model where the user is choosing to view an ad, she says. We’re paid on a cost-per-click basis where the user chooses to click on the ad. It’s up to the ad system and the publisher to show the right ad at the right time. TrueView ads on YouTube are the same way. About 70% of ads on YouTube are now TrueView. We’ve seen a reduction of 40% in dropoff of ad viewing. One ad on YouTube got 33 million views, an ad by Pepsi featuring race car driver Jeff Gordon, pretending he’s going undercover to buy a car. It got all those views even though it was four minutes long. Another ad format is engagement ads, which show in standard ad formats, but when users hover their mouse over it, catalogs, videos, and other features come up. 2) Control: Users will participate in the ecosystem if we provide enough value and control. In order to serve things that are relevant to me, you (ad folks) need to know something about me, she says. It’s really important that the ads are relevant and useful. We know this works. We’ve seen a 30 times increase in programmatic buying of display ads since 2010. But one thing has been missing. That is having users have the opportunity to say this is what I’m interested in. We have an ad preference page where we list the ad preferences of each user. When we offer this opportunity, most people take it. But we need to do this at scale. How can advertisers connect to users at scale? 3) Charm: Ads will be more interactive and beautiful–at scale. Scale is the important word here. One format we’ve been working on is engagement ads, which give you an opportunity to be more creative. Samsung livestreamed their 90-minute event of the Galaxy S4 launch via a lot of channels, including ads. Click on that ad, and you got a livestream over the existing page. It was one of the most popular concurrent, livestreamed events we’ve seen, right up their with William and Kate’s wedding. 4) Connected: Ads will help people live their lives on the go. Users have multiple devices, their lives are fragmented across many devices. And the devices are blurring into each other. That’s why we announced Enhanced Campaigns, she says, calling it the biggest change in Google’s AdWords structure in years. The main thrust of the changes, she says: You should be able to target not devices but people. We should be able to get ads that are relevant to where we are and what we’re doing right now. 5) Calibration: All ads will be measured. Clicks will be only one type of measurement. We need the right type of measurement for branding too, Wojcicki says. So if you’re a brand advertiser, you’re thinking about reach and impact. For reach, she says, we’ve been working on Active GRP and Active View metrics and building that into all our products. Impact is harder. Recently we announced a brand lift survey product where we can run surveys to users who have seen the ad. We also made the biggest change to Google Analytics in a long time. We redesigned it so we can have an understanding of data coming from different screens, different systems like customer relationship management, etc. All these developments make the future role of the advertising agency a lot murkier. Ultimately, predicts the head of advertising at a big American news firm that already sells a lot of its space through real-time bidding, “We may not be needing the agencies – not anymore.” So far real-time bidding is still a small part of the online-advertising business—around 19% of online display ads in America are now bought and sold in this way. But it is growing quickly and may account for 29% of them by 2017. And it is only a matter of time before digital radio, outdoor and television commercials start to be sold this way too. Paper posters on billboards, bus shelters and elsewhere are rapidly being replaced by electronic screens which can be updated instantly, and thus sold via real-time bidding. Despite the huge threats from online giants such as yahoo, facebook and Google, agency can still own up to the fact that creativity has no substitute. The talent for creating memorable and persuasive ad campaigns will always be in demand, and not all advertisers will be capable of doing it for themselves. So the agency business will not die out. But, as Wall Street traders found out when their trading floors were automated, the move towards buying ads on exchanges will mean that their margins are squeezed and life gets a lot tougher. Need we ask again; Where lies the fate of the ‘agency star’? Patrick Ezeh.
Posted on: Wed, 13 Nov 2013 09:14:19 +0000
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