The Convergence of Ad Tech and Ad Agencies
By John Laramie, CEO, 12/20/11
I sat down last week with a few friends that work at traditional and digital agencies to discuss the future of agencies and ad tech. It was a great conversation because we discussed the challenges and opportunities they face. As I am intimately familiar with ad tech, I want to share some of my own thoughts as to how ad tech drives value in the advertising industry.
All of us in the ad industry know that the convergence of third party ad tech platforms and ad agencies is drastically changing the advertising industry. Ad tech inherently introduces more efficient, cost effective means to planning and buying various advertising media. Agencies have traditionally been the cornerstone of the advertising industry because it has always been about the people, from planning to creative to executing. However, the introduction of ad tech has agencies scrambling and asking themselves how they innovate. When do they innovate? Do they do it internally or with a third party?
I grew up in Detroit when the automotive industry was a leader in innovation. However, when a major flood of new innovation came into the automotive industry, Detroit ran into a wall and stalled. What is this alternative energy? Where did Toyota come from? Nobody is going to want to drive a quiet, electric car. We like our gas guzzlers. I get it. Detroit watched the future of technology roll through town and they “missed the boat”, as so candidly admitted by Bill Ford. A major reason for this mistake was probably ignorance, a lack of willingness to understand and fear of their inability to innovate and execute with the changing industry. Complacency can kill industries and their businesses.
Simply put, ad agencies need to innovate with the speed of ad-tech. The convergence of ad tech and agencies reminds me of when the ad industry started sitting their creative and media buying teams next to each other several years ago. This improved cross-department communication and, more importantly, creative collaboration which benefitted the agency’s clients and their campaigns. Now is the time to look internally at existing resources and their talents and blend them with ad tech.
My objective for this post is purely to state my observations as we embedded ADstruc’s OOH buying tools within agencies. This is by no means a “you better join ADstruc or your agency is going to die” statement.
In my opinion, the advertising world is walking a difficult tightrope right now. Agencies that embrace ad tech may appear more innovative to competitive agencies’ clients. The smarter agencies see the opportunity to get ahead of others by engaging with ad tech and finding ways to pair their human resources with it. For those not yet utilizing ad tech, I am sure there are lots of internal conversations about how to use it to their advantage, the risks of its use, and the external perceptions of other agencies, clients, brands, etc. For those that aren’t talking about ad tech, how you will innovate is beyond me. Innovating by staying traditional doesn’t work.
Agencies are filled with talented minds throughout their creative, planning and media buying departments. However, I believe that pairing their talents with ad tech makes each individual far more valuable for the agency. This is the first step toward innovating together. If we incentivize our people to leverage their expertise with technology, we can maximize client and campaign performance. Isn’t that what the services industry is all about?
At ADstruc, we see ourselves as a tool for agencies to use, not as a tool to replace them. Our technology simply helps power the way outdoor advertising is bought and sold. Instead of dealing with laborious data flow across a fragmented industry, our tools bring efficiencies to how data is organized and, in turn, helps execute faster OOH buys. Agencies use ADstruc to communicate and purchase outdoor advertising across multiple companies faster than ever before.
If, as an industry, we continue to focus on what we are good at, while understanding where we can improve, then we can become better at what we do together. Creative agencies are good at creative. Media planning agencies are good at media planning. Media buying agencies are good at media buying. Technology companies are good at building technology. When we all work together, we learn together and thereby drive innovation across the entire industry.