Performance & Programmatic – The Great Disruptors
Performance and programmatic have become digital media’s great disruptors. And in doing so are creating significant problems for the stakeholders at the table – publishers, advertisers and agencies.
Nearly all forms of digital today lend themselves to measurement and evaluation – therefore could be defined as ‘performance’ based. This applies equally to transactional or brand metrics. Programmatic is the more recent game changer that’s sweeping in. It basically refers to the automation of media buying where ‘audience targeting’ is more sophisticated through platform data and ‘supply and demand’ is the key factor in pricing. Effectively less wastage and a better ROI.
Let’s start with the publishers. The elephant in the room for their industry is the emergence of the ‘big 5’ media owners that are already beginning to dominate at a global level. Google, Facebook, Apple, Amazon and Alibaba are all building their own ‘stack’, a bundle of different media products layered with customer data.
There are of course local market and independent publisher networks sitting under the ‘big 5’ but their challenge right now is data alignment through some form of stack development. They have to be able to offer one seamless, data driven solution to advertisers. Otherwise they will lose relevance over time.
Obviously the data makes the ‘big 5’ stacks highly effective but advertisers are facing their own problems with programmatic buying. The biggest of which is the ‘walled garden’ nature of each stack. In the past, advertisers could use independent cookies to track a customer’s journey between digital touch points. This is changing. Google, Facebook and co. are point blank refusing to share data so a media spend split between the stacks is less effective than betting all of the budget on just one.
So advertisers are spending on individual stacks to get the reach without being able share the data across the five platforms. The flip side is that the level of data in independent cookies is weak when you compare it ‘big 5’ stack data.
Agencies aren’t immune from the disruption. The C level in client organisations now gets digital more than ever so marketing directors are coming under intense pressure to justify budgets and demonstrate ROI. But their agencies aren’t always geared up to deliver.
Most media agencies simply don’t have the talent ‘top down’ to tackle and embrace the change head on at a strategic level. Yes, they do recognise the disruption at the door but they are still relying on traditional senior talent to evolve and drive the offering. So they’re struggling to infuse the client’s business or even their own agency with the data and performance skills necessary to deliver today. They buy in the talent ‘bottom up’ but that only goes so far to ‘infusing’ the thinking and indeed shifting the culture to one of ‘digital first’.
To state the obvious it’s a rocky road ahead for media agencies if they do not widen their remit beyond media planning and buying. But they are a robust type so it’s no surprise to see many of the better ones move aggressively into other areas especially earned and native. The media agencies that have embraced content and technology are already enjoying renewed success with clients.
More worrying for media agencies and indeed all agencies is the fact that clients are looking to establish direct relationships with the ‘big 5’. These collaborations are very open, void of politics and over time will end up providing the insights that drive brand and P&L growth.
Of course all of this change comes with plenty of opportunity. There was a nice example two weeks ago when WPP bought a majority stake in Essence, the world’s largest independent buyer of digital media. This was an especially interesting acquisition when you consider Essence is also Google’s global digital agency so they’re effectively the top table strategic partner when it comes to Google stack and media innovation. A smart move by WPP!