Digital Agencies Need to do More

The March of 2017 has been an interesting month for digital advertising.

With France’s Havas, the world’s 6th biggest advertising company pulling its UK clients ads from YouTube after Google failed to give assurances that the ads would not appear next to offensive material.

Also during the month, Google was forced to explain why taxpayer funded adverts are appearing alongside extremist material. Sir Martin Sorrell, CEO of the world's biggest advertising company WPP, suggested the responsibility sat largely with the media companies themselves.

“We have always said Google, Facebook and others are media companies and have the same responsibilities as any other media company..."

Following the concern from brands, Google has become highly engaged in allowing 3rd party partners to assist in the monitoring of brand safety and have reportedly increased efforts to utilise machine learning and artificial intelligence in order to evaluate and identify ads that appear alongside objectionable content.

Adding to the scrutiny, Facebook has experienced similar pains on their platform since the November 2016 American Presidential election around fake news and misinformation. Leading to a very interesting Stanford University paper on the subject.

"We estimate that the average US adult read and remembered on the order of one or perhaps several fake news articles during the election period, with higher exposure to pro-Trump articles than pro-Clinton articles. How much this affected the election results depends on the effectiveness of fake news exposure in changing the way people vote."

Like Google, Facebook has also announced new initiatives with the creation of the News Integrity Initiative. A joint effort with Mozilla, Betaworks, the Craig Newmark foundation (CEO of Craigslist) and a number of other partners.

“As part of the Facebook Journalism Project, we want to give people the tools necessary to be discerning about the information they see online,” said Campbell Brown, Facebook’s Head of News Partnerships. “Improving news literacy is a global concern, and this diverse group assembled by CUNY brings together experts from around the world to work toward building more informed communities.”

At a glance, it would seem Google and Facebook warrant the criticism.

And you certainly can’t blame the brands for showing concern over what their brand appears next to.

But while the effort by Havas is commendable, and though Google and Facebook have continued their efforts to build systems to combat the issues, it is important to consider the role of agencies in this conversation.

Let’s step back and remember that few advertisers buy ads directly with publishers and that this has commonly been the middle-ground of advertising agencies.

Since the first ads in newspapers advertising agencies fundamental proposition to brands has been to leverage their relationships and simplify the buying of media.

Originally in print, then radio, then television and now in digital.

As advertising agencies have grown, they have continued to add more feathers to their caps by acquiring new ways of creating, targeting and buying media.

Continuing their proposition of simplifying the buying of media by becoming the go-to place for brands different advertising needs.

If you needed to take out a newspaper ad and run a television commercial you would also need someone to create the ads, so adding the capabilities to create these ads naturally became part of a growing agencies offering.

Consequently, this also diversified advertising agencies revenue streams and enabled agencies to begin work with a brand across one service while offering complementary services in the future.

Creative teams, analytics teams, strategy teams, digital teams and web development teams have all been bolted on to existing advertising firms as these companies have expanded.

So, it’s no surprise to see the surge in M&A activity throughout 2016 as more companies advertising spend is moved online.

There has also been M&A activity from outside the advertising industry with PwC, Deloitte, IBM and Accenture all adding digital capabilities via acquisition.

"Of the deals so far in 2016,  62% involved digital marketing capabilities, compared with 42% a year earlier. The cumulative value of the deals shot up 288%,  R3 said."

Despite the addition of these new capabilities, advertising agencies underlying proposition to brands hasn’t really changed.

Agencies are still in the business of simplifying advertising for brands.

It is clear that the increasing shift towards digital presents some highly unique challenges for agencies doing digital marketing.

Due to the nature of digital marketing, the challenges ahead for agencies is partially the result of the dynamics of having two publishers with a majority market share. Those two being Google & Facebook.

Both companies here in Australia have dominant strategic positions and are largely entrenched in the digital media spends of most household brands. This is not necessarily a negative, provided that these channels continue to be effective.

When you unpack the channels themselves it makes sense that this is where the majority of an advertiser’s digital ad spend ends up for several reasons:

• These platforms have huge amounts of high performing inventory and are continuing to grow and innovate with new formats faster than other platforms
• Google & Facebook invest heavily in measurement. Having some of the better measurement and advertiser platforms to help agencies generate better ROI for clients
• The cost of producing these ads for these platforms is competitively quite low to other marketing channels

And this is what presents an interesting problem for digital marketing agencies.

With only two key players for publishers, it becomes difficult to leverage relationships in order to create an economic benefit for clients.

This poses several questions: 

• When there are only a limited number of places to buy an ad, how does an agency justify their fees?
• How do agencies remain relevant in a highly competitive marketplace when faced with the competition from below and above?
• What additional value can agencies truly bring to their offering?

With the current challenges for brands, one way would be for agencies to increase their service levels and their accountability.

While Google & Facebook receive the majority of finger pointing when it comes to brand accountability, we believe that agencies should be doing more for their clients.

Accountability requires an in-depth understanding of the marketplace, opportunities and challenges. It requires transparency, straight-talking and trust.

Google and Facebook's platform challenges are complex and while easy to understand, by nature are difficult to solve.

We believe that agencies need to be helping their clients ensure that their ads and investment is being placed in the right way and that agencies need to become more accountable when buying media.

We feel that agencies should not be leaving the problem to the technology providers to solve and that we too can be part of the solution that helps our clients use digital marketing in a safer and more effective way.

Gallantway is a performance marketing partner that deeply understands your business.

If you’re interested in chatting about brand safety, learning about how your marketing team can run more effective digital marketing, how you can respond to change faster and deliver better business results then please get in touch.