The future of the media agency is a big and exciting unknown, full of possibilities and change, but one that also surfaces some confronting truths, writes Rufus Chuter.
Where’s the media agency heading? To answer this question properly, we first need to look back
to appreciate where media agencies came from, and perhaps where many are still finding themselves today.
And so it begins
The origins of the media agency are simple. Media agencies were born to sit between a buyer (the advertiser) and a seller (the media owner) to buy the media space that the advertiser needed. With relatively
few media choices to make, the agency was able to use wholesale buying to achieve discounts that the marketer couldn’t have achieved on their own. Meanwhile, media owners were able to manage their cost
of sale by offering commissions to agencies, thereby reducing their overheads.
Buying was the value exchange media agencies were based on and how they made their money. Many still do.
Then along came tech
Like so many other industries, technology has disrupted this model. The first way in which it has done so is that it has enabled a ‘direct to consumer’ model for media buying. It’s no longer the case that you
need an agent to buy media space for you. In fact, if you’re an advertiser, it’s never been easier to buy media space yourself. Facebook and Google led the way with their self-serve models, but now the variety of other self-serve models, technology platforms and direct sales teams mean you’re only ever a credit
card away from buying ads on anything from billboards to Stuff.
The second way in which technology has caused disruption is by establishing bid-based buying as the predominant mode, eroding the benefits of buying scale that agencies used to tout as an advantage.
You don’t need the biggest billings in town to win a programmatic bid.
Finally, technology is lifting the veil on media buying and shining light in places media agencies with trading and investment practices don’t want it to shine. The legitimacy of agency trading commitments and inventory on-selling by group companies one step removed from the agency, long the opium of finance directors, is rightly being questioned. When the FBI investigates media buying practice, as they did in the US, it doesn’t send a reassuring signal.
Today, the legacy media agency concept and legacy media agencies are facing a crisis. At best, they’re not really needed to buy media. At worst, they actually appear to corrupt the process. Faced with this reality, media agencies have to ask themselves a confronting question: In a world in which media buying isn’t the value exchange, what is?
Today’s media landscape is complex, technical and fragmented. The de-averaging of media consumption means it’s never been more difficult to find audiences at scale, and the breadth of targeting and automation technologies applied to media transactions grows daily, so although buying media has never been easier, buying the right media has never been harder.
Bid-based or programmatic media buying crystallises this shift. The whole premise of programmatic buying is being able to answer one simple question in a nanosecond: Is this media impression actually worth it? It’s a question that reinforces the point that buying media isn’t the value exchange today. It doesn’t really matter who buys it or who invoices who, it matters what you’re buying and why.
This simple reframing should liberate the businesses known up to this point as media agencies. It refocuses them on how they can add value to the process, not control it. It demands that they add value, not just
a link in the chain. This also sets the characteristics for what successful media partners need to look like now and in the future. To my mind, they should:
- have data at the centre. Asking which media we should buy demands us to be experts in measurement, marketing science and new disciplines such as audience design. Identifying what drives long- and short-term success, building predictive models, and deciding if an impression is worth bidding on are all core competencies of a modern media partner, not peripheral services.
- be technical creators. Media is increasingly powered by technology and AI, so we need to be able to bring unique creative thinking and solutions to enhance what’s readily available already on platforms.
- Skills such as building custom algorithms, engineering data pathways between platforms and helping businesses extract maximum value from marketing technology are all critical. If everyone has access to the same base technology and data, the ability to create and innovate is where competitive advantage lies.
- be strategic partners. This is a cliché as every agency will say they’re strategic partners, but modern
media asks us to reconsider what that means. Today we have to go further upstream and simultaneously downstream to solve problems. Execution has become far more strategic, so partners need to offer strong strategic thinking from the rarefied air of business and marketing strategy all the way through to the technical detail of a programmable testing programme. This further tests the legacy delineation between ‘planning’ and ‘buying’ that exists in some media agencies. It also asks questions of agencies busy in the detail of ‘performance digital media’ whether they have the strategic vision and horsepower needed to solve bigger business and marketing problems.
New talent & priorities
These new priorities also force media agencies to evolve the type of talent they attract and the mindsets they need to cultivate. New talent such as analysts, data scientists, engineers and strategists are clearly needed, but with New Zealand’s small talent pool, we’ll have to identify this talent in new and unexpected places.
We also have to lead in aligning our values with those of our customers and consumers. This is absolutely about ensuring our businesses are as diverse as the communities we engage with, but it’s also about bringing values to bear in how we answer the question: What media should be bought? At Together, we’ve developed custom algorithms we call ‘algorithms for good’ that prioritise media inventory in content that champions sustainability, social cohesion and diversity. We believe this type of values-based media decision-making will become increasingly common as both media agencies and advertisers accept their responsibility to support positive content.
Media agencies should be leading the answers to questions like: What’s the carbon footprint of this media approach and what are my advertising dollars inadvertently funding? This evolution of media decision-making beyond just price, including interrogation of metrics such as attention, is exciting.
Underpinning all this has to be a cultural shift to champion and support experimentation and creativity. As the demise of cookies is showing, the future won’t be defined by one solution — growth will come from controlled experimentation, from testing new solutions and hypotheses, and from applying human understanding and creativity to the technical playing field in front of us. We have to create cultures and processes that support this.
If all this makes a modern media agency sound more like a strategic consultancy, then maybe it’s time to rethink the labels we use. I’d argue we should lose the words ‘media’ and ‘agency’ altogether. Strung together, they’re not a helpful description for what a modern media partner needs to be. The label grounds them in an intermediary role between a buyer and a seller of paid media. It fixes them to a media transaction that with in-housing and self-service models feels increasingly redundant. It conjures up images of aggregated buying and agency trading deal-making that serve only the agency.
Furthermore, it undersells the role that great strategic partners can play in driving growth using technology, data and creative thinking. It’s probably a similar reason why other media agencies have started splitting out roles like Head of Media — they’re distinct signals that they see media as one part of their future, alongside tech, data and content services.
Whatever the labels we’re using, it’s clear that there’s a growing divide between the legacy media buyers and new-era strategic media partners opening up. The media agency may be dead, but the future couldn’t be more exciting.
This article was first published in the 2022 March/April issue of NZ Marketing magazine.