There has been a lot of talk in recent years about the topic of media agencies and how they have to develop and position themselves. The answer is basically simple: The media agency of the future is a media agency – not a management consultancy, not a technology start-up and not a creative digital agency. Although all these related disciplines have been trying to penetrate the domain of media experts for years, this has not been crowned with lasting success yet.

Best examples are Blackwood Seven or SAP XM. Both providers, come from the pure technology and software side, and were hyped by many industry participants as the media agency model of the future. Algorithms and programmatic advertising instead of people should take the lead over media budgets. It was an exciting experiment, but the revolution did not happen – both companies have since withdrawn from media consulting. The all-encompassing algorithm, which can optimize everything from old clothes to cell phones, insurance, sweets and cars, simply doesn’t exist. And peta, exact or even zeta bytes of data do not change the fact that good media planning requires not only algorithms, but also experience and tools developed from this expertise.

The future naturally lies in (partial) automation. Without smart data, AI, programmatic advertising, individualized control of creation, and tools that work more or less automatically, no agency of the future, even of the present, will function. But if you want to be as creative as you are effective in media planning, you have to employ people with knowledge and experience in a wide range of disciplines in addition to your colleague computer. People who are capable of abstracting beyond the experiences made and of creating something new. Machines are still having a hard time here as well as agencies that are too focused on one discipline.

In the future, it will be essential for media consultants to look outside the box in their own discipline. There will continue to be agencies for very specific niches, such as employer branding or e-commerce. However, the media future belongs to the generalists and not to the specialists or rather: it belongs to a task force of differently positioned specialists, which can be put together individually according to the task and goal of the customer. Agency models such as the House of Communication, which combines all service providers under one roof and has been operating this type of collaboration since its inception, have an advantage here over companies that are only just starting to work in an integrated manner. And independent agencies score points over listed network bolides when it comes to the speed and flexibility with which they react to market developments.

Flexibility and speed regarding customer requirements is one thing, but the size of the company required to be able to implement these is an equally decisive factor that will separate the wheat from the chaff in the market. Investment in manpower, technical equipment and research is immense – which is why the tendency of smaller agencies to slip under the umbrella of more powerful partners, unless they have found their very special niche, will continue to increase.

The challenges that digitisation, the fragmented media landscape and the resulting individualised media use pose to planners are too diverse. The more data and information about the individual is available, the clearer it becomes: Mass communication as we know it from the past no longer works. It has been replaced by individual mass communication. Socio-demographies have had their day. The typical “man aged 14 to 49” no longer exists, nor do “householders” or the much-cited “best agers”. The stereotypes of the past are no longer applicable, for example; men are interested in cars, women in cosmetics, young people are modern and open-minded, old people are traditional and old-fashioned. If we look at people of identical age, place of residence, education and income, they tick completely different boxes.

In times of individualisation, easily accessible information and increased life expectancy and opportunities, values have become our distinguishing feature. What motivates people? What drives them? In order to describe this world of values, the so-called “value sphere”, 360-degree tools are needed that can assign specific values and people to specific media and thus create a value map of the target group. And this is where the algorithm comes into play again. The media agency can bring both aspects together: data and target group expertise to create messages tailored to each recipient.

This does not mean that mass media such as TV or OOH are obsolete per se. They only need to be supplemented by individualised messages and replaced where necessary. This can only be achieved with appropriate tools – tools like the Brand Investor, which the agency of the future does not buy, but develops itself based on its expertise and existing skills. The Brand Investor is the first AI-operated planning tool that manages the communication mix on basis of marketing goals and target groups across all media. 19 media genres are considered – from TV to advertising papers and affiliate marketing.

One thing is clear: the agency business has changed radically. New technologies are giving advertisers the opportunity to depict classic agency services themselves. In particular, with the increasing spread of programmatic advertising, digital-savvy and large companies are taking the path of anchoring media planning in-house. This development is a good thing, because this way advertisers are developing a better understanding of agency work. In practice, however, it often turns out that the strategic and, in many cases, also the operative know-how is missing to work successfully. Not to mention the experience that agencies gain from the overall view of all their clients. Technological development is quite simply progressing too rapidly for us to be able to keep up to date without any problems.

So how will media agencies earn their money in the future? What does their business model look like? Of course, purchasing power and the associated good conditions remain an important factor. And this is exactly where automation plays into the agencies’ cards, because it helps to implement more efficient media planning. But (strategic) consulting will increasingly become another mainstay beyond media. Advertising companies today need a partner who supports them in the development of a promising strategy, accompanies implementation across the entire range of communication and is also available later on for operational support if required. They need tailor-made technologies, specialist knowledge and many years of experience. You need researchers and creative and data specialists. In summary, you need an integrated (media) agency.

Programmatic Advertising

Programmatic advertising (PA) is a multi-faceted term. Many market players use it as a buzzword, a label for the hype that has at times raised very high expectations among lots of market players, especially advertising customers. Others frequently use PA as a synonym for automation projects that are several years overdue, especially in so-called classic media, but in which nothing is “programmatic”. At mediascale, we generally define programmatic advertising as data-driven media-buying and as a process we are only just beginning.

Therefore, the disappointment that may have occurred with one or other advertisers is not a fundamental issue for programmatic advertising. Rather, it should be an incentive to take programmatic to the next level: on the one hand, by rethinking the set-up of service providers and technology; on the other, individual expectations should be reasonably calibrated.

In recent years, it has mainly been venture capital-financed players, who wanted to be part of the media value chain, who have fuelled the programmatic hype starting from their own interests, which has led to high expectations. And of course they have claimed “their” part of the supply chain. But those who worked more intensively with the market knew that the quantity and quality of the available profile data for programmatic campaigns is limited. However, only good data can increase the efficiency of campaigns significantly enough so that the additional costs for the additional members of the value chain are reintegrated. A possible disappointment was thus an announcement or based on unrealistic expectations.

In many conversations with our customers, we have realistically presented both the possibilities as well as the limits of data-driven advertising in order to rule out exaggerated expectations of PA from the outset. In doing so, the following assumptions were made, which our customers, sometimes against their initial will, have been getting along well with so far:

  • Programmatic advertising is not a new channel with completely different rules to traditional display business. Also when auctioned and backed by data, a content ad remains a content ad and will not develop the advertising impact of an instream pre-roll large format
  • Meaningful, validated data is the indispensable basis for programmatic advertising. Here it is important to look carefully and carry out comprehensive auditing of the available data offers. At first glance, the data market in DMPs seems expansive. But data segments that deliver what they promise (delivering a corresponding uplift to campaigns) are by no means abundant. And they have their price.
  • An impression that cannot be assigned to valuable data should not be bought programmatically. As meaningful as it is to uniformly track all advertising contacts and accumulate all campaigns and pseudonymous profile data in one system, it makes little sense to put untargeted campaign volume into systems just to have bought it “programmatically”. This results in costs and technical performance losses that are not offset by financial added value.
  • The open market, open to all, originally proclaimed by many to be programmatic’s central promise of salvation, has created more problems than it solves, as it has also opened up the market to a plethora of dubious players. The efforts of the large, open sell-side platforms to push the black sheep out are commendable, but unfortunately not always successful. That is why we only buy inventories that we can thoroughly test, both technically and commercially. Furthermore, whenever possible, we buy from partners (often in private marketplaces) that we know and have established business relationships with – including any sanction options which may be necessary in the interest of the customer in an emergency.
  • And we’re not forgetting the creation: What use is the most sophisticated planning on a profile basis, if only one means of advertising is available? That’s why data driven creativity is, in our view, the indispensable fourth pillar of programmatic advertising – alongside technology, media space and data.

Today, programmatic has already caused major changes in the digital media business. But we are sure that this transformation process is far from finished yet. And it will encompass more and more media types in the future: TV, out-of-home, audio, cinema and eventually also print. In five years at the latest, we will be able to plan, book and control more and more channels via programmatic. In addition, people’s media use is evolving, new, relevant platforms are being created at ever-increasing speed, and data protection requirements also require fundamental and sometimes new solutions. All these challenges keep us busy and agile. Staying at the current level of development is not a solution. Particularly as we are just scratching the surface with programmatic.

This article was first published in adzine.