SpectatorBytes

As I evaluate how the display advertising environment is evolving, I have come to realize that the advertising agencies still have a significant opportunity to recapture their leverage in the marketplace. Today, ad networks have most of the leverage in the display marketplace. The display ecosystem has been built around advertising networks whose primary objective is to profit from arbitraging advertiser inventory demand and publisher inventory supply.

As the market developed in the mid to late-2000s, aggregating inventory supply was critical. Thus, many ad networks began to develop additional services (ad serving technologies, content syndication, analytical tools, etc.) for publishers as a way to secure those relationships. Optimization services such as Ad Meld or Rubicon Project are the latest in publisher-centric advertising services.

In the meantime, little attention was paid to advertiser and ad agencies. No major technology solutions were created to enable advertising ad agencies to optimize their display spending. Most of the reporting came directly from each of the ad networks that they work with. Tools to make ad buys where network-centric. There is not a single tool which advertisers can use to easily execute buys across their favorite networks. In general, there was no interest in the part of advertising networks to help advertising marketers optimize their spending across them and their competition.

However, today’s display advertising ecosystem is much different from that in 2002-2005. There are many more advertising networks, all of which are aggressively competing for advertising dollars. Advertisers are overwhelmed with the amount of choices and lack the capabilities to effectively optimize their spending in today’s ecosystem. This creates an opportunity for advertising agencies to develop (or acquire) services to help marketers optimize their marketing investments across advertising portals, networks and exchanges. These services would help advertisers to execute campaigns across multiple ad networks that deliver a better overall performance. In addition, agencies can provide tools to enable their clients to easily execute buys across multiple advertising networks.

Agencies are in a unique position to do this as they have a trusted relationship with clients and are designed to solely serve their interest. They also still have access to/visibility over most of an advertiser’s ad budgets, and thus, they can easily influence the migration of those dollars from traditional to digital media. Creating an advertising-centric optimization service would help advertising agencies recapture leverage vs. the rest of the players in the ecosystem.

Performance-display advertising networks are likely to initially oppose such efforts. Agencies would have to convince them to integrate into their platform. It is not in their interest to enable ad agencies to help their clients at the expense of ad networks profits. However, advertising agencies can leverage their scale to successfully establish these services as part of the ecosystem. Also, advertisers are likely to realize the value and demand compliance from advertising networks. Publisher data will also play a key role. So, services like Blue Kai and Lookery can end up proving to be good partners to this ad-centric efforts.

Traditionally, agencies have not had the technology capabilities to develop these services. Those who do ( I hear) are already developing solutions of this kind. The ones that don’t, I would expect them to acquire them.

If agencies are successfully in developing/offering these services, I dont not expect the ecosystem to tilt entirely in favor of advertisers but I certainly expect the display advertising ecosystem to be much more balanced in the future.