Speaking at the Innovfest Unbound conference last week in Singapore, Dominic Powers, CEO of CtrlShift, minced no words discussing the role of large media-agency networks in adtech.
Agencies want to take their cut on the backend, especially when hiring outsider programmatic agencies to execute on their behalf, often comprising the effectiveness of media execution, he said.
“One of the biggest problems we face in the industry today has been self-created by the network agencies and their silos,” Powers said, adding that complex technology stacks* have added to increased fees, which eat into campaign budgets. While many of these do provide value, such as hyper-targeting or better brand safety, "the typical pricing models for agency services have led to an industry built on opaque fees for execution and murky wholesale media arbitrage," Powers added. "And with brands continually applying downward pricing pressure, something has to give."
Brands aren’t concerned about money spent on pieces of the adtech ecosystem that add value, they’re concerned about the pieces that don’t - @dominicpowers #InnovfestUnbound #unlocktransparency #programmatic pic.twitter.com/BiKVn4shmk— CtrlShift (@CtrlShiftAsia) June 6, 2018
He recounted an instance where a network agency sought to retain 25% of the client ad budget, even without contributing toward the digital media planning, buying or tracking.
“Where the agencies need to go is back to where they started, which is focusing on their strategy, insights, and creative—the what, the why, the who,” said Powers. “Don’t focus on the how. There are plenty of technology players out there that can do things, to be honest, far more efficiently than the [network] agencies can. Don’t get me wrong, we work with agencies and help them, but they are a big part of the problem that exists for the industry.”
He added that the power of Google and Facebook, combined with the rising trend of insourcing digital media management, buying, and planning means that the largest members of the ecosystem will start taking programmatic seriously enough to place driving value over reeling in returns.
In trying to persevere under pressure of the duopoly, Powers believes there is room for optimism and innovation in a fragmented digital advertising ecosystem.
For more from Innovfest Unbound, see "Get creative right, the rest will follow: Tourism Australia CMO".
* This paragraph has been edited starting at the point indicated. We removed a reference to "smoke and mirrors" and added the remainder of the paragraph, which was provided by CtrlShift after the event to clarify Powers' position. Sound problems at the event may have impacted the accuracy of the original report.