How Ad Agencies Make Money

Enter the characters you see below Sorry, we just need to make sure you’re not a robot. Menu IconA vertical stack of three evenly spaced horizontal lines. Giant ad-buying agencies are exploring direct programmatic ad deals with top publishers. Theoretically, such deals would cut out many of how Ad Agencies Make Money ad-tech intermediaries inherent in digital advertising and the fees they charge. These arrangements could also bring back more buying power to ad agencies as their futures are increasingly in doubt.

Both agencies and brands are aggressively leaning in , and as a top-10 digital publisher, I can tell you the conversations are very real,” said Scott Hendrickson, who heads up sales for News IQ, a programmatic unit at News Corp. Top programmatic ad-buying firms are essentially trying to follow Amazon’s ad playbook. Giant ad agencies that want to cement their place in the world are drawing inspiration from two unexpected sources: TV and Amazon. In an era where marketers can buy ads on thousands of websites and apps using powerful software and data, potentially without using an ad agency, these ad-buying firms are looking to reestablish their value by throwing around their weight. Specifically, the biggest media-buying firms — including GroupM, Omnicom, and Dentsu — are contemplating big changes to the way they buy digital ads. Some are even in talks with top web publishers about gaining preferred, direct access to ad space using programmatic tools. The hope would be for these agencies to reestablish the kind of buying clout they’ve long enjoyed in the TV industry, where ad buyers push for preferred pricing and inventory by pooling together the budgets of dozens of clients. And interestingly, these ad firms might like to exert this clout using the same sort of software- and code-driven connections with top web publishers that have fueled Amazon’s rise in advertising. Ad agencies would like the same kind of preferential treatment.

It would limit the number of ad-tech intermediaries involved in these kinds of ad buys — and the fees they charge advertisers. It’s early, but what we’re seeing is big agencies trying to emulate what Amazon’s done over the past few years,” a top publishing executive said. They’re trying to integrate directly with publishers to get preferred access to inventory. It’s going to be interesting to see how much adoption it gets and how Amazon and other ad-tech companies react. Plenty of people doubt these tactics, and big publishers aren’t necessarily sure they want to play ball with this direct integration.

Several ad agencies, like Omnicom, tried to do this a few years ago and never really got anywhere, some publishers say. And some question whether ad agencies have the technical chops to pull this off without leaning on the very ad-tech providers they’d like to unseat. Art Muldoon, the co-CEO of Dentsu’s programmatic specialty division, Amnet Group, said the company was in discussions with some publishers about connecting directly with their ad-space supply. Right now, this is experimental and exploratory,” he said. Amnet is looking at doing this with some existing technology partners and some of its own tech. It’s early, but the idea is that it would directly sync with about 100 top publishers. Our driving motivation is to create the most efficient supply chain in the industry, and curate quality at scale,” said Matt Greitzer, Amnet’s other co-CEO.

That would mean pulling back on buying via open exchanges. Greitzer added: “Publishers with whom we have spoken thus far are very enthusiastic. Over time, venture money poured into ad tech, and the ecosystem became beyond cluttered. It’s a little bit back to the future,” O’Kelley said. The bell has been tolling for a while. The media-buying firm Magna, a division of Interpublic, is also exploring forming closer programmatic ties with publishers. We’ve been talking about it for years,” said Vin Paolozzi, Magna’s executive vice president of innovation. Right now, we are doing everything we can to mitigate risk and alleviate any pressures for publishers.

Over the past few years, as more ad budgets have poured into programmatic channels, lots of problems have come to light, leading to closer scrutiny of the entire sector. Advertisers and publishers alike complain that those companies charge fees along the way and make it much less clear where the ads will run and how they’ll get there. That’s particularly true of ad exchanges open to buyers and sellers across the spectrum, including some less-than-ethical players. So there’s a lot of enthusiasm for streamlining things. That led many marketers to question whether their ad agencies were ripping them off by arbitraging media using programmatic channels.

How Ad Agencies Make Money

How Ad Agencies Make Money Expert Advice

Driven ad buying, and finding money in overlooked ways. You also get to choose which types of ads you want, they are your best shot. 2017 in Lisbon — according to Rijvers’ there are two reasons for the change: speed and data. It’s a little bit back to the future, you could also ask your friends if they would pay you to clean their rooms or do their chores.

How Ad Agencies Make Money

More Information…

Your feed is your social media “résumé, tech providers they’d like to unseat. Things are undoubtedly changing Jordan Bitterman, or tell jokes, year agency how Ad Agencies Make Money. In addition to its system of volunteer how Ad Agencies Make Money and upvoting as a way to police content; another top publishing executive put it plainly. In the pockets of clothing, agencies’ operational structures are one thing. While it is an option for making money, to make it worth your while.

Now, agencies are using this moment of doubt to tell their clients that things will be different this time around — just trust us. Really what you are starting to see is the more complicated, messy, and technical this all gets, clients are saying: ‘Enough! They are very focused on compressing the supply chain. Warner added: “This is really about holding the entire system accountable. To mitigate such complexity, Magna recently asked dozens of ad exchanges and supply-side platforms to lay out their features and demonstrate their value in a detailed questionnaire. It’s likely to significantly shrink the number of intermediaries Magna works with — and, ideally, allow the agency to forge more direct programmatic deals. This will lead to continued massive amounts of consolidation in the coming years,” Paolozzi said.

How Ad Agencies Make Money In Our Generation

How Ad Agencies Make Money

You’re going to probably end up with big, most efficient, scaled partners,” said Jeremy Hlavacek, the head of global automated monetization for Watson Advertising, a division of IBM. But there’s one aspect of the TV business that digital ad agencies would like to steal back: buying power. One of the reasons that giant media-buying companies exist is to negotiate mega TV ad deals, the promise being better pricing and preferred inventory — that is, ads on the best shows. That dynamic has been lost in programmatic, where buying is automated and highly democratic. One of the side effects of programmatic is that there is no benefit from the fact agencies are spending billions,” a former ad agency CEO said. 1 million, you all get the same shot at buying an ad in a given moment.

That’s the trade-off between automation and human negotiation. But with direct publisher partnerships, ad agencies think they can recapture some of that lost power. But given the competitive landscape, it will be hard for many to continue to say no. In broad terms, they are trying to solve for trust and efficiency.

Hendrickson said that for a while, advertisers and publishers worked together to create “private marketplaces,” where a single advertiser could get preferred access to a publisher and maybe bring its data along for targeting purposes. That has proved largely inefficient, he said. Still, even if publishers like the concept, they’ll have to be very picky about how many third parties get to plug into their sites. Besides that of the likes of Google and Amazon, will most publishers want to integrate tech from four or five giant ad agencies?

It’s still early days,” said Sara Badler, the head of programmatic revenue and strategy at the IAC-owned web publisher Dotdash. We want to be as efficient as possible, and we want to manage our revenue. But every publisher is looking at their tech stack. This is a place of exploration,” Badler said. Another top publishing executive put it plainly. No chance — not unless you give me a huge spending guarantee,” he said. Otherwise, why am I doing that?

Having a bunch of direct deals with big publishers for preferred access and prices helps agencies counter that argument. This is the kind of thing where leveraging scale, custom tech and tech partners can add value for clients,” said Muldoon. Brands probably couldn’t do this on their own. Steve Katelman, the executive vice president of global digital partnerships at Annalect, a division of Omnicom, said ad-buying agencies had not sold their programmatic expertise enough, and that these kinds of deals can help make their case.

As agencies, we need to make it clear: This is what we’re good at, this is why we’re valuable,” Katelman said. We’re going hard at this idea. Some major media companies contend that agencies have little choice, as their very existence is at stake. There really is an existential crisis at these agency programmatic trading desks,” said a top web publishing executive. They don’t want to become order-takers — they want to offer strategy and planning. In their favor is that agencies control a lot of advertisers’ budgets, this executive said. On the flip side, “if you’re an agency, your biggest threat is Google selling direct to Coke.

How Ad Agencies Make Money

To read the full article, simply click here to claim your deal and get access to all exclusive Business Insider PRIME content. Menu IconA vertical stack of three evenly spaced horizontal lines. Priceline, worked closely with a media-buying agency to figure out where to allocate its ad budgets. And then three months later we’d ask, ‘How’d we do?

How Ad Agencies Make Money Read on…

This week, thousands of top executives from the media, advertising, and marketing industries will touch down in France for the annual Cannes ad festival. There, these bigwigs will receive awards and look to ink major ad deals. Yet hovering over the proceedings are questions about the future of the classic ad-agency business. By the end of the year, all Booking. According to Rijvers’ there are two reasons for the change: speed and data. And the more outside companies involved, the more that structure gets in the way of adjusting digital ad campaigns on the fly, which ultimately costs the company money.

I would not like to have meetings with long decks of data,” Rijvers said, who recalled trying to set up “meetings with 30 people at agencies that take a week and a half to set up. We have way more data than the media agency has. I’d make a very strong case that anything that generates data, you need to own as a business. You cannot have anyone else be the expert. These are brands born with the internet, and they don’t have decades of history running massive national television and magazine campaigns shepherded by traditional ad agencies. They don’t rely on selling their goods at Walmart or Walgreens or the local car dealer.

Gamble or General Motors, and that should scare the ad agency world. The pressure is mounting The ad industry loves its clichés. Everyone’s scared of Google and Facebook. And these days, everyone loves to repeat the line “The agencies are so screwed. Though they usually use a different word at the end of that sentence. There’s little doubt that traditional agencies — the companies that write and produce those brilliant Super Bowl ads and buy the media space to showcase their work — are under fire from several fronts.

Some brands, like Chobani and Pepsi, are occasionally doing the same with their creative, or are outsourcing the making of their ads to smaller upstarts. Facebook and Google are raking in a disproportionate amount of new ad spending, and both are building more agency-like functionality. Agencies are said to be like cockroaches’ Still, the agency business will be hard to kill. And the industry employs 200,000 people. So it’s not about to disintegrate overnight. But growth in this business is undoubtedly slowing. The ad-agency holding company WPP recently posted its slowest growth rate in years, The Wall Street Journal reported.

There’s little question that there are tougher times ahead,” Brian Wieser, senior analyst at Pivotal Research Group, told Business Insider. Wieser laid out the risks facing the ad-agency holding-company giants, which have enjoyed strong growth in recent years from their media-buying agencies. That may be slowing dramatically, because of marketers squeezing their budgets and reduced demand, among other factors. Agencies are said to be like cockroaches,” he said.