New Ad Agency, New Ad Tech?

Changing ad agencies not only impacts your media buying and operations. It often means a change in your entire ad tech stack. What to consider if making a switch.

It has been a wild 12 months for obvious reasons. As many of you are actively experiencing, it is also becoming quite an agency pitch season. Brands are getting antsy and putting their business up for review.

When evaluating agency proposals and pitches, you are conducting a technology review as much as a media review.

If digital media is a cornerstone of your marketing activities, selecting a new media agency has very real ad technology considerations. Today, I'll provide a primer on what you should consider from a tech perspective in your next agency selection process.

Tech: To in-house or not in-house?

Before putting your digital account up for bid, you should first consider what (if any) key components of your ad tech stack should be brought in-house. Certain ad tech components are vendors that you will always need and are very unlikely to be differentiated from one agency to another.

For example, the ad server. Just about every display and video advertiser out there needs an ad server to serve, track, and manage creative. It is also the critical element in most digital attribution models measuring ad exposure and conversions.

Without naming names, most major ad servers in the marketplace today are excellent. They are also not differentiated. There are some ancillary features and capabilities that each uniquely brings to the table. But let's be honest, you can count all of the ad-serving companies worth knowing on the one hand, and you would probably only consider working with two of them.

What's your agency bring to the table? Probably a better rate than you could achieve on your own. In other words, the agency probably has a sweetheart rate card with the ad server that would be tough for you to get directions. But that's it.

So your options are:

1. License through your agency and save a bit of money. However, you give up control of the data, the seat, etc. The license remains with the agency if you choose to leave.

2. License direct. You will pay more for the privilege, but now you own it. It will move with you should you ever choose to switch agencies in the future.

Standard digital ad tech stack

Here's the list of technology solutions you are likely to encounter if you put your digital advertising business up for review/bid this year. If any of these components sound foreign to you, that's ok. However, it would be best to get in touch with your digital subject matter experts ASAP and include them in the pitch review process.

If you do not have solid subject matter expertise in-house (perhaps you've relied on the agencies for this knowledge), then you should consider bringing on a consultant to guide you through this process.

Ad server

Purpose: Manages the creative delivery process through to the end consumer.

• Serves your creative

• Manages creative rotations

• Tracks impressions, clicks, interactions, etc

• Tracks online conversions

• Considered by most companies to be the "billable" impression or media delivery count

Cost Model: Pay for consumption (CPM).

Demand-side platform (DSP)

Purpose: The programmatic platform used to buy ad impressions in auction-based markets. Considered the primary display and video buying channel by most performance marketers.

• Allows an agency or marketer to activate display and video campaigns.

• Puts the buyer in control of costs

• High degree of flexibility and performance optimization capability

• Can facilitate direct deals with publishers

• Most often used on non-guaranteed buys

• Offers sophisticated audience and behavioral targeting capabilities

• Brands can BYOD (Bring Your Own Data) for targeting purposes

Cost model: Pay for consumption. Cost of media + platform fee based on a percentage of media spend.

Reporting and dashboarding

Purpose: Ideally, a marketer can access a reporting dashboard or business intelligence (BI) tool that allows them to see real-time media delivery and performance information. This is preferable to offline Excel or Powerpoint-based reports.

• Ingests data from multiple sources, including ad server, DSP, website analytics, etc

• Consolidates data into consumable dashboards, including tables, charts, graphs

• Allows for drill-downs, filtering, and time frame adjustments.

• Can serve as centralized "source of truth" for campaign analysis

Cost model: Typically SaaS-based subscription with a la carte feature add-ons. License price varies based on the total size of data assets being managed.

Data for targeting

Purpose: Often provided as a pseudo data management platform (DMP) where third-party targeting data is available for purchase or activation. In the last few years, agency holding companies have acquired some of the top players in the space.

• Allows for campaign targeting based on proprietary knowledge of consumer attributes or behaviors

• Includes consumer targeting based on past purchases, "in-market" status, current shopping and searching behaviors, likelihood to purchase, competitor conquesting, etc.

Cost model: Pay for consumption (CPM). Can also include setup and processing fees if customized segments are created for a brand.

Verification

Purpose: The layer of ad tech that measures your campaign's for:

• Viewability — were the ads actually seen?

• Human impressions — were the ads seen by real people, not bots?

• Brand safety — were the ads served in objectionable content?

Most verification providers also have tools that provide intervention and avoidance capabilities that will prevent your ads from ever being served to a bot or in objectionable content.

Cost model: Pay for consumption (CPM). Some are also offering SaaS pricing too.

Note: Yes, there are many (many) other important parts of the ad tech ecosystem that should be part of the conversation. Yes, it would help if you explored those too. This list is simply a thought starter.

The new (?) differentiator

For the most part, all major media agencies have access to all of the same tools. They all have licenses in place already for all major ad servers, DSPs, data, and reporting tools. And to be honest, there's not that much difference in terms of their pricing either.

This is why the tech component of an agency is often overlooked in the agency selection process. The belief that "hey, they all have the same stuff" is true, but how they deploy it is the difference-maker.

However, there is one major exception: targeting data.

The major ad agency holding companies began acquiring data companies a few years ago. It was seen as a potential differentiator in an otherwise undifferentiated service offering. The thought was that if an agency could claim that they have exclusive access to the holy grail of consumer targeting data, they would win accounts and make a healthy profit.

In essence, the agency gets paid to do the planning and buying that you would expect. However, they also get paid when you use their proprietary data for targeting.

And who gets to evaluate the success of the campaign using this targeting? The same agency that recommended it in the first place.

Consequently, today's digital agency pitches tend to cut through the platform and operational chaff pretty quickly and get right down to the agency's "unique" ability to find bespoke audiences for you.

This is where it becomes challenging to evaluate one agency's offering against another because the data platforms are a bit of a black box. You won't know how "good" they are until you try them. By that point, you've already awarded your business.

Some agency groups have offshoots of this service that also address campaign performance measurement and attribution. Using the same underlying technology, the agency will offer the ability to do a closed-loop analysis of your campaign outcomes. Again, it is a similar black box that is hard to tease apart until after you've already made a decision.

What aren't we considering, but should?

Many other things should factor into your decision-making process. For the discussion today, I do not care what the answers are to these questions as much as I care about getting a clear response.

Transparency: Every agency will offer complete transparency (more or less). However, the level of transparency you require will increase the scope of work. For example, if you expect to see all of your costs broken out line by line, reported at a certain cadence, and visualized in a dashboard (all of which you should want), you should expect to have an increased scope of work to service your account. TL;DR Transparency isn't free.

Subject matter expertise: I recommend that you require excruciating detail about the level of subject matter expertise that will be dedicated to your account. I care less about the number of years of experience and more about the "hands-on" nature of the experience. I want to see doers on my account, not managers.

Interoperability: If you choose not to use any agency-owned and operated ad tech, can you still achieve the same results or costs? If not (likely not), how much does the cost or performance change?

Preferred platforms: What are the agency's preferred platforms? Remember when I mentioned earlier that many platforms are neck and neck in terms of features and performance? If the agency has a preference, why? Having a preference is not a bad thing; I just want to know why. Is it because they offer the agency a commission? Is it because the platform makes certain features available to them first? Is it because the agency receives unique beta testing opportunities?

Not Google. Not Facebook.: It is too easy to slam 70% of a campaign into a Google or Facebook platform. If that's the plan, ok fine. But tell me what you are doing with the rest of the business that does not run on one of those platforms. The reason I care about this is that certain media channels are just plain easy. It is super easy to park most of your budget in the walled gardens and call it a day. When evaluating an agency, I want to know how they work on the hard stuff. The new stuff. The stuff that doesn't have an exact playbook yet. That will tell you a lot about their problem-solving capability.

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