In part two I discussed how some media vendors have been forced to start acting like agencies in order to compete for media dollars, but once in that position, there are a number of benefits to the situation, if only they can afford to maintain it.
But I couldn’t move on without considering the reverse scenario - agencies themselves are becoming media vendors.
We primarily see this with the holding companies who have been creating trading desks through which they buy ‘raw’ media from the exchanges, package it up in some way with data and optimization, and offer it to the brands that engage them. Whilst glass walls exist between the desk and the agency, and the agency buys from the desk like they would any other media source, the trading desks often have their own relationships with the client too. In those circumstances they use (sometimes) proprietary technology, their own flavor of secret sauce and their own teams to provide an end to end media buy. They have become vendors.
But it’s not just the big agencies doing this. Look at an agency running a simple technique like site retargeting by using a DSP (Demand Side Platform) and they too are being vendor-like. The advantage is control and margin- buy your site retargeting campaign through an end solution vendor and you pay their profit margin, but buy it as close to source as possible and you get to keep that margin for yourself. Interestingly the brand always ends up paying the margin of course, unless they themselves choose to bring the technology in-house, something I predict will occur a lot more over the coming 24 months.
How will the agency / client relationship have to evolve to account for such a development?
Look out for future parts of this series:
Part Three: The Media Agency / Client Relationship - The Unrealistic Client
Part Four: The Media Agency / Client Relationship - Choosing The Right Agency for Added Value