It's become fashionable to predict that AI automation will kill ad agencies. In order to understand why this is wrong, you have to understand why marketers hire agencies in the first place.
If AI induces demand a la “widening highways,” what is the “commuter” rail in this stretched analogy, ie the old school tech that actually IS more efficient but is definitely not sexy and requires major upfront investment?
Brand-building. I literally mean that. Over a long time horizon (i.e., years or decades), a strong brand is far more efficient at driving marketing performance than essentially trying to boil the ocean chasing every new digital ad format, platform, device type, and user profile.
Like a commuter rail, a brand is harder to build than adding lanes to highways, but it's ultimately the more efficient way to get people from point A to point B.
I wonder if the end of the cookie changes this at all. agencies have built their planning, buying, tech and partnerships around 3rd party data. Now that it's going away what is the fabric that weaves their value together? Or are brands just going to turn over their data to agencies for 1st party execution?
In aggregate I would doubt it. Will the death of the cookie cause pain for a whole slew of agencies that (probably unknowingly) over-optimized to 2010s era 3P data portability? Yes. But overall, agencies will just find new/different types of work that clients don't want to manage in-house. New agencies will rise from the ashes of incumbents.
And in fairness, usage of 1P data definitely DOES change the types of work that clients have appetite to in-house. I just think that net-net clients will still need to be efficient with their capital and outsource a lot of marketing work / technology / expertise. Everything is a trade-off.
I think we’re already seeing some of the brands during over their data to agencies, as well as the agency providing their own proprietary data as value add + expertise (Merkle, Annalect, etc…)
If AI induces demand a la “widening highways,” what is the “commuter” rail in this stretched analogy, ie the old school tech that actually IS more efficient but is definitely not sexy and requires major upfront investment?
Brand-building. I literally mean that. Over a long time horizon (i.e., years or decades), a strong brand is far more efficient at driving marketing performance than essentially trying to boil the ocean chasing every new digital ad format, platform, device type, and user profile.
Like a commuter rail, a brand is harder to build than adding lanes to highways, but it's ultimately the more efficient way to get people from point A to point B.
Thiiiiiiissss. So hard to justify the upfront cost as well as measurement is not as straightforward or linear
I wonder if the end of the cookie changes this at all. agencies have built their planning, buying, tech and partnerships around 3rd party data. Now that it's going away what is the fabric that weaves their value together? Or are brands just going to turn over their data to agencies for 1st party execution?
In aggregate I would doubt it. Will the death of the cookie cause pain for a whole slew of agencies that (probably unknowingly) over-optimized to 2010s era 3P data portability? Yes. But overall, agencies will just find new/different types of work that clients don't want to manage in-house. New agencies will rise from the ashes of incumbents.
And in fairness, usage of 1P data definitely DOES change the types of work that clients have appetite to in-house. I just think that net-net clients will still need to be efficient with their capital and outsource a lot of marketing work / technology / expertise. Everything is a trade-off.
I think we’re already seeing some of the brands during over their data to agencies, as well as the agency providing their own proprietary data as value add + expertise (Merkle, Annalect, etc…)