As the demands and reach of the big global brands became ever more international in scope, so have the media agencies powering their communications. The largest of the networked agencies now has 110 offices spread throughout the globe. Even the company in tenth spot boasts 90, serving 85 different markets.
I hate to be the one to spoil the party – we all love a bit of jet-setting glamour – but times are changing and the truth is, the days of the global media agency are probably numbered. The reason behind this is the same thing that’s driven so much disruption in advertising over the last decade: programmatic.
From fairly humble beginnings in the last decade, programmatic has grown to take up a powerful role in the advertising ecosystem, accounting for more than two thirds of US digital ad spend and growing by double digit figures every year.
It has reached a stage now that it is challenging the idea that agencies above all else need size in order to thrive. Programmatic advertising can be scaled globally from one central engineering hub, while campaigns themselves are adapted to each market. The algorithms that power it are programmed to take into account an almost limitless number of variables, be that language, time of day, weather conditions, location and even local pollen counts. The level of adaptability open to advertisers is staggering and growing by the day.
In Europe in particular, having local offices in every country has always been expensive and complex, because of the 50-odd countries making up the continent. As multi state regions in Asia and South America continue to develop, the same will be the case for them. Although it’s very cool to be able to say you have an office in Copenhagen and Buenos Aries, we need to be asking ourselves if it’s really necessary in today’s digital marketplace.
As knowledge and understanding on the brand side of the potential of programmatic grows, advertisers will be less and less attracted to the benefits of global scale and more interested in nimbler agencies that are able to operate global campaigns from hub locations, because the efficiencies are immense. The idea of ad budget going to where it matters rather than to propping up expensive networks will be hard to resist.
I’m not saying the world’s largest agency should close 109 of its 110 offices tomorrow. Having a base on the ground in certain key areas – North America, APAC and Latin America – will always be important regardless of the impact of programmatic. But the big global networks operated by some just won’t be necessary anymore.
This may sound like a daunting prospect for the many established agencies that have built their reputations on size, but the transition goes even deeper than that. Technology will obviously be crucial in creating that hub structure, but this won’t mean just buying programmatic capabilities off the shelf from one of the many ad tech platforms. Most of them are made for the relatively homogenized US market and don’t offer the level of variability that is required for more complex regions like Europe.
The only way agencies will be able to realize the full potential of programmatic, and have the control necessary to adapt it for the advertiser and audience, is if they bite the bullet and start building the tech themselves. It’s an expensive process, but by allowing the development of a more nimble global structure, it saves a whole lot more in the long run.
Having that independence also allows advertisers to get closer to the technology, boosting transparency and massively enhancing the relationship between agencies and brands.
Programmatic isn’t perfect. We’re really just scratching the surface in terms of its capability and the technology will need to mature further in a number of areas. But, the direction of travel for our industry is clear. The future of the media agency isn’t just around being structurally nimble but also having programmatic embedded deep within its DNA.
As programmatic continues its march towards ubiquity, networked agencies will increasingly struggle to justify their huge global footprints. They need to be prepared to cut the fat and get themselves lean for a programmatic future.