Media & Ad Agencies, where are you going to add value in the future? (I’ve got a long essay in my head about supply, demand, market liquidity and the role media and ad agencies play now and in the future. I don’t have time to write the whole thing up, but here’s the heart of it:
- Long term,
- Ad agencies and Media agencies are in for it
- The value they provide is being marginalized
- As the innefficiencies of the ad marketplace
- Get automated (see google, Yahoo APT,)
- or turned into markets (see ad exchanges).
- There’s a growing price volatility in the ad impressions market, since
- there the number of publishers is exploding…
- and they can create a virtually unlimted number of ad impressions.
- There are more dollars flowing into the online ad space, but ultimately that "demand" won’t ever be able match all the supply
- We’re already seeing crazy bad sell through rates on leading sites by direct sales teams so…
- Publishers are turning to networks to offload the inventory and try to get some revenue for it, even if it’s a fifth of what they could get by selling it directly…
- Which is accelerating the decline in prices…
- Creating more opportunities for advertisers to be aggressive with their digital media planning and buying policies
- media success becomes a pricing game, where efficiencies drive more exposure.
- HINT: The value media agencies have in the future will shift from planning the program to reach the audience (which is getting increasingly automated and just plain easier than ever) into exploiting marketplace pricing inefficiencies, driving more value for the client through a price advantage vs. a planning advantage.
Stuff like this ( Yahoo Overhauls System for Selling Display Ads – NYTimes.com.) will only accelerate that.