The anti-agency business model, Digiday Agency Summit, October 2016
Digiday Agency LA: Hypebusters: The Agency R&D Problem
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The Agency R&D Problem Russ Fradin CEO, Dynamic Signal @rfradin
description
Russ Fradin, founder of Dynamic Signal and former CEO of Adify, lays out his case for why agencies have been their own worst enemies because they haven’t invested in technology. Yet Fradin doesn’t necessarily think agencies are to blame; instead, he points the finger at clients, who have squeezed agencies to the point where spending on technology is impossible. The result: agencies are forced to outsource tech development to middlemen like ad networks.
Transcript of Digiday Agency LA: Hypebusters: The Agency R&D Problem
The Agency R&D Problem
Russ FradinCEO, Dynamic Signal@rfradin
Background
In the Beginning: Agencies & Advertisers
A match made in heaven
Agencies had REAL expertise
Advertisers valued it
Profitable enough business to fund investment in great people, training and infrastructure
… and man, what a cool job.
Then it all changed
Agencies & Advertisers
Fees cut across the board
15% -> 1%
Can still hire junior folks
Can still keep small number of senior people
Bare in the middle
Can’t compete for technical talent
Can’t build any unique / defensible IP
Bad Timing
Gigantic & Growing Fragmentation Issue…
Clear Internet will matter back in 1995Agencies not staffed to get ahead of the media
Extremely complicated to plan & buyMore than 750M English language websites today
Networks, Attribution, Data ownership, Creative optimization
Expertise that traditionally lived in agencies moved to publishers / ad networks
Still need:People
Expertise
Technology
Consumers trust these ‘new’ media
82%20% 61%22% 60%38% 59%
Source: comScore Marketing Solutions Survey
Entrepreneurs step inHire the best agency people
‘Thanks for all the free training!’
Provide media planning / buying servicesTrack / measure / optimize
All sold as an IOCosts of these services well beyond 15%
Marketers now paying much more than 15% for planning /
buying
0% 10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Media Agency Cut
Agency Discount
Rich Media / Video Fees
Buy Side Ad Server
Content / Widget Distribu-tion
3rd Party Validation
Ad Exchange
Sales Agent / Rep Firm
Ad Network
Network Ad Platform Provider
Site Groups
Site Side Ad Server
Member Site
* Yes, obviously the worst case scenario
To make matters even worse…
Who owns the data?
Who really is delivering the value for the clients?
In summaryFor my agency friends to share with their clients…
Is there a future?Trading desks?
Real opportunity when done correctlyManage the data
Actual buy media directly – Can’t be just another ad network buy
Buying moving in-house?Maybe this is the future, just go work for the marketers!
Social Media?Real opportunity for both PR and Ad Agencies here
