On Monday B&T published a controversial piece about the merging of ad tech and mar tech. Here, B&T chats with the article’s author and eminent authority on the subject Andrew Birmingham and tries to uncover what it all means for local agencies. Yes, be VERY scared indeed, it’s a frightening new world that’ll take few prisoners…
Put simply, what actually is advertising tech (adtech) and marketing tech (martech)? Ad tech’s the stuff that serves and counts your paid advertising; the actual technology, the analytics. Martech’s direct marketing; things like emails, social, posts, the automation that controls all the campaigns.
Why merge the two? Because that’s what marketers want. The two have been separate beasts for the past 20 years but marketers want the one screen, the one dashboard to understand where their spend is going. Video’s the anomaly, it can be either/or.
When’s this all going to happen? It will take another five years for the martech firms to roll this stuff out. The big players – Salesforce, Adobe and Oracle – are all buying and building ad tech platforms into their systems.
Is it really all a play so Google and Facebook can soak up even more ad dollars? Yes, those two will dominate the advertising landscape. Remember, too, it’s not about the number of ads being produced it’s about how much money’s being spent. Take the US, in the first quarter this year Google and Facebook snared 85 per cent of all the new (digital) ad dollars that came into the market.
How will this play out for local Aussie agencies? At present there are a heap of agencies offering ad tech; some they own and others they license. Increasingly a lot of the capability will end up inside Google and Facebook. Yes, there’ll be less providers and, yes, agencies will be working directly with two giants (Facebook and Google) who’ll control everything.
So that’s bad news then? Depends how you look at it. Do you want to put 80 per cent of your effort into two companies or 20 companies?
Will it hit agencies’ bottom lines hard? Agencies don’t care where the money gets spent so long as it gets spent. The next big thing for agencies will be (the next iteration) of programmatic. At the moment it still requires a lot of human intervention but it’ll be taken over by AI and machine learning and smart software. And as the past 20 years have shown, when it comes to humans and machines, the humans always lose. When it comes down to Google’s machine brain or people sitting at a buyer’s desk then Google will win every single time.
So it’s the beginning of the end of the media buyer then? A lot of people who buy advertising are stupid and make stupid decisions based on the data in front of them today and not what the data might look like tomorrow. That, in my books, is stupid
You appear to have a particular disdain for media buyers? If you refuse to buy into mobile campaigns at the moment because you think the cost or acquisitions are too high, and if you feel you can wait, say, three years for the cost of acquisition to halve and then jump in then, yes, you’re stupid. And the reason you won’t be able to get it at half the price is because the people who will are the ones in now and they’ll be building the capabilities to do it and you’ll be starting cold.
So if you aren’t in bed with Google or Facebook, you’d bloody want to be? At the moment, in Australia, digital is about 40 per cent of the total advertising spend. In the next five years it will be 50 per cent and could get there faster. And right now Google and Facebook have 50 per cent of that 40 per cent. And remember, Facebook in Australia is only really getting started; it’s barely even got going with Instagram. In five years’ time Google and Facebook will have 65 per cent of all digital spends in Australia.
By “Google” you basically mean search, yeah? Is the good old-fashioned creative ad going the way of the dodo then? There’s so much digital “noise” that brands need to make themselves more important not less important. If you want to charge $300 for a pair of sneakers you need to be have a pretty compelling case. It’s not all about the direct response (getting people to buy stuff), brands want to be fun, have a purpose in your life. Marketing’s still about being the top of the pile, top of mind over your competitor.
This all sounds bad news for creatives? Creatives love to think nothing beats their human genius but there’s a whole heap of companies like Adobe who are doing a stack of work on making ads made basically by computers. They’ll make tailor-made ads directly to suit the viewer in their favourite colours and models and style. It’s pretty clear that’s where the technology will take us in five to 10 years’ time.
In terms of agency land, who won’t survive in this new, rather daunting, landscape? What agencies offer to brands is a set of skills they can’t afford in-house. An agency that works with 50 clients get the benefits of what works across a broad spread. Given that Google and Facebook are going to be so utterly dominant in the coming years then an agency’s knowledge and expertise around how they can plug their clients into their systems is going to be critical.
Your advice to agencies? Tell your clients that they should be putting their money into things that look expensive today because you need to able to build the capabilities today because you’ll want to exploit them tomorrow. Mobile is a great example of that. Agencies who deal with the traditional media need to understand that money is going to shift out of things like free to air TV. Money will follow eyeballs and the money is flowing to the other channels. For example, more people are watching video and the money will naturally follow that.
If all the cash is going to Google and Facebook, that sounds like very bad news for the media companies then? The players that have typically driven media spend in Australia have been Fairfax, News Corp, APN, the radio stations etc. But by the time you take Google, Facebook, Seek, Realestate.com and Sensis; you take all the money that they’re going to get in digital advertising, then that leaves absolutely nothing for anyone else. They (the traditional media players) are all fucked and they know they’re fucked! They’ll be fighting over the scraps after Google and Facebook have taken what they want.
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