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Mark Kahn is the CEO of TRAFFIQ. Prior to founding the company, Mark served as Vice President of Business Development at a leading pay-per-click search network, where he was responsible for growing the company’s core revenue-generating relationships. Mark has also held senior business development, marketing and corporate development positions at iVillage, B2B Video Network and several of The News Corporation’s companies including, News America Publishing, News America New Media, Kesmai Corporation, American Sky Broadcasting, Delphi Internet Services and TV Guide. Mark has also managed over $500 million in M & A transactions. He earned his Bachelor of Arts from Connecticut College.

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Agencies: Working Hard or Hardly Working?

Written on
Mar 9, 2010 
Author
Mark Kahn  |
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Agencies: Working Hard or Hardly Working?

goofing_smallADOTAS – A recent meeting with a large agency’s digital planning team left me wondering who is doing the real work these days: agencies or ad networks?

I was there to talk about our solution for making sense of an increasingly crowded and complicated digital space. Today’s media planners and buyers have to be able to navigate through a 300,000 channel world for their clients — and be able to take advantage of dozens of new creative executions, placements, and targeting capabilities. Their clients trust them to find a receptive audience wherever they are on the web — and deliver enough scale and performance to make it effective and affordable.

One of the planners in the room was responsible for a seven-figure pharmaceutical budget. When I asked him how he was evaluating new traffic sources, he said, “I buy on two networks. They find me headache suffers and my client is satisfied, why would I want to risk it by moving money around?”

“I buy on two networks.” Surely he couldn’t be serious.

After I left the meeting, I continued to be astonished by the reply. Sure, buying on those networks was easy (and probably pretty effective) but what was the agency bringing to the table? Why wouldn’t the client simply place those two network buys themselves, and gain an extra 10% in performance by eliminating the agency’s fee?

Furthermore, what if the client’s CMO asked that planner where his ads were running? He couldn’t tell him with any certitude. It seemed to me like a pretty expensive and risky marketing strategy.

The agency is passing along their job along to a network, who is keeping all the data from the campaign. Even if the company sold a ton of migraine pill prescriptions, they still don’t know how they were successful—and who responded to their ads. Even worse, that network can now go and pitch all of the client’s competitors, who now stand to gain for the investment they made building an audience.

If I were the client, I would be justified in firing this agency.

The successful agency not only continually works to discover new pockets of high-performing traffic for their clients but they actively manage the campaign, and share performance results with them. If I want to reach migraine sufferers, the easiest thing in the world is to call WebMD and sponsor their migraine section; I am guaranteed a contextually-relevant placement in a high quality setting. Easy.

Same thing as buying a car. If I want a really reliable German automobile that seats 5 adults, with leather seats, all-wheel drive, and impeccable handling, I just go the Mercedes dealer and pick up a new S-Class.

The problem starts to arise when I get my monthly bill. Is $1,200 a month too much to pay when I can get to work in the same relative comfort in a $600 a month Audi, or a $350 a month Volkswagen?

Maybe, as a media planner, I can find five health sites that target migraine sufferers and string together the same audience for a lot less money. In addition, maybe there are premium opportunities I can get on smaller, more vertically focused sites that the leading site cannot or will not offer me?

Don’t get me wrong, WebMD is a great place to advertise. But that’s something even my mother knows. Do you really need to pay 15% to an agency for them to recommend that strategy?

So, how hard is your agency working for you, anyway? Every advertiser who uses the services of a media agency for their media planning and buying should ask themselves and their agency this question every single day. If they did, I think they would unfortunately find in many cases, the answer to be: not very hard.

How can an agency then justify the fees that they are collecting? They can do it by continually looking for better performing traffic. The only way to do that is to spread dollars around, find pockets of traffic either through other networks, or direct-to-publisher sites. They can do it by deploying smaller per-publisher budgets, while benefiting from smaller incremental risk.

Sure, it will take more work, but that’s what the client is paying for.





Reader Comments.

I think this scenario is more an exception than a rule. Many agencies have a lot of work on their hands because they are juggling inventory coming from 10-12 networks… maybe more. That’s on top of the premium buys they have to make on the top comscore sites.

Posted by Anthony Loredo | 1:08 pm on March 10, 2010.

I dont agree with this at all. Clients pay media planners for their expertise, negotiating skills, reporting, optimizing, trafficking and keeping up with all of the paperwork/billing that goes into that 7 figure budget… on top of figuring out which sites will get them the most bang for their buck. If it just so happens that the campaign is performing on two networks, so be it.. but I don’t think that is the norm or warrants your case of not hiring a media agency at all.

Posted by laura | 1:09 pm on March 10, 2010.

I wonder how many of the clients would accept a media plan, that would -as in your example- exclude WebMD and instead would offer several different (smaller) sites, that will perform just as well -or even better- than WebMD but costs about half.

The blunt truth is; CLIENTS ALWAYS ADVERTISE ON SITES THEY FREQUENTLY VISIT THEMSELVES AND FEEL MUCH MORE COMFORTABLE IN PUTTING THEIR MESSAGE ON SITES THAT HEY ARE FAMILIAR WITH.

An agencies hands are pretty much tightened when it come to choosing spots to advertise on.

Posted by Bulent | 10:56 pm on March 14, 2010.

I think you need to avoid making blanket statements based on one or two cases. Not all agencies approach media planning and buying the same. Your story helps make the case for ad networks in terms of the value they provide. I think there are other ways you can demonstrate this point without undermining the value of an ad agency or media buying agency.

Posted by Brady | 3:47 pm on March 24, 2010.

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