Are Digital Media Agencies An Endangered Species?

Just ten years ago, media agencies were simply the middle man between the publisher and the advertiser. Their task was simple but time consuming: buy advertising impressions from publisher sales teams, create a media plan containing various different publishers and send this onto the client.

The task for the publisher was also simple: aggregate an online audience, create online ad-serving systems and evangelise the benefits of the online medium to brands and agencies. Everyone knew where they stood and what role they had to play in the supply chain.

Fast forward a few years and advancement in advertising technologies has significantly altered this. The display media buying model is moving towards that of the search engine model. The development of programmatic buying and trading desks had made the buying process more efficient. Programmatic buying can be done through what is known as an 'ad exchange'; a neutral ad platform where advertisers meet publishers. They offer advantages over buying inventory directly from a publisher sales team, including natural price optimisation for publishers and fewer irrelevancies for consumers.

So how does this affect a media agency? And does the development of neutral platforms where advertisers can directly connect to publishers endanger the media agency model? The answer lies in the agency's ability to innovate on outdated business models. There are various ways in which an agency might innovate to avoid extinction:

Create their own trading desk Media agencies can create their own trading desk as a department or subsidiary of the main agency. The 'Agency Trading Desk' is viewed as an internal centre of excellence for digital advertising buying on behalf of agency clients. The advantage that the agency has is that it already has a strong existing client base. However, the agency will need to up-skill in different areas by employing software engineers and algorithm specialists: roles which are not typically the reserve of media agencies.

Focus on content deals Although it is becoming possible to buy and sell more premium ad formats (such as interactive ads, dynamically targeted ads etc.) through programmatic buying, there are some packages that an algorithm can't buy, such as content deals and deep site integrations. The agency's...