How Consultancies Can Avoid Devaluing Themselves When Entering Into Programmatic Ad Buying

It's a frustrating fate that holding companies have already experienced

Holding companies have less client loyalty and more pricing pressure than before, and consultancies could end up in the same place. - Credit by Getty Images
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The cost for strategic management consulting is much higher than the cost of media buying at typical agencies. So, why then, would a management consulting firm like Accenture want to move “down-market” into programmatic ad buying to play in a lower-cost arena and potentially devalue their brand?

One possible reason might be that this move helps consultancies to execute on the strategic direction they put forth. I’ve spoken to several management consultants over the past year, and each of them is frustrated that the strategic work they do with a client is then given to an agency that doesn’t know how, is obstinate about or simply fails to execute on the strategic recommendation the marketer paid for from the consulting firm. If the consulting firm is frustrated, imagine the client’s frustration.

Another explanation is that programmatic media is much more than just buying. It’s insights, strategy and execution across targeting, optimization, channel-planning, metric selection and more. Perhaps the consultancies believe executing programmatic actually is highly strategic when done right and that it’s just not being done right often enough.

These two reasons present good rationale for the move into programmatic, however, consultancies may be repeating history if they’re not careful in how they approach this new practice. Moving down-market is a mistake the holding companies made 20 years ago as they took valuable brands such as Leo Burnett, Y&R and JWT and spun off media-only agencies Starcom, Mediaedge and Mindshare. This created media buying-only entities that lacked the mystique possessed by the original brands for their blend of art and science, creative and media. Now, 20 years later, holding companies find themselves with less client loyalty and more pricing pressure than ever. Perhaps this is why agencies are re-integrating—but it may be too late.

Holding companies find themselves with less client loyalty and more pricing pressure than ever. Perhaps this is why agencies are re-integrating—but it may be too late.

In order to avoid going down the same path as agencies, here are three considerations for consultancies that plan to enter into programmatic.

Acknowledge that media buying is more commoditized than consulting

When comparing the kinds of fees that consultancies are charging versus agencies, especially for digital media buying services, it’s clear that consulting takes the cake. Consultancies shouldn’t try to package their new media buying services under the same cost structure as their consulting practices. With all the cost-cutting going on in the industry, marketers are not going to pay more for a service that is increasingly being viewed as a commodity.

Ironically, this doesn’t mean that executing programmatic campaigns is simple. It’s not, and consultancies should restrain themselves from thinking it is. These two opposing forces—the commoditization of media and the increasing complexity to do it right—is sure to present a challenge to consultancies.

Set clear expectations for marketers

Consultancies should be mindful of how they present their new offering to marketers. Talent, for example, is one area that can’t and shouldn’t be mixed. Marketers need to have clear expectations that the talent working on media buying is not the same as those who work on the consulting services. One way to communicate this is to establish a hard line between strategic consulting and the services and execution businesses.

Marketers should be weary and cognizant of the two incompatible factors they may be seeking by switching programmatic over to a consultancy: better service for a lower fee. For example, if quality of work that goes into planning, executing and delivering insights on programmatic media requires $500 per hour, why did the brand just switch from one holding company to another with the expectation and requirement that the new agency’s fees are 10 percent less than the outgoing agency?

When someone is perfectly happy with the value equation a product delivers, they don’t usually go seeking alternatives. This is an area where agencies—especially holding companies—should be held accountable.

Be transparent and approach programmatic more strategically

There is a lot of angst toward holding companies among marketers. I’ve spoken to many over the last year who are outright dissatisfied with their holding company agency relationships. The ANA report is still reverberating, and agencies are feeling the shock from their decision to create separately branded trading entities and take undisclosed margins, fees and possibly even kickbacks to make profits.

The arrival of programmatic was the first seismic shift in how media was bought and sold since the arrival of broadcast rating points. It provided a real chance to change not just how media planning, buying and insights are charged, but also the quality of product delivered to marketers.

Consultancies have an opportunity to approach programmatic in the way it was intended. The question is: Will the consultancies be able to deliver what marketers want and need and be paid fairly, or will they be led down the holding company path of commoditization?

Jay Friedman is president and partner of Goodway Group.
Publish date: July 26, 2018 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT