​The Impact of AdTech and Why Agencies Have the Most to Lose ​


In the world of digital advertising, many of the large players are not perceived as enterprises in the eyes of traditional big businesses. As a result, the enterprise rules of survival are often not seen as relevant, however, if the advertising giants of today want to ensure they retain their market share and power tomorrow, they will have to do what enterprises in all other industries are doing – innovating and collaborating – particularly with startups.  

The $83 billion digital advertising industry has long appealed to startups and innovators looking to enter and disrupt ripe markets. The question that remains is, will the advertising giants embrace the innovation or will the disruptive startups of today replace the advertising giants of tomorrow?

The New Face of Advertising  

Today, advertising is more than a great idea and a pretty picture – it’s about leveraging technology and big data to understand the numbers behind campaigns and improve them in a way that isNew advertising automatic, programmatic, and scalable across a variety of industries. The modern advertising agencies are those that make a majority of their revenue from digital advertising campaigns, drastically changing the advertising space and making room for the emergence of AdTech.

As a result of the emergence of AdTech, real time information and programmatic ad-buying capabilities are a given and not a luxury, and in order to ensure that advertising agencies continue to thrive, the advertising giants of today need to integrate software and tools that optimize and automate campaigns.  According to eMarketer, 74% of marketers said that utilization of AdTech tools is a deciding factor when selecting an advertising agency, showing the impact AdTech has on the advertising world.  

This importance is not only seen in the preference of the marketers, but also in the way the advertising space is perceived today. Advertising giants such as WPP Group, Omnicom Group and Publicis, whose 2014 combined revenue exceeded $43.9 billion, are not perceived as threats to startups in the ad-space. That spot has been replaced by publishing platforms and ad networks such as Google and Facebook, who control 40.7% and 19.7% of the market respectively.

What time will tell is whether the large advertising agencies will embrace innovation enough to stay relevant, or if advertising agencies are a dying service to be replaced with AdTech tools.  

Where Agencies can Innovate

While it will be hard for agencies to develop proprietary ad networks that will be able to compete with AdSense, Facebook etc, there are a few things agencies can do in order to embrace innovation.

Ad agencies innovating

One thing agencies can do in an effort to innovate is identify early on the changes in the needs of brands. By recognizing the challenges that brands are expected to run into and actively seeking out innovations that address these challenges, agencies will be able to differentiate themselves from competitors as well as traditional ad-networks, bringing added value to their clients and their digital advertising capabilities. Since advertising giants still have unique insight into their clients’ pains and can see the trends in the advertising space from within, they can take that information and use it to seek out PoCs that solve a particular need or problem in advertising (of course if the agency wants to run multiple PoCs with multiple startups at once, they only need to contact prooV and set it up in minutes – but that’s a whole different topic).  

Another way for agencies to innovate is to simply bring the innovation in house – or rather, approach innovations the way any enterprise would – with the intention of acquiring the best innovation and bringing it in-house to their own ecosystem. By seeking out startups with unique ad-tech innovations and bringing them to their ecosystem, not only with the agencies be able to obtain cutting edge ad-tech solutions, but they will be able to do it in a way that gives them a unique advantage in the advertising space, continuing their growth and establishing their market dominance.

Learn from Startups

Ultimately, agencies looking to innovate should look to those who define innovation – startups themselves.  Startups are often focused on automating processes and improving efficiency, and Startupsthat is exactly what advertising agencies need to focus on. By recognizing the ways in which they can automate processes and improve the efficiency of campaigns, advertising agencies will improve resource allocation and retain relevance in the ever-dynamic market while building a unique differentiator.  

As Uri Levine, Co-Founder of Waze once said, startups must “fall in love with the problem, not the solution” – the same goes for advertising giants. Agencies need to focus on creating opportunities for their clients in the rapidly changing market rather than servicing an existing opportunity. That means creating new opportunities utilizing existing technologies in new and creative ways. 

The agencies that find a way to use the most exciting technologies, such as augmented reality, hypersegmentation, virtual reality and more, in a way that can be scaled and analyzed with ease will be the ones who will retain market share and dominance – and if the agencies won’t do it, there is no doubt that new startups on the scene will find the space and take it over themselves.    

About the author