Will Martech take down the media agency?

Odd Morten Sørensen argues that martech is now so sophisticated, the media agency as it stands is headed for obscurity.

In April 2019 I wrote an article where I argue whether martech represents the beginning of the end of media agencies? You might say that was a bold statement. But the statement is as bold as the reasons supporting it.

We are now in August 2020 and my prophecy, for want of a better word, looks set to become true. Why? It’s a perfect storm on three fronts:

  • Death of the third-party cookie
  • Power of first-party data
  • Democratisation of martech

The death of the third-party cookie

For years, digital marketers have been using third party cookies to track their website visitors and also when those visitors are on other websites, collecting data to improve the customer experience and to better target ads to the right audiences. Now that Google, with its global browser market share of 65 per cent, is following Safari and Mozilla and will phase out third-party cookies on its Chrome browser by 2022, the days of using third-party cookies are numbered for sure

Agencies that run digital campaigns for clients have so far heavily relied on the use of third-party cookies. They are in fact a third party themselves, as they do not own the data they run the campaigns on. Often, the first-party data of the clients ends up being transformed to third-party data when used by the agencies. For instance, when agencies use cookies placed by Facebook or Google on the client’s websites to build audiences they can target in campaigns, that data becomes third-party as neither the agencies, nor Facebook or Google it.

The power of first-party data

Although media agencies boast about having the recipe for proper targeting and how to bring their clients results using advanced algorithms, smart segments, lookalike audiences and the use of AI and Machine Learning, none of this is happening on first-party data.

In the soon-to-be digital world full of non-functioning third-party cookies, ad-blockers, tightened privacy rules and GDPR, how can agency marketers still hit the right person, with the right message, at the right time?

Yet clients own tons of first-party customer data. Data that the companies themselves have obtained permission for from their users and customers. The companies have full control over the data quality and can use it in their marketing.

Only when you are able to connect that first-party data directly with marketing technology in-house in the company is where the fun begins and the magic happens.

The democratisation of martech

More than a few would still argue that bringing the needed marketing technology in-house would be such a big obstacle for most businesses that it wouldn’t be a danger to media agencies. In the early days of digital marketing, it often required specialised expertise to leverage the marketing tools. Expertise mainly found in agencies.

But, as we already have seen over the last five to 10 years, there is an ongoing democratisation of marketing technology. More and more marketing solutions become low code or even no code, enabling marketers with low technological skills to perform complex activities like data crunching, rendering content at scale and so on.

It is becoming more and more common for bigger companies to have their own Marketing Operations team which manages the martech tools and runs the digital campaigns in-house – with no need for external media agencies.

And since soon anyone will be able to use marketing tools that are even more powerful and than those used by professional marketers today, so smaller businesses will also shift over to running martech in-house, without the use of agencies.

The question we then need to answer is:

Are media agencies able to escape their downfall?

In the offline days, agencies made money with labour-intensive activities like desktop publishing. In the online era, they moved to other labour-intensive activities such as using marketing technology to manage campaigns for their clients. So what’s next?

Marketing budget previously spent on agencies will transfer over to in-house marketing tools and the resources to manage and run them will also be in-house. When this happens at scale, the digital media agencies will face a significant challenge for sure. How can their digital marketing expertise be best used for their clients?

I firmly believe agencies can overcome this threat, but it requires a great committment to changing how they work and the services they provide. The ones that will make it are those who are able to adapt to the new reality. They will need to offer more martech consultancy to their clients, helping them set up lean, mean martech stacks. They will need to offer consultants to work at clients’ locations and so on. The demand for martech consultancy is, in my opinion, about to skyrocket.

Another option is to be insourced as a team by a brand, while catering for the GDPR restrictions. We have seen examples in the market recently. This allows the agencies to stay in their comfort zone and overcome the GDPR/first party data challenge.

Agencies will need to adapt and change to the new reality that surrounds them. To be brutal, we most likely will see a trend of “adapt or die” within the industry. Some media agencies as we know them will have no place.

Only time will tell how this will pan out, but the democratisation of martech is about to hit the media agencies like a tsunami. If I still had been working in an agency today, I would put all my time and effort into a strategy to survive.

It may not hit tomorrow or next week, but soon. To those it may concern, consider this your wake-up call.

Featured image: Shutterstock.com

Odd Morten Sørensen

Odd Morten Sørensen is a growth hacker at Norwegian energy firm, NTE. Prior to that he held the position as digital marketing specialist at BN Bank. He is also a passionate martech evangelist with over 16 years’ experience in the industry. He firmly believes that the democratisation of marketing technology is about to disrupt the media agency landscape.

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