The end of traditional agencies and the upcoming changes in mobile advertising


 

 

 

Let’s assume you are a successful local businessman. You make small improvements to everyday tasks of normal people, producing kitchen utensils. If you were really good, you could make some money. People would start to talk about your service and things eventually would grow. But let’s say that you want to expand more. That you want to make your business a national – or even an international one. 20 years ago it was almost impossible. How could a small business achieve audiences and markets far away from their borders? Theoretically, it was possible by hiring advertising agencies and export consulting professionals, but only very large companies had the money to do it.

 

So you should give up, alright? 20 years ago it might be true. Not anymore.

For more than 100 years, advertisement changed radically, but one thing persisted: It was hard to measure campaigns, their reach and how they were influencing customers. Of course, you could try to measure the output, sales success, etc. But to know how many customers were interested in your product was a very difficult issue, mainly because – back at the time – you couldn’t measure exactly how many people had seen an advertisement.

The first banner ad came out in 1994, at the “Hotwired” website, now called “Wired Magazine”. Wired decided that it was a good way to make their website content free while enabling the company to have a steady source of income. After this, the market started to grow, initially slowly, but soon the adoption of self-service dashboards and credit card billing made everything huge.

One of the keywords in the digital advertising era is empowerment. Digital brought equilibrium to the whole advertising market. How could a small business owner advertise its product or service worldwide and to many complex and different audiences before the age of digital advertising? It was impossible. Now a small jelly manufacturer in Italy can earn market share in China and in Brazil without having to start a multi-million dollar international ad campaign – or even talk to anyone in those places.

Another often overlooked aspect of digital advertising is that each dollar can be tracked. When you use trusted platforms and suppliers you can see exactly where your budget is being spent. This is also another revolution because the impact on traditional agencies is huge. While traditional agencies normally have very expensive quotas – which only huge companies can buy –  digital advertising agencies can even be self-service. Which means that you upload the ad and they sell you the traffic, based on a budget. If the campaign is performing well, your budget won’t last and you can invest more into the same campaign. And if it is not performing well, you can quickly turn it off and invest in better campaigns.

Many traditional agencies tried to invest in digital advertising. Overall they did not succeed to dominate the market as before. This happened due to two key factors: The first one is that agencies used to have a symbiotic relationship with media outlets. Radio, TV, Magazines. All of them worked closely with advertising agencies to determine budgets and divide the market. In some countries – such as Brazil – only a few agencies controlled more than 90% of the total advertising budget of the country’s biggest companies.

The second one is that after the digital bubble of the 2000s, agencies lacked the timing and the will to join forces with the Silicon Valley. While Google, Yahoo, Altavista, and others were growing fast, they developed advertising models that did not need traditional agencies. You could be your own campaign manager. Or, if you were a big company, you could have your own campaign manager, but with data and transparency, that traditional agencies just couldn’t provide. They were strapped to a business model that was expensive, hard to track and very secretive. Just the opposite of the revolution that was happening in the Silicon Valley and that swept the whole world.

At the end of the day, digital advertising is also changing rapidly. Ad viewability is a real issue, fraud is another real issue. Mobile marketing is quickly overtaking non-mobile marketing in budgets and importance. And we will shortly see another revolution, probably with AR and VR. We already have the technology to serve reality-merged ads with geolocation, and some even already do it in an experimental way – such as Waze – but we are capable of going well beyond that – we can not only track and analyze all advertising data but also think of new and breakthrough formats to engage customers and audiences worldwide. We will see this revolution soon. Will it also overtake “traditional” digital advertising? Only time will tell.

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