As someone who has been responsible for a bit north of $1B in profitable, attributable digital ad spend in my career, I can say with conviction that the problem comes down to analytics and misalignment of incentives, NOT the performance of digital media channels.
1)Agencies charge on a % of total media spend, and are thus incentivized to spend more.
2)Advertisers net benefit from expected lifetime value and revenue generation, but are often reticent to share this type of information to an agency.
Agencies are commonly unable to get access to business-level health metrics such as churn, RPU, LTV, and thus optimize to top of the funnel metrics that often do not correlate with attributable lift but do correlate with showing the value of increased levels of spend. Such metrics include click-through rate, viewability, brand awareness and safety, fraud mitigation, etc.
This, combined with the improved ease of use for major digital platforms (I know quite a few startup CEOs who manage all of their PPC/Facebook ad spend), is why the agency model has started to fail. And that is a good thing.
The less intermediaries that touch an advertising campaign, the less likely it is that we as consumers will see an irrelevant ad.
1)Agencies charge on a % of total media spend, and are thus incentivized to spend more.
2)Advertisers net benefit from expected lifetime value and revenue generation, but are often reticent to share this type of information to an agency.
Agencies are commonly unable to get access to business-level health metrics such as churn, RPU, LTV, and thus optimize to top of the funnel metrics that often do not correlate with attributable lift but do correlate with showing the value of increased levels of spend. Such metrics include click-through rate, viewability, brand awareness and safety, fraud mitigation, etc.
This, combined with the improved ease of use for major digital platforms (I know quite a few startup CEOs who manage all of their PPC/Facebook ad spend), is why the agency model has started to fail. And that is a good thing.
The less intermediaries that touch an advertising campaign, the less likely it is that we as consumers will see an irrelevant ad.