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Tech-Empowered Agencies: The Best of Both Worlds for Consistent Data Segment Valuation and ROI

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In a recent post in iMedia Connection, Michael Katz of interCLICK described the challenges ad networks face in delivering client ROI at scale. One of his main points dealt with the difficulty of consistently valuing and pricing consumer data sets.

From his perspective, of course, this is a vexing issue: an ad network has to consider what data to license and how much it's worth, and it's difficult to pin down the value of data in any consistent manner across a spectrum of clients. An ad network has to make decisions on data valuation based on the broader needs of many clients, and doesn't have the luxury of managing client by client, making individual decisions based on a client's needs.

But this is exactly what an agency is set up to do. If you're an agency account team lead managing a single client, you're set up to aggressively purchase inventory solely for that particular client; you have clarity of purpose and an organization set to do so in an effective manner. On the buy side it's very easy to know what data is worth for a particular client. You find out very quickly with a trial run. You know exactly what kind of lift it has to give you to justify its price. It's a straightforward equation. This point goes to the heart of why agencies are looking to build demand-side networks vs. relying on sell-side networks to fulfill clients' needs.

At some level, ad nets have usurped the role of the agency in recent years. If you think about it, the role of the agency has always been to aggregate inventory (and eyeballs) on behalf of clients. We call this a media plan. But because networks have had a technology advantage, the responsibility for aggregating medium and long tail inventory has fallen to them. In addition, the technology advantage has allowed the optimization responsibility to migrate to them as well. But as agencies reach out to providers of enabling technology, they can migrate these functions back where they've traditionally lived and really belong.

Today, most agencies lack the technology to manage the data and act upon it in order to achieve their client goals. That's why all the major holding companies have started separate corporate entities to take responsibility for acquiring technology and data, realizing they don't have the core competency on the technology side to build it themselves. While many mid-level agencies may be priced out of the acquisition option, they can go the partner or vendor route.

Ultimately, this solution will work much better for clients because it puts the responsibility for aggregating the right audience and inventory in the hands of an agency, where that role has always existed. When empowered with the right technology and toolset, they can do this job more effectively than an ad net. For the ad nets, there is no silver bullet, no one data standard that's right for all clients. Their struggle is having to stitch together a whole bunch of different data sets, not knowing what it's worth or how much incremental revenue it will drive. As they do deals, they know they'll achieve a certain level of performance and revenue, but in the aggregate, they don't know the marginal benefit of adding data.

But a tech-empowered agency with a targeted client focus can say, "If I pay X dollars for this data set to provide Y lift, I will achieve Z ROI" – it's a very clean formula. An ad net trying to figure out data standards and valuation across 500 or even 25 clients is another animal altogether. The data sets they've aggregated can't be applied generally, so they need to figure out what type of potential lift it can give each client on average. It becomes difficult to figure out with any confidence what to pay for the data on a net basis.

So Michael's observation is spot-on: the issue for ad nets is not one of scale – they have that angle sewn up – but of execution and delivery of consistent ROI. The real win-win is a next-gen agency that has both the tech and the people resources to focus on the success of each individual client by only buying data that consistently delivers highly granular audience segments.


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