Braving the new frontier of technology-based agencies

The world of advertising is changing at a rapid pace. When digital advertising was introduced, nobody thought it would attract media spend worth $210 billion. Today, digital advertising globally accounts for more spend than TV. As a result, the role of the creative and media buying agencies is changing too. Clients want media buying backed by data and are no longer satisfied with traditional media buying methods.

Given changing agency roles and structures, a new set of technology agencies are emerging. They are not agencies in the strict sense of the word. They are agency collaborators – because they help agencies and clients to undertake data-driven campaigns empowered by technology such as ad viewer, consumer data providing companies, demand side or supply side platforms, ad exchanges and other companies which enable programmatic technologies.

The changing agency role has opened the doors to an entire new generation of young entrepreneurs. Entrepreneurship is sexy and attractive and it is equally rewarding. People working in traditional media and creative agencies will find it rewarding to explore new technology-based agency models, especially if they enable them to provide real value to their clients. Furthermore, even techies can dive into the advertising world using their technology skills. However, entrepreneurship brings both risks and opportunities and sometimes soft skills are more important than technical skills when it comes to a start-up. In fact, the minimum number of soft skills entrepreneurs willing to enter the advertising industry need can be summed up as follows.

First, understand the market, your customers’ needs and whether they are willing to pay for your product. Idea and market validation is the most difficult part because this requires meeting with decision-makers, which is not easy for industry outsiders. Second, make sure you have the patience to enter a B2B market because it has a relatively lesser number of customers with deep pockets compared to a B2C market that has millions of customers but with smaller purchasing power. A B2B deal may require more time to mature compared to a B2C one. Perseverance and hard work is the only way forward. Third, if you are a non-techie, make sure you identify the right technology team and the right technical co-founder to build products from a MVP (Minimum Viable Product) perspective. Fourth, learn to know what to do to get things going. Fifth, understand how to build relationships. And sixth, always follow the rule of customer-obsessed product development in order to build a perfect product.

Entrepreneurship is about solving problems or addressing a business need. Here are some business problems which young entrepreneurs can try to solve in the advertising world.

1 Providing data and insights

Nobody should forget John Wanamaker’s famous words: “Half the money I spend on advertising is wasted but I do not know which half.” Measuring advertising impact and ROI has always been a problem in the advertising industry and this can now be solved by data, which is dubbed the fourth industrial revolution. More data simply means better measurement and better measurement means better management of your advertising spend. Similarly, the new kids on the block are AI, machine learning and Blockchain, and they require data science based skills. Given the way companies are becoming data centric, data provision and insights (predictive and prescriptive analytics in particular) are the hottest things tech entrepreneurs can do in Pakistan right now. Data obtained from AI can be used in trade marketing to provide ROI for trade marketing spend and retail tracking. Similarly, it can be used to provide retail intelligence for OOH assets measurement, measuring mall media ROI, adding new elements in the marketing mix, predicting sales and even predicting the likely sales outcome of an advertising campaign. Anonymous data (obtained with user consent) is sold to multiple partners, including first-party data users, third-party data integrators and market research companies.

Location advertising is big business globally; it is estimated to become a $72 billion industry by 2021. Placed, a company which provides location-based offline attribution services, was recently bought by Snapchat for $100 million.

2 Creating digital programmatic companies

In Pakistan, digital spending is at six percent of the total ad spend. However, it was also the fastest growing medium registering a 25% growth in 2017. In the next five to 10 years, this figure will account for 10 to 12% of total ad spend with programmatic being the ultimate winner. The opportunity is ripe to start a digital programmatic company acting as a DSP (demand side platform) for buyers. Even in the global market, there are important programmatic players apart from Google and Facebook. App Nexus (the third biggest DSP in the US) was recently bought by AT&T for $1.6 billion. The Indian start-up Inmobi is a billion-dollar company because it had first-mover advantage as a SSP (Supply Side Platform). Making a successful bid is not easy, especially in today’s competitive environment when clients want quality on a budget, but it could be a big opportunity for anyone who wants the first-mover advantage in a potentially Rs 10 to 12 billion industry in the next five to seven years.

3 Solving offline attribution problems and location-based advertising

Linking online ad serving with offline purchase is a problem for retailers whose bulk of the business exists offline. Although Google and Facebook have started providing such services in North America, they work in silos without integration, whereas advertisers want a holistic view of their digital media efforts. In Pakistan, where the majority of the business is still offline, finding a way to demonstrate the link between OOH assets, digital ads and in-store visits would be a great service to the industry. Similarly, location data can be used to serve digital ads after a person has been exposed to an OOH ad to enhance brand recall or to serve hyper location-based ads. It can also be used to serve ads by predicting a next visit and displaying the most relevant ad at the most relevant time. Location advertising is big business globally; it is estimated to become a $72 billion industry by 2021. Placed, a company which provides location-based offline attribution services, was recently bought by Snapchat for $100 million.

4 Acquiring technical skills for the data-driven agency

The skills required to work in data-driven agencies are primarily technical or computer sciences based. The skill set will move from the traditional creative thinker to the analytical brain, where the thought process is based on computation and mathematical algorithms. Thanks to MOOC (Massive Online Open Courses) platforms such as Coursera, Edx and Udacity, anyone interested in coding can learn these skills in a year or two. Similarly, people working in data provision companies must have knowledge of deep learning, which is the basis of AI and AI-based tools such as object recognition algorithms, self-driving cars, etc. Advertising data scientists should also have a strong grip on computing languages such as Java and Python. Understanding Game theory is essential to build real-time bidding engines. For creative dashboard design, designers must have skills in how to merge and visualise data in Tableau, Microsoft Power BI, Sisense and how to use CSS or HTML along with Adobe and Photoshop. Similarly, for building location-based offline attribution tools or location-based advertising services, understanding GPS, Bluetooth and Wi-Fi is imperative as is a good understanding of LAN (Local Area Networks). The technical team should be able to think creatively and develop solutions according to the set requirements. Most importantly, they should be able to think in terms of user story – what customers need and what they want.

To conclude, agencies of the future will be data-driven and will require the skills of a computer scientist, combined with the abilities of a creative dreamer and the rigour of a highly-analytical media planner.

Tayyab Tariq is CEO, Advertelligent. tayyab.tariq@advertelligent.com