A new wave of technologies disrupting the advertising industry

With technology, accountability, and information as topical problems, many organisations are re-evaluating and modernising their marketing strategies. But these strategies could be departing advertising agencies in the dust.

Proctor & Gamble Chairman and CEO David Taylor recently made headlines when he declared that P&G would continue to lower advertising agency and production prices from its budget. The procedure will reduce the number of bureaus P&G works with by 80 percent from the initial number.

This move is just part of a trend of bigger companies cutting ties with advertising agencies.

The availability of the Internet and the increase of “digital native” productions imply that traditional advertising is on the decrease; advertising jobs are decreasing through an economic growth for the first time on record. The world wide web has fragmented audiences, and online reviews frequently make customers more discerning about where and what they’re buying.

Together, they drive more than half of the global advertising spending, controlling a joint 61 percent. Up to now, no other advertiser has managed to crack even a three percent share of the international market.

The amount of ad agency jobs dropped by roughly 5,000 in 2017. Positions in media buying agencies are generally stagnant.  Media buying is changing and becoming more accessible to businesses wanting to by-pass agencies.

Along with supplying inexpensive ads, Facebook and Google have enormous amounts of consumer data. They are also two of the most famous brands in the world: Facebook has 2.2 billion monthly active users and Google procedures 1.2 trillion searches annually (that is 40,000 per second). This gives both enormous scale and reach, and agencies have not been able to catch up.

The second most significant factor in the decline of advertising agencies is that, through programmatic advertising, companies can emulate agencies in-house. Not only did the number of jobs fall, but the number of accounts wins also dropped, resulting in an overall drop in revenue.

This sort of program introduced a way to generate the advertisement buying process more efficient mechanically purchases and sells advertising space, and it currently accounts for almost 80 percent of screen spending at the U.S.

Programmatic is far from ideal – click bot fraud, and lack of control over advertising placement are two big problems which should frighten advertisers – but it works much faster than a human could. “Humatic” programs make it possible for users to automate and optimise campaigns, which provides one media buyer with the media purchasing capabilities of a complete team.

Whatever gives businesses more control over advertisements is now regarded as a benefit. Companies also own more client information, giving them the capability to fine-tune their targeting. Furthermore, clients are increasingly putting the value on customised marketing strategies, such as personalised responses on social networking. This approach has the additional advantage of providing the company data about what users believe and value.  Buying TV advertising is a simpler process than before with the likes of online ad platform Adfomo.

For many businesses, involving external companies makes it difficult to adjust digital campaigns rapidly. Bringing advertising in-house means more effective procedures concerning changing strategy along with buying and selling.

There are other factors driving businesses away from advertising agencies, also. One example is transparency problems breaking trust between companies and agencies.

Brands also can work directly with platforms to make native advertisements like blog posts. A Facebook and Google version that promises massive scale and reach for low cost has a last advantage in removing the middleman. Facebook and Google work directly with businesses to place advertisements, and so companies using these services in combination with automated eliminate the majority of the need for external advertisers.

Ultimately, traditional agencies are only having difficulty changing. They do not have the digital capacity of smaller and newer agencies and are not adapting to new advertising models. However, it’s critical for companies to accommodate these models and adjust according to new advertising strategies to survive.