An Open Letter to the CEO of WPP

I read your comments from Cannes in The New York Times article “Ad Leaders See Web’s Threat and Promise” [June 23]. While I appreciate the competition you perceive from online ad networks and technology providers such as Google and Microsoft — and why you’d like to acquire a position in that space — I’d like to suggest an alternative strategy.

Up until now, agencies such as yours have provided value to clients in two main ways: the strategy, design, and production of creative and the distribution of that creative through media channels.

You didn’t own the radio, TV or print channels through which ads were distributed, but their fractured structure gave you an opportunity to coordinate media buying — and earn nice fees doing so, which largely subsidized the creative.

The problem now is that companies such as Google and Microsoft offer Web services to let any marketer manage the distribution of ads — and not just for online vehicles. These ad platforms are siphoning money from your media coordination cash cow, as well as double-dipping from the channel.

But will ad networks be the center of power in marketing’s future?

Ad networks are intermediaries, matching publishers, advertisers and audiences. If there’s one thing the Internet has been, it’s the ultimate disintermediation machine. Especially when it comes to data. And the heart of any ad network is really just data.

Google may always have a gold mine in its search engine (which is more of a “publisher” itself), but will it be able to monopolize how other publishers and advertisers connect with each other? Not as likely — at least not for envious fees. As marketers and publishers get savvier, and as more competitors flood that space, more downward pressure will be exerted on intermediary prices. There are simply too few barriers to entry.

To be sure, networks connecting advertisers and publishers will always be important. But similarly, just because the underlying fiber optics of the Internet are important, that doesn’t mean the telecoms have been able to extract great economic value from them. In fact, I believe that the dominant ad network will eventually be an “open source” model, with no single corporation controlling it.

This can be very good for you.

You want ad networks — along with technologies for targeting and tracking audiences — to be standardized and commoditized. You’re not alone either: Publishers and in-house marketers want the same things, to bring order to the confusion of overlapping marketing technology vendors and to have full transparency in the costs and distribution of ads.

Instead, you want value to accrue where it arguably should have in the first place: with compelling strategy and creative — and its seamless execution.

This is where the Internet can shift the balance in your favor.

For most online marketing initiatives, you can now prove the quantitative value of great strategy and creative. Anyone can buy a keyword. But put a mediocre ad and an amateur landing page up against truly masterful creative, and the outcome will be 100 percent to 1000 percent higher conversions for the professional version.

This is clear, measurable and a source of major competitive advantage. And unlike the mechanics of placement and distribution, it can’t be boiled down into an algorithm.

You face three big challenges though:

First, you need to expand the scope of Internet marketing. Three lines of text in search engine ads is not a large enough canvas to deliver value. Although you can — and should — push the envelope with more innovative ad formats in banners and video, the real battleground is what happens after the click.

Continue Reading