5 Ad-Tech Insights Learned From Dmexco and the Ad Trading Summit

Why mar tech won’t kill agencies and the leveling the walled gardens were just two topics discussed

At this year's Dmexco conference, a few industry leaders shared their ad-tech insights and dispelled some myths.
DMEXCO: ©Koelnmesse

Media executives gathered last week at the Dmexco exhibition in Cologne, Germany, and Ad Trading Summit (ATS) London for thought leaders’ observations on the notoriously esoteric (yet increasingly ubiquitous) sub-genre of the industry. Here the most tech-savvy of the business on both sides of the Atlantic gather to trade war stories and insights. Below are key lessons from industry grandees, who include Pivotal Research’s senior analyst Brian Wieser, Iponweb’s founder and CEO Dr. Boris Mouzykantskii, DCA’s CEO Jay MacDonald and MediaLink’s CEO Michael Kassan.

The death of the agency model has been greatly exaggerated

The emergence of ad tech and mar tech are supposedly the driving forces behind the “in-housing movement,” thus disrupting the industry’s major agency holding groups. However, Wieser said the rise of such technologies does not indicate the decline of agencies, as mar tech only represents the software layer and agencies are the service layer.

“Do services go away? No,” he told ATS attendees. “Can marketers in-source some software functions? Yes, that’s possible. But I adhere to the maxim that agencies are cockroaches, not dinosaurs, and will outlast us all. They find ways to evolve.”

Michael Kassan
DMEXCO: ©Koelnmesse

Although the impact of the 2016 ANA transparency report, which probed rebates between holding groups and their suppliers, has been costly. This was demonstrated by the majority of publicly traded holding groups posting financial results indicating that they’ve experienced difficult times since the report’s publication.

Per Wieser, this is because many marketers are beginning to realize the markup their agencies have charged for services such as programmatic media buying—aka “the ad-tech tax”—only for such fees to then move back-and-forth between vendor and agency.

However, the existential threat the ANA report appeared to pose in 2016 has diminished somewhat, albeit a lot of marketers are now engaging in “enhanced contract scrutiny.”

Who’s in-market for ad tech, and what are they buying

As the ad-tech landscape experiences another phase of merger and acquisition activity, many forecast that private equity and traditional management consultancies will be particularly acquisitive.

MacDonald noted the interest of private equity groups, such as Vector Capital and Vista Equity Partners. He pointed to the $122 million purchase of Rocket Fuel, once valued at $2 billion, by Vector Capital-owned Sizmek as typical of the maneuverings of private equity.

Such outfits will seek to “add on another couple of pieces,” which Sizmek did through several purchases to build a “full-stack” that it claims can rival Google in terms of utility.

“Everybody is talking about and trying to achieve a ‘full-stack’ so if you [are trying to sell your company], find a gap in their stack. And if you can make it better, then you are in a great position [to negotiate a sale],” concluded MacDonald.

Management consultancies are making their presence known

Kassan noted the enhanced presence of management consultancies on the Dmexco exhibition floor as a harbinger of things to come.

“Looking around, I’ve never seen as large an Accenture Interactive sign, and I’ve been coming here a long time,” he told Adweek.

Echoing this from the ATS stage, MacDonald noted that “the consultants have entered the advertising world” and are “frightening” a lot of players due to their sphere of influence beyond clients’ marketing departments.

Such outfits are likely to acquire assets to further their competitive edge in the near future. “Not only on the agency/service side but on the technology side as well,” he added.

Consultants have traditionally “been hired by the CEO and the board of directors” as opposed to a CMO, which can mean their input is deemed cost-saving and not just marketing spend. Therefore, they enter the media business with “a very high-end level of trust.”

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