The Agency R&D Problem

Russ FradinCEO, Dynamic Signal@rfradin

Background

In the Beginning: Agencies & Advertisers

A match made in heaven

Agencies had REAL expertise

Advertisers valued it

Profitable enough business to fund investment in great people, training and infrastructure

… and man, what a cool job.

Then it all changed

Agencies & Advertisers

Fees cut across the board

15% -> 1%

Can still hire junior folks

Can still keep small number of senior people

Bare in the middle

Can’t compete for technical talent

Can’t build any unique / defensible IP

Bad Timing

Gigantic & Growing Fragmentation Issue…

Clear Internet will matter back in 1995Agencies not staffed to get ahead of the media

Extremely complicated to plan & buyMore than 750M English language websites today

Networks, Attribution, Data ownership, Creative optimization

Expertise that traditionally lived in agencies moved to publishers / ad networks

Still need:People

Expertise

Technology

Consumers trust these ‘new’ media

82%20% 61%22% 60%38% 59%

Source: comScore Marketing Solutions Survey

Entrepreneurs step inHire the best agency people

‘Thanks for all the free training!’

Provide media planning / buying servicesTrack / measure / optimize

All sold as an IOCosts of these services well beyond 15%

Marketers now paying much more than 15% for planning /

buying

0% 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Media Agency Cut

Agency Discount

Rich Media / Video Fees

Buy Side Ad Server

Content / Widget Distribu-tion

3rd Party Validation

Ad Exchange

Sales Agent / Rep Firm

Ad Network

Network Ad Platform Provider

Site Groups

Site Side Ad Server

Member Site

* Yes, obviously the worst case scenario

To make matters even worse…

Who owns the data?

Who really is delivering the value for the clients?

In summaryFor my agency friends to share with their clients…

Is there a future?Trading desks?

Real opportunity when done correctlyManage the data

Actual buy media directly – Can’t be just another ad network buy

Buying moving in-house?Maybe this is the future, just go work for the marketers!

Social Media?Real opportunity for both PR and Ad Agencies here