Are Clients Sleepwalking Into Tech Monopolies?

Six Ways to Help Protect Your Ad-Tech

By Published on .

Hardly a day goes by without news of another acquisition, merger or strategic partnership among major ad-tech firms and agency holding companies. It is symptomatic of a market capitalizing on growth and, at the same time, protecting itself from the uncertainty of change. "Self-preservation" is how Sir Martin Sorrell described WPP's recent investments in Vice, AppNexus and Refinery29.

Despite the rise of the chief information officer and chief technology officer positions, particularly in the U.S., many clients are not paying sufficient attention to the strategic importance of technology in marketing communications. Instead they abdicate responsibility to the powerful tech giants and holding companies. And in so doing, they unknowingly empower "partners" who don't always have their best interests at heart and from whom they will be unable to extricate themselves in the future. They are sleepwalking into the fold of wolves in sheep's clothing. Regulators have recognized this development and are acting, but they will take time, something clients don't have in this fast-moving ecosystem.

The explosion in ad-tech provides the market with unlimited choice and innovation, but in the search for the elusive single-customer view, effective workflows and cost efficiencies, choice has been replaced with the need for simplicity. In this arms race, led by the Google and Facebook duopoly, virtual walled gardens are forming, and within them, new agendas and rules are being set that create the currency around data accessibility, customer engagement, measurement, trading models and, ultimately, the price of media.

The agency holding groups are culpable in making this tech duopoly worse; when fees are stretched, it's easier to do business with two companies -- a couple of bullies in the playground are much easier to deal with than many uncontrollable kids -- while at the same time pushing clients into their acquired or developed solutions, which are not always suitable, let alone best in class or sufficiently transparent.
Water flows downhill for a reason, and a centralized stack is more appealing than potentially more complex but potent tech arrangements requiring specialist capabilities. But flexibility, agility and interoperability are essential qualities, and simplicity for simplicity's sake can be the enemy of competitive advantage. For clients seeking fit-for-purpose solutions, agnosticism should be prioritized and walled gardens of all kinds should be challenged.

In this context, "challenged" means clients taking more ownership of the decision-making process surrounding the technologies required to power their digital advertising, and taking seriously the potential implications of a media ecosystem determined by the agendas of a select few. For clients looking to exploit the diversity of the ad-tech market for competitive advantage, they should look to both customized solutions as well as standardized ones, particularly in more nascent areas such as data management, cross-device tracking and attribution, where there is much development going on.

In order to take control of their ad-tech, clients should:

  • 1. SPECIFY THEIR REQUIREMENTS carefully and ensure they are not investing in capabilities they don't need or can't handle.
  • 2. DEFINE THE RELATIONSHIP they want with their ad-tech provider, especially around data management, ownership, control and third-party access.
  • 3. INTERROGATE any commercial or strategic relationships that exist between the agency partner and the ad-tech partner.
  • 4. EVALUATE whether their agency partners have the capabilities to execute the chosen ad-tech solution.
  • 5. INSIST ON a thorough RFP process to ensure the solution is underpinned by the necessary features, benefits and compatibilities.
  • 6. CONTINUALLY REVIEW the stack with a regular testing program to ensure it remains a fit-for-purpose solution.

It is noteworthy that there has been so much focus on the transparency of digital-trading practices, which is an important topic, yet so little discussion around the strategic question of ad-tech development and adoption. If clients don't engage, then they only have themselves to blame if they find themselves locked into inappropriate solutions and locked out of their all-important data. Caveat emptor!

Nevertheless, the industry generally needs a more robust and, dare we say it, transparent debate around this topic of monopolistic technology practices, so that clients can be more confident the solutions they are recommended and ultimately deploy are rooted in their interests rather than driven by others' commercial and strategic motivations. This way, whether they choose a more consolidated or a more flexible model, they will do so knowingly, on their terms and with their rules. This issue cannot just be left to the regulators.

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