AOL's Tim Armstrong to Media Agencies: Don't Fret About Fees, Look at Your Opportunity
AOL CEO Tim Armstrong thinks media agencies have more opportunities than they might sometimes think, so long as they embrace technology and make their case to clients.
Mr. Armstrong kicked off the second day of the 4A's Transformation conference, lauding the opportunity agencies have to partner with digital media companies, particularly his own. He began by delineating his "blue ocean" corporate strategy, borrowing from a management theory that encourages pursuit of new markets (blue oceans) over fending off competitors (red oceans).
"When I look at the agency landscape right now, I see blue ocean opportunity," he said. "The agencies are the only community that's basically sitting between digital, offline and the combination of the two."
To prove their worth, agencies need to be comfortable marrying creativity and technology, Mr. Armstrong added. Also, he argued they should focus on the value they provide to clients -- a focus, he said, that would alleviate the challenges facing agencies, such as talent and downward pressure on fees.
"So much discussion in the industry about who's getting paid for what. No one is talking about how ad agencies represent consumers," he said. "Stop talking about fees. Stop talking about all the stuff that's in the press constantly."
The executive also hinted at future offerings around programmatic TV buying. He voiced frustration with seeing spots from the same brand, Buick, on repeat during the recent NCAA basketball tournament. "Every time I see a Buick ad in the next three weeks, it's probably going to be wasted money," he said.
AOL is one of several tech and media companies dipping its toes in the promising, but still undeveloped market. In a conversation with Horizon Media CEO Bill Koenigsberg, Mr. Armstrong was asked whether personalized, automated buying would eventually come to TV. "One hundred percent," he replied.
Earlier this week, Mr. Armstrong's former employer, Google, ventured in, saying it would introduce real-time TV ads based on geography and viewing history for consumers of Google Fiber, its fiber-optic broadband service, in Kansas City.
AOL's ad-tech business has rebounded, reaching profitability on $13.5 million in earnings last quarter. But it lags behind digital powerhouses like Google, in part, Mr. Armstrong admitted, due to poor marketing. "AOL has some of the strongest capabilities in the industry," he said. "But I need to prove it to you."