By Mike Shields
Advertisers like Booking.com are relying less on agencies, and that should scare the ad business.
A few years ago, Booking.com, a hotel e-commerce site owned by Priceline, worked closely with a media-buying agency to figure out where to allocate its ad budgets.
“We’d have meetings where we’d sit down and say, ‘We should put this much on YouTube, this much on other sites,’ et cetera,” Pepijn Rijvers, Booking.com’s chief marketing officer, told Business Insider. “And then three months later we’d ask, ‘How’d we do?’”
But Booking.com is about to cut out that middleman, and it could have big implications for the advertising industry.
This week, thousands of top executives from the media, advertising, and marketing industries will touch down in France for the annual Cannes ad festival. There, these bigwigs will receive awards and look to ink major ad deals. Yet hovering over the proceedings are questions about the future of the classic ad-agency business.
In recent months, Booking.com has hired data scientists and researchers and other digital-media-buying experts. By the end of the year, all Booking.com’s digital-media buying will be done in-house.
According to Rijvers’ there are two reasons for the change: speed and data. And the more outside companies involved, the more that structure gets in the way of adjusting digital ad campaigns on the fly, which ultimately costs the company money.
“I would not like to have meetings with long decks of data,” Rijvers said, who recalled trying to set up “meetings with 30 people at agencies that take a week and a half to set up.”
“We have way more data than the media agency has. I’d make a very strong case that anything that generates data, you need to own as a business. You cannot have anyone else be the expert.”
Booking.com is representative of a new wave of marketers. These are brands born with the internet, and they don’t have decades of history running massive national television and magazine campaigns shepherded by traditional ad agencies. They don’t rely on selling their goods at Walmart or Walgreens or the local car dealer. Instead, they have direct relationships with customers and live and die on data.
That means they have a very different take on advertising than traditional marketers like Procter & Gamble or General Motors, and that should scare the ad agency world.
The pressure is mounting
The ad industry loves its clichés. “Content is king.” “Everyone’s scared of Google and Facebook.” “I’m a thought leader.” And these days, everyone loves to repeat the line “The agencies are so screwed.”
People love to say that ad agencies are screwed.
Though they usually use a different word at the end of that sentence.
There’s little doubt that traditional agencies — the companies that write and produce those brilliant Super Bowl ads and buy the media space to showcase their work — are under fire from several fronts.
- More marketers such as Booking.com are taking their data-driven, transaction-oriented ad buying (e.g., programmatic ads) in-house.
- Some brands, like Chobani and Pepsi, are occasionally doing the same with their creative, or are outsourcing the making of their ads to smaller upstarts.
- Consulting giants like Accenture and Deloitte are investing in the ad world.
- Facebook and Google are raking in a disproportionate amount of new ad spending, and both are building