Leveling the playing field: 3 ways for independent agencies to compete


By Camille Roberts, Senior Marketing Director

One of the fundamental challenges facing independent agencies is managing scale economies. On one hand, small to medium creative departments flourish under founders with strong creative backgrounds, resulting in stunning executions. On the other hand, small is definitely a hindrance when it comes to buying media; large agency holding companies can exact pricing concessions to pass on to their clients, while using volume to support leaner margins. Or can they?

At DataXu, we’ve seen small- to mid-sized agencies use media buying technology to differentiate themselves with strategic insights for their clients, while simultaneously reducing their costs and upholding their margins.

Some of the most common strategies used by these agencies are:

#1: Use programmatic buying to level the playing field
With programmatic buying, everyone has the same buying power regardless of volume. Exchanges are designed to sell each impression at the true, auction-based market price. This is a case in which size really doesn’t matter; what counts is your bidding strategy.

#2: Shorten the value chain to maintain your margins
Ad networks, portals, trading desks and affiliates are tried and true ways to buy media, but the endless juggling of vendors is a sure way to drive up overhead. What’s more, the lack of transparency means you don’t know how much of your budget ends up as working media and data spend. We’ve seen independent agencies save hundreds of thousands of dollars per year – for exactly the same impressions – simply by adopting a disintermediation strategy. Passing along part of the savings is a win-win situation for both agency and client: A higher percentage of the client’s media budget goes to working media, and the agency enjoys a healthy margin.

#3: Give your clients something extra
What do consumers do when they’re not on your clients’ websites? Are clicks the best indicator of success? How does advertising work across channels to create a customer-centric brand experience? Every impression served to your clients’ audience generates a stream of data, addressing the context, the consumer and the creative. When you bring your media buying in-house, that data becomes available to both you and your clients at no incremental cost, simply as a byproduct of your advertising. With the right analytics tools, you can use that data to:

  • Optimize campaigns across all channels
  • Find new pockets of demand
  • Identify and eliminate media inefficiencies
  • Match creatives to consumer profiles to increase conversions
  • Go beyond the click and optimize the entire buying journey

Implementing the first two of these tactics minimizes the scale economies that large agencies enjoy, while the third enables independent agencies to provide a service that’s well beyond client expectations – and at no incremental cost to the agency. Net result: agencies already known for segment expertise, great creative and client service become strategic partners to their clients as well.