Ad agencies and CDP: The future of marketing

During the onslaught of the COVID-19 pandemic, brands of all sizes rushed to meet what would become the first-ever, digital-first online economy. Speed of digital transformation was the name of the game, and the key to brand survival amid vastly new purchasing and engagement behaviors of consumers. Brands who were not prepared to take a digital-first mindset or who did not innovate fast enough were forced to close their doors. At that time, we saw with our own eyes a fundamental change in not only how but where we bought goods and services.

What was the impact of this change?

Brands now have to engage with consumers in radically new ways to create awareness, develop consideration, and deliver conversions as effectively than they did before the world went digital-first. In turn, this need on the brand side delivers a new opportunity and model to ad agencies. There’s a clear gap and new challenge to help find ways to help brands better interact online with customers, purchase media, and deliver strategic advice to drive bottom line results. And it starts with customer data.

The state of data-centricity in advertising

In advertising, the buying of media, planning, execution and understanding a brand’s audience is no longer simply left to the creativity of the advertising agency.

The future of reaching customers now sits firmly in the science, analytics and data-driven results which are available in real-time across all channels for brands. The ability to automate decisioning based on that data for real-time interactions and feedback are the key to unlocking low-cost precision marketing. At one time this was what was believed to be the promise and potential of digital. Today, that promise has come true.

How to use data in advertising? Start with a CDP.

The vehicle to deliver on the promise of reaching the full potential of digital-first strategies is using your brand’s own data. The keys to better personalization, higher engagement, higher CLV, and higher bottom line revenue for the enterprise lies in that data. Forward-thinking brands who recognize this are working hard to quickly capture, transform, and activate their data to achieve just that.

For many brands, this means investing in a customer data platform, so it should come as no surprise that the Customer Data Platform (CDP) market is expected to surpass a massive $15.3B by 2026. And what’s even more promising is that the CDP market also has an expected Compound Annual Growth Rate (CAGR) of 34.6%. This tells us there’s no end to CDP growth in sight. We’re also seeing that early adopters of CDP are confident that first party data works to better service customers and drive positive business outcomes to a state of global adoption.

What does (and should) the future of advertising look like?

Clearly, there’s huge opportunity up for grabs, but there’s also a big challenge.

In-house, agency support, or both?

Brands are moving to adopt a new customer data technology that will transform their business for the better, but often lack the expertise and resources of the agencies they traditionally have leaned on to carry out these projects. Or, on the other hand, the agencies they do work with are experts in traditional third-party data-driven approaches aren’t well-equipped in how to work with a CDP and first-party data for advertising.

Because of this, lots of brands have been hiring experts to scale out their CDP programs, do strategy planning, and execute campaigns as quickly as possible in order to firstly, beat their competition to market and secondly (but not less importantly) capture the results.

Brands have traditionally leaned on the ad agency for strategic, tactical and planning execution of ad campaigns. These roles which they are now hiring for within their organizations were traditionally reserved for the agency.

• So how can brands get the most out of their resources and budget without compromising on expertise?
• Is it in-house experts, agencies, their CDP, or some combination of them all?

Ad agencies and CDP: Unlocking synergy

It’s important to recognize that there is a gap in the market, which I believe that agencies themselves have an opportunity to fill. As a Key Account Executive with Lytics, I have worked with hundreds of brands on CDP projects, and know it is very rare for an agency to be involved in the evaluation of a CDP technology or the administration of the selection. How can they address this?

• Ad agencies need to join the CDP revolution
• Ad agencies need to be more hands on with data
• Ad agencies need to choose partners who keep PII data out of the platform
• Ad agencies need to partner with brands to run the CDP
• Ad agencies need to deliver strategic support for CDP projects

Leading agencies have identified the gap and started to build CDP practices to help brands get to value faster. They’re understanding the CDP landscape and how customer data can help deliver smarter, better advertising. This means that even if you have invested in an in-house team member to manage these projects, tacking on agency support would simply mean bringing in on-demand expertise to relieve pressure off the brands — especially as the organization grows and there is more need to hire, train and scale more internal resources for these projects.

However, in most scenarios, the brand is leading the way — without agency support. Because lots of agencies seem to be unclear on who will manage the CDP and what the current state of PII is within the CDP as a practice, they may come off as unprepared to handle these projects as a valuable partner. However, ad agencies that want to remain strategic and less hands-on to deliver thought leadership need to jump in and get acquainted with the CDP landscape, threats, and opportunities so they can align with brands and leverage CDP technology for smarter, more relevant, and more effective advertising than ever.