A manual for the brand-agency-vendor relationship

The fall of the agency

Five years ago, I found myself as an executive of an ad serving business in Europe, competing against the likes of Atlas and DoubleClick for mostly agency clients. The pitch was about delivery speed, reporting functionality, and how quickly one could traffic 30 placements with 20 creatives after a martini lunch. The agencies spoke our language and the brands did not, allowing the agencies to not only make a handsome profit from our technology (often $0.05 to $0.50 CPM above cost), but also to own the client's data and the pixels on their site, making it hard for the client to move their account in the future.

Most clients failed to understand why that could become a problem, and most agencies failed to see how quickly it would change. By my estimation, ad serving contracts have gone from being 90 percent held by agencies just five years ago to perhaps only 30 to 40 percent today.

The enablers of this change are the demystification of what ad serving is and the influx of cheap labor that understands how to use it. Ask most CMOs and they can tell you their ad server gives them independent reporting, view-thru measurement, and campaign management. And chances are they've found a low(er)-cost resource to manage the entire process for them.

More importantly, ask the smart CMOs and they will tell you that taking control of their ad serving gives them the power to switch agencies if and when they want to without losing historical data or needing to re-pixel their website. To this day, Dart does not have a feature for porting a client out of one agency's account into another's, and probably with good reason.

Meanwhile, ad serving isn't the only aspect of digital marketing that CMOs are looking to bring in house. Brands are now also well positioned to negotiate the best rates. While some agencies still hold guaranteed access to certain inventory sources at preferred rates, the percentage of media that is being bought through auction tools is rising sharply, and where an auction exists, so does "equal" access (and therefore CPMs).

The dirty truth about Facebook commerce

What is social commerce?

Social commerce can be thought of simply as the intersection between social media and e-commerce. Think of it as how you can use social media to drive consumer interactions and engagement as part of the process of selling.

Techniques span everything from simply having a Facebook page that drives traffic to your website, social plugins (such as the Facebook "like" buttons and social logins), user-contributed reviews on your e-commerce site, Facebook-specific promotions, and full-blown Facebook stores.

How brands can use social commerce

There's a lot of experimentation going on as brand marketers explore the new frontiers of social commerce. At times, it feels like the Wild West -- a frantic race to unlock hidden gold buried somewhere in Facebook. Experimentation is good -- after all, if we can find new ways to leverage the Facebook powerhouse to do more than drive traffic, then there's definitely gold to be discovered.

With all this frantic activity, it's worth looking again at how customers buy, why they don't, and the role that social media plays in loyalty and driving conversions. Loyalty is important because it drives profitability -- repeat customers are many times more profitable than new ones. And loyalty principles are inherent to social media success; even if loyalty is a slightly old-fashioned term, there are many lessons that can be applied to social media.

A recent PwC research paper sheds new light on what we already know: When consumers were asked to rank factors that influence purchase decisions, they were driven by price and their experience with a brand over all else. PwC notes that long-term relationships were formed by friendly, helpful service and the people behind it. This can be thought of simply as the "brand experience." Loyalty programs rank last.

The "brand experience" is the user's perception of the brand, while interacting across channels and spanning experiences that define the relationship, especially when things go wrong.

While this research confirms what we already suspected, it does shed new light on how we should view social commerce, as many social programs are focused on building the "social channel," rather than using social to serve customers better.

Many brands have social media teams focused on decoding the social media formula. These separate teams are reminiscent of the early days of e-commerce, when many companies set up a group focused on how to make e-commerce work. This resulted in stovepipes, in which e-commerce was separated from the rest of the business, and then needed to be re-integrated as it became clear that e-commerce was not a business in its own right, but a channel that needed to be integrated with all other channels. In time, I suspect that we will view social media in the same way, as a communication and engagement platform that needs to be integral to the rest of the business, rather than standalone. Social media will be key in shaping the brand experience, but will do so in conjunction with all the other channels and not as a channel in its own right.

I'm sure that some will take issue with this -- if you're selling a service that enables brands to offer Facebook storefronts (f-commerce), then this is heresy. But my perspective is different. I look at what the data tell us about how, why, and where customers want to buy.

In the light of this, let's consider five home truths about social commerce.