The traditional media buying agency model is threatened with extinction from the kind of automated ad serving offered by the likes of Google (NSDQ: GOOG) and Microsoft (NSDQ: MSFT), warned Dave Morgan, evp, global advertising strategy at AOL (NYSE: TWX). But he hastened to assure media buyers of one thing: don’t include AOL as part of that threat.
On top of that, Morgan told attendees at a media conference held by investment bank Gridley & Co. this week that digital media buyers are relegated to a second-class status at traditional agencies compared to TV buyers. Specifically, he decried that digital media buyers tend to be paid poorly when compared with TV media buyers. (He spoke during a panel discussion covered by Adweek and in an interview with the magazine.) More after the jump.
— AOL not a threat?: Morgan attempted to couch his critique as friendly advice, though it appears to be more than a little self-serving. He insisted that the units in AOL’s Platform A ad network, which includes Advertising.com, Tacoda, Quigo and Third Screen Media, do not represent the kind of competition that some other online ad services do: “We’re not Google. We need agencies. Unfortunately, the don’t have a profitable business model now.” In particular, Morgan said AOL is not trying to do an end-run around the agencies by going to clients directly. The comments echo those of Andy Berndt, a former Ogilvy & Mather creative exec who now heads Google Creative Lab, who was similarly emphatic that his new role did not constitute a direct confrontation with traditional agencies in an interview with me. And in the case of Google Creative Lab, which is intended to serve only as Google’s internal branding unit, that might be true. Despite their respective assurances, it’s difficult to suggest that the advertising services being provided by all three – Microsoft, Google and AOL – does not present a danger to traditional media shops’ and their territory.
— Comparable pay for digital buyers: When it comes to the pay disparity between TV and digital buyers, the agencies would likely respond that if TV buyers’ compensation is higher, it’s because that’s where advertisers spend more money – despite online’s higher growth rates. Morgan’s other criticisms of the media agencies’ methods aren’t so easy to dismiss, however. He wondered why media companies decided not to challenge Microsoft’s $6 billion purchase of aQuantive, or at least adopt a similar approach to serving ads. However, he does praise WPP Group (although it’s fair to cite Publicis Groupe, too) as practically single-minded in its pursuit of digital properties and investments. As for the other big holding companies, Omnicom and Interpublic Group, which owns AOL’s media agency Initiative, have appeared less aggressive in their digital-related acquisitions in the past year.
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