The Rundown: Ad agency holding companies set their sights on DTC
Digitally native brands are the next hot thing, so agencies are jumping on board. The latest is Dentsu Aegis Network, which on Wednesday announced that it had acquired MuteSix, one of the darling of the direct-to-consumer brand boom. MuteSix will become part of iProspect, Dentsu Aegis’ performance agency.
It makes sense that agencies, never ones to be too early to a trend, are cottoning on. Direct-to-consumer brands are mostly shy of outsourcing their creative chops to others, but do still rely on agency partners. Responding to this, there was a veritable boom in specialized DTC allies last year, from Gin Lane (since pivoted into a brand of its own) to PR shop Derris, to other companies like YellowHammer and Azione. DTCs work differently, so these agencies made it a point to pitch their capabilities to these brands, with closer relationships and a supposed better understanding of the nuances of the business. (The DTC way of doing things also has made other marketers take notice: Digiday Research last week surveyed major brand marketers and found that none of them rely 100% on agencies any more, with 56% running “most or all” of their marketing in-house.)
It also spurred new financial arrangements — e-commerce founders often don’t really believe that agency and brand interests really are aligned, so they prefer to do things themselves. In response, agencies are becoming OK with with non-FTE-based payment arrangements that are more equity based, or discounted, or incentivized toward outcomes.
Dentsu seems to have caught on: “DTC advertisers are born from performance, building their brands online through smart targeting, engaging creative and seamless customer experiences, and MuteSix is the leading solutions provider for this hyper-growth category,” said Jeremy Cornfeldt, CEO, iProspect US in a statement.
After all, the shiny new thing is like catnip to agencies — I think most of us still remember the number of blockchain agencies that cropped up last Spring at Havas, GroupM and others. “Are you surprised?” said one DTC brand founder to me when the Dentsu announcement came out. “They finally caught on.” — Shareen Pathak
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How clean is clean?
Amazon has begun testing a so-called “clean room” for marketers and the e-commerce giant to cross-reference their respective data sets in order to inform advertisers’ campaigns, according to an AdExchanger report published Aug. 27. Amazon by no means invented clean rooms, which are designed to be privacy-safe environments to commingle advertisers’ customer data and platforms’ aggregated audience data. Google and Facebook already offer clean rooms for advertisers, and marketers including Hershey’s and Unilever have been developing their own versions.
However, agency execs have some questions about Amazon’s clean room. “Amazon’s clean room is similar to Google’s where you have to put data in. But how comfortable is an advertiser in giving their data to a massive tech company?” said one agency executive who has had conversations with Amazon about its clean room. That wariness is not necessarily unique to Amazon. However, Amazon has a habit of using its platform to benefit its own business at the expense of others, such as by promoting its private label products on other brands’ product listings. So this agency exec’s concern is whether Amazon will use the data it gains access to within the clean room — or more likely the resulting insights into an advertisers’ business or customers — to compete with advertisers.
Another agency exec, who has not been briefed on Amazon’s clean room, wondered about the data coming into the clean room, specifically whether Amazon will provide log-level data within its clean room.
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An Amazon spokesperson did not respond to a request for comment by press time.
That has frustrated agency execs because that data not only provides more transparency into the performance of advertisers’ campaigns but also enables more advanced analysis of campaigns to inform how programmatic buying strategies can be enhanced. According to AdExchanger’s report, Amazon is not making log-level data available within its clean room. Despite the questions about Amazon’s clean room, the two agency execs were generally positive about Amazon opening up a clean room given the company’s reputation for being a black box and are, if anything, impatient for the clean room to officially open up. “They’ve been talking about doing that for a while,” said the first agency exec. — Tim Peterson
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