Advertising partnerships. A lot of technology companies use the “P-word” often, but what does it truly mean? In today’s guest post, Kenshoo’s Managing Director, North America, Jason Pratt, shares his point-of-view on how brand and agency marketers might best evaluate this crowded space.
As an in-house brand team or an agency managing media budgets for performance, you probably want outside opinions from time to time regarding what to do, what strategies to use, what ad units work for what types of advertisers, etc. You have a few options of whose help to use.
You could do all the analysis and decision-making yourself.
You could also hire an outsource partner and hand it off entirely.
Both of those options are viable, but the vast majority of brands and agencies that I’ve seen do something in between. They listen to and work with external parties like publishers, consultants, vendors, and ad networks and take some of the recommendations they give while rejecting others.
Advertising partnerships and the value of recommendations
It seems to me that the value of a partner in the media space is based on the quality of the recommendations they give over time. A partner that continually gives either poor-performing or self-serving recommendations won’t thrive and grow—the market will punish them out of existence. A partner that gives high-performing and brand-enhancing recommendations will thrive and grow over time.
Therefore, it follows that one way to gauge the overall value of a partner is to look at how it has performed as a company in the market and for how long. Just as Darwinism weeds out the poor performers over time, marketplace longevity is a good indicator on which partner companies deliver real value and which are not.
Advertising partnerships… how do you know which are good or bad?
But there are caveats to this rule. Publishers themselves enjoy a special place in the market. They don’t necessarily have to give good recommendations to survive because they are the unavoidable options for advertisers and agencies that want to grow revenue.
Publishers such as Google, Facebook, Instagram, Amazon, Microsoft, Pinterest, and Apple are fantastic consumer companies that all of us can recognize give consumers what they want, leading to their impressive user and revenue growth over time. But, as long as their media products perform (and they do), they can rely on that fact, and just convince you to continue to experiment with different approaches until they find the one that works. In the meantime, you’re spending with them anyway.
But how much does this built-in momentum impact their ability to see what really drives value for brands? Will sub-optimal recommendations from one of the must-have publishers cause an agency or an advertiser to stop advertising on their properties? Not usually. It, of course, might impact the number of dollars a brand allocates to that property but isn’t likely to cause them to stop spending there altogether. The inherent strength of the media’s performance blunts the blow of bad advice.
So the built-in market enforcement mechanism isn’t there. Because of this, we can’t use the measure of “they’ve been around a long time, therefore they must be giving good recommendations” — there’s just not the same correlation between longevity and value that an independent market participant can be judged by. The old saying “The lion is running for its dinner, but the antelope is running for its life” applies well here.
And, of course, my post here is a bit self-serving. Kenshoo has been in the market for well over a decade continuously growing in a very competitive space. Our customers have grown with us.
If you’re evaluating us (or any partner), you might look at the track record we have as a validation of the fact that we generally give good recommendations and our technology works. Of course, nothing is 100% certain in the world of advertising, but the market doesn’t lie either, over time.
Any company, agency, or technology that’s been growing and thriving for a long time is most likely doing something right. You’d be wise to take their recommendations seriously. They know their reputation and their long-term future rides on the quality of those recommendations. You can benefit from their thinking because of it.
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