Interactive agencies can gain a competitive advantage by implementing an advertising analytics solution that allows them to:

• Make their clients more profitable
• Increase the efficiency of their staff
• Utilize superior technology
• Create new revenue streams

An advertising analytics solution provides functionality beyond what most agency home-grown applications and excel spreadsheets provide. As with any technology solution, however, the business benefits and expected returns should be analyzed before making an uninformed investment in an advertising analytics solution. There are 4 main ways in which an interactive agency can produce a positive ROI on a technology investment:

1. Make your clients more profitable: Most interactive agencies charge a percent of ad spend. The more a client spends, the more an agency earns. There has always been some distrust from the client when an agency recommends they spend more. The client may think the agency is asking them to spend more just to increase the agency’s revenues. This situation can be eliminated with technology that clearly displays the client’s ROI and profit. Some advertising analytics solutions are able to measure the true profit (Revenue & COGS & Ad Spend) earned from online advertising, even if the conversions happen offline. This usage of true profit can provide definitive proof that increasing ad spend is in your client’s best interest.

An agency can calculate the amount of increase in ad spend they need to breakeven on their advertising technology investment. For many agencies, they can justify the cost of the technology by leveraging the new conclusive data to raise their client’s ad spend to higher levels.

2. Staff Efficiency Gains: Interactive agencies spend a tremendous amount of time gathering data, compiling it, and formatting it into a presentable analysis. Some agencies have full-time data analysts devoted exclusively to data gathering and formatting. This type of work can be greatly reduced, if not completely eliminated with an advertising analytics solution. Certain solutions available to agencies centralize all of the data they need, compile it, and output formats that can be presented directly to clients.

In order to calculate the ROI here, an agency must identify how much time is currently spent on gathering, compiling, and formatting data, and then put a dollar figure on the time. In addition, the agencies need to ask themselves what they will be able to do with these newly freed up resources. Each team member will be able to handle more business than before. You will be able to take on other projects that were not possible due to bandwidth constraints. You may be able to redeploy your staff to more value added tasks that can lead to increased revenues.

Have you ever walked away from a deal because you could not make it profitable given the projected man-hours? Would technology have allowed you to close this deal profitably? This is not a simple exercise, but one that must be done while looking at all of the factors. Many agencies may be able to justify the cost of an advertising analytics solution using this ROI method alone.

3. Superior Technology: Have you ever lost a deal because a competitor was able to meet the client’s business requirements and you could not due to an insufficient advertising analytics platform? Has a prospect inquired about the type of technology you will be using to manage their campaigns? Has there ever been a requirement from a prospect to track offline sales or to track past the standard metrics provided by the search engines and other ad sources? Were you able to deliver on that requirement or were you forced to walk away from the deal? In addition to a new technology increasing your client’s profit and yours, and making you more efficient, it should also provide you with features that give you a competitive advantage in the market.

A solution that allows you to solve business problems in unique ways should help you close new business. Interactive agencies that make use of sophisticated technology are perceived to be more advanced than non-technical agencies. The ability to offer a robust advertising analytics platform can help you land large clients by giving your agency more sophistication in its practices. The right technology will change the way in which you position and sell your agency to prospective clients.

4. Create new revenue streams: Many agencies that employ advertising analytics solutions are able to charge their clients higher fees. In some cases they charge a technology fee (tracking fee) above and beyond their current agency fees. In other cases they may charge for the setup and integration of the technology as a one-time fee. The choice to monetize a technology investment in this capacity is yours. You may not be able to charge every client, but you should be able to charge some that stand to gain the greatest lift by your decision to go with a sophisticated technology. Additionally, each client will have different requirements in terms of the deliverables they want to receive. You can charge clients for any custom work that is outside your standard deliverables.

There is another reason for investing in an advertising analytics platform that does not require an ROI justification. The online advertising space is constantly evolving and clients are demanding more insight and performance from their agencies. Investing in an advertising analytics solution will keep you at the forefront of the advertising space.

This entry was posted on Thursday, July 3rd, 2008 at 3:24 pm and is filed under All Blogs, Analytics, News, Optimization, Uncategorized, What's New?. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.