Forrester: Agencies' data platforms capture significant ad spend but face challenges

Dive Brief:

Agencies have invested more than $12 billion on technology and databases since 2014 to meet CMOs' need for data-driven performance, but advertisers and agencies have too much data and too little insight, per a Forrester Research report shared with Marketing Dive. The deals cited in the report, "The Agency Data Platforms That Will Power Creativity At Scale," include Publicis' $3.7 billion purchase of Sapient in 2014, Dentsu's $1.5 billion deal for Merkle in 2016, IPG acquisition of Acxiom for $2.3 billion in 2018 and this year's $4.4 billion purchase of Epsilon by Publicis.
Agencies' data platforms helped holding companies capture a total of $6 billion in media and advertising spend in 2018, according to an analysis of the companies' quarterly reviews. Ford spent $500 million in media and advertising with Omnicom, which is powered by Omni; Amex spent $400 million through IPG and its AMP platform, and JM Smuckers spent $580 million through Publicis and its PeopleCloud platform, per Forrester's analysis.
While agencies have made some big bets on data, their efforts so far fall short when it comes to leveraging these assets to enhance the creative process. Forrester recommends agencies apply data platforms to the creative process to enhance strategies, for example by using tech resources to build test-and-learn cases.

Dive Insight:

Agency data platforms — including Alchemy, AMP, Converged, Epsilon/Publicis Peoplecloud, M1, [m]Platform and Omni — compile several data sources into a common pool of audience and channel information so clients can scale campaigns to specific audiences and ostensibly helping agencies win business from marketers, who are increasingly looking for data-driven solutions. The Forrester report highlights several challenges agencies need to overcome to turn their data platforms in competitive advantages.

So far, data platforms haven't connected to agencies' creative development process, missing out on significant media activations such as identifying, segmenting and engaging audiences in paid channels, per Forrester. Advertisers and agencies also face difficulty in identifying high-value audiences, placements and messages. Forrester said that 41% of global purchase influencers are working to improve data insights for business decisions.

Agencies' data offerings most frequently are in headquarters or hub offices in New York, Chicago, London and Paris, leaving "data deserts" in certain offices and on certain accounts. The lack of access to data tools hampers agencies' ability to showcase the latest innovations, leading marketers to regard agency contributions as commodities.

Agencies tend to highlight their data capabilities during pitches for new business, but CMOs and business leaders mostly aren't aware of agency data platforms. Sixty percent of media clients said they couldn't name or didn't recognize the name of the data platform owned by their media partner’s holding company. Agencies can't expect marketers who aren't familiar with agency platforms to understand their importance in media and creative efforts, per Forrester. CMOs who provide first-party customer data need to understand that their agency data platforms aren't taking over their data.

The federated model and the proprietary model are the two most common setups for agency data platforms. In the federated model, agency data platforms combine third-party data sets with clients’ first-party data, such as at Havas, MDC Partners, Omnicom Group and WPP. For the proprietary model, agency data platforms collect acquired data assets, such as Merkle’s or Epsilon’s, to use in combination with third-party assets and client data reconciliation. Proprietary model examples include Dentsu Aegis Network, IPG and Publicis Groupe.