Agencies are being disintermediated because clients are looking for more specialized skills as well as lower costs.

1. Augustine Fou- 1 -
Disintermediation/
Disruption of Agencies
- 1 -
Dr. Augustine Fou
http://linkd.in/augustinefou
September 2013

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Source: ANA via eMarketer, Sept 2013
Brands Use In-House “Agencies”
- 2 -
56% have
already
started
moving
work in-
house to
save costs

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Source: ANA via eMarketer, Sept 2013
What In-House “Agencies” Do
- 3 -
• Magazine ads
• Social media
• Online display ads
• Search engine marketing
• Newspaper ads
• Search engine optimization
• Mobile advertising
• Out of home advertising
• Radio advertising
• Tv advertising
• Social Media
• Display Ads
• Search Marketing
• Search Optimization
• Mobile Ads
Are being done in house
because they can buy direct
or use ad networks
themselves.

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Source: ANA via eMarketer, Sept 2013
Dangers of In-House “Agencies”
- 4 -
Seems
like these
can be
overcome
through
training

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Performance-based Incentives
Source: Adweek, August 2013

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Changed from 70% commission and 30% fee to 81% fee and
only 5% is commission; Increasingly clients add in
performance clauses
Fee-based Compensation
Source: Association of National Advertisers

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Buying Direct from Facebook
Source: AdAge RBC Capital Survey September 2013
More clients/advertisers are buying direct from Facebook (similarly
with Google Adwords, Twitter, etc.); so the “buying power” rationale
is no longer valid, or will be less so going forward,

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IDC Study April 9, 2013
An IDC study has found sweeping changes in how mobile display
advertisements are sold, with Facebook, Pandora and Twitter
successfully wresting away control from advertising
networks over the last year.
“In display ads, the era of ad network dominance has come to an end,”
IDC said. “New mobile ad budgets flow more easily into the coffers of
publishers than into those of networks.”
“Mobile display ads accounted for US$1.7 billion of spending in 2012,
up from $700 million the year before. IDC expects mobile advertising
spend to reach $7 billion this year, up from $4.5 billion in 2012.”
Source: IDC April 9. 2013

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So What?
“More clients are taking pieces of work in-house for
cost savings and also efficiencies. For things like social
media, it makes sense to have someone from the
company be the „voice of the brand.‟Also search
optimization is something that occurs over time and
involves content creation (continuous). These moves
are disintermediating agencies and disrupting their
typical sources of revenue and business models. How
will they adapt? Or not?”
Augustine Fou- 9 -
- Dr. Augustine Fou

10. Augustine Fou- 10 -
Dr. Augustine Fou – Digital Consigliere
“I advise clients on what to in-source and
what to out-source to vendors and agencies. I
also help them set up metrics to measure the
impact and efficiency of the tactics
deployed.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
ClickZ Articles: http://bit.ly/augustine-fou-clickz
Slideshares: http://bit.ly/augustine-fou-slideshares
LinkedIn: http://linkd.in/augustinefou

11. Augustine Fou- 11 -
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