Digital Advertising Agencies Can Improve Efficiency by up to 33 Percent

LONDON--(Marketwired - May 22, 2013) - The efficiency with which digital advertising is delivered can be improved -- in some cases, by as much as 33 percent -- and this improvement translates into more effective campaigns, according to new research by The Boston Consulting Group.

Working with agencies, the BCG study analyzed 24 digital campaigns across 15 advertising companies in five European countries. It examined the causes of inefficiencies that agencies encounter -- uncovering more than 25 "pain points" throughout the campaign process, from planning to billing -- and how they limit effective use of agency time. The study found that agencies could overcome many inefficiencies by applying unified technology platforms and a lean approach to rethinking their processes and structures.

Even agencies that opted for a less ambitious, more narrowly focused approach realized efficiency gains that averaged 12 percent savings in time expended.

"The room for improvement is vast," said Paul Zwillenberg, a BCG partner and a coauthor of the report. "Only 20 percent of campaign-processing time is spent on activities that directly improve performance. The other 80 percent -- four days out of five -- is devoted to heavily manual, low- or no-value tasks, such as formatting reports and data entry."

The BCG study found that the rise of complexity and inefficiency of digital advertising has several causes, among them, near limitless choice with regard to ad timing, placement, and format; rapidly multiplying agency tasks; and a host of new intermediaries. Advertisers often compound the complexity by mandating the use of particular platforms, tools, applications, and reporting requirements. To address these issues, most agencies have knitted together a discrete set of solutions for each activity and developed individual workarounds to fill in the gaps.

"In the digital era, ROI and brand impact are increasingly becoming the defining metrics of value for marketers," said Damian Lawlor, managing director of media-buying solutions for Northern and Central Europe at Google, which commissioned the report. "Improving efficiency now in a sustainable way will help media buyers free up resources that can be invested in the technologies and activities that drive better campaign performance."

BCG observed that when advertisers focus more on measurable goals for both brand building and direct response, improved efficiency soon becomes a basic competitive requirement. But agencies also need to transform better efficiency into more effective campaigns for clients. Sustained competitive advantage will come from more comprehensive efforts for adapting processes and structures for the leveraging of new technologies -- efforts that will shift the resources freed up by enhanced efficiency to focus on campaign performance, enhanced optimization, and deeper insight.

"Even the clever workaround solutions will become costly to maintain and inadequate for coping with an increasingly complex environment," said Dominic Field, a BCG partner and a coauthor of the report. "To continue to meet client demands without built-in inefficiencies overwhelming their operations, agencies need to develop sustainable, scalable solutions -- with the support of advertisers, media owners, and technology providers."

Agencies seeking such long-term improvements can benefit from even early versions of unified platforms that allow for data sourcing from a single pool and eliminate the need to reconcile, consolidate, and transfer data from multiple sources, as well as from leveraging lean methodology. They also need to form collaborative partnerships with technology providers, advertisers, and media owners in order to realize the full potential of improved performance.

A copy of the report, "Cutting Complexity, Adding Value: Efficiency and Effectiveness in Digital Advertising," can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The Boston Consulting Group

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