Are mobile marketing agencies relevant in 2019?

Uber’s recent lawsuits against various third-party marketing agencies and traffic providers pulled back the curtain on how some service providers see their relationships with large clients. Obviously any lawsuit represents a worst-case scenario, but it is jarring to learn of how these service providers allegedly treated Uber — a large, well-funded organization that not only has the resource to pursue legal action over wrongdoing but would also logically be a valuable long-term client if kept happy. In reading the lawsuit, it’s fair for any mobile marketer to ask, “If this is how Uber is treated by agencies and traffic providers, how might they treat me?”

But fraud and unscrupulous behavior aside, it’s also interesting to consider whether mobile marketing agencies are still relevant in 2019, with Facebook and Google having transitioned to algorithmic campaign management that handles much of the “button clicking” work that used to occupy mobile media buyers’ time. Specifically for Facebook, much of the manual analysis, creative variant production, and campaign optimization work that used to be done by media buyers has been automated away, as per the table below:

The above sets of tools and features in Facebook (almost all of which are matched within Google’s Universal App Campaigns) allow advertisers to keep their marketing teams small and lean while still managing to grow their ad spend to very near maximum potential scale. There are a number of valid reasons for why a company would want to keep its marketing headcount low for certain periods in its lifecycle:

  • The company is still exploring product / market fit and wants to avoid the chicken and egg problem while it experiments with product functionality and total addressable market;
  • The company wants to remain as operationally lean as possible;
  • The company fundamentally sees itself as a product organization and doesn’t want to grow a large team that is ancillary to its core focus.

All of these reasons used to justify outsourcing marketing spend to agencies, but as the largest ad platforms agglomerate the functionality that mobile marketing agencies commercialize, these reasons now simply exist as arguments against expanding the team. If the mobile marketing landscape is split out into the time periods of “Then” (2014 – 2018) and “Now” (2019 and beyond), one could conclude that the reasoning for giving budget to mobile marketing agencies (versus expanding the internal marketing team) has all but disappeared:

One issue that always existed in the mobile marketing agency / client relationship was the arms-length nature of data access. No advertiser wants its agency to know which of its users monetizes the best: just as with advertisers’ reticence to give ad platforms the advertising IDs of high-monetizing users, advertisers wouldn’t want their agencies turning around and leveraging their own data for the benefit of other clients.

It is hard enough to avoid the advertising death cycle — which is when the product team blames marketing targeting for poor engagement, and the marketing team blames the product’s design — when all parties are internal and have complete access to in-app and marketing data. It can be very difficult if not impossible to avoid that fate if one of the parties, a marketing agency, sits outside of the app’s core data set and has no insight into how well the traffic it delivers performs.

In addition to this dynamic, there exists a fundamental mis-alignment of incentives in the agency / client relationship around spend and install volumes, namely: since agencies are typically paid with a percentage of overall ad spend, they very understandably want their clients to spend as much money as possible. This mis-alignment compounds the advertising death cycle and can be the kiss of death to an early stage mobile company: the agency has no oversight into down-funnel campaign performance and pressures the advertiser to simply spend more and more money to accumulate more and more data.

In my State of the App Economy presentation from late last year, I identified creative production and in-app event experimentation as the primary means by which advertisers can improve marketing campaign performance in this new, algorithmic, “black box” ad platform environment. The recourse that advertisers used to have for performance optimization — what I usually refer to as “button clicking” but is actually audience targeting experimentation and bid management — is gone, and so are the gigantic, super-specialized and matrixed mobile marketing teams. If there’s little reason in 2019 to ever want to scale a marketing team to a large size, and not wanting to grow a team is the primary justification for hiring an agency, then this modern mobile marketing environment calls into question the relevance of agencies.

Photo by Alex Holyoake on Unsplash