During his Re:think 2011 keynote speech, Sir Martin Sorrell, talked about a new structure in the creative sector, with agencies, content owners and clients all working together. He said that tech companies such as Twitter, Facebook, Yahoo!, Aol, Google (including YouTube) and Microsoft were actually media owners with distribution channels, ‘masquerading as technology companies’.

Flipping this around, Sorrell is saying that WPP’s new competitors are not media buyers but the tech giants. In fact, traditionally, media channels have created content and then sold ad space next to it. This fits perfectly with the ad agencies who needed this space to seed creative media for their clients. This relationship has developed over many years and they now work hand in hand but this model is facing a new paradigm.

The resultant threat being that brands can now just go directly to the online properties owned by the tech giants and seed their content directly through them at a lower cost. This is a especially difficult when advertising spend to support brands using traditional channels is increasing in the ad industry itself.

However, underneath the surface, it’s not as straight forward. The above threat doesn’t apply to wholesale digital media inventory.

The cost of digital media has trended downwards over the last decade due to the gap in demand relative to traditional media. For example, Unilever spends less than 5% of it’s advertising budget on digital media inventory according to the IAB. It’s due to figures like this, that the industry feels that advertisers should be spending an extra $60 billion a year on digital media, considering the amount of time their audience actually engage online.

Of course, the reason for this is one word and that word is, ‘context’. Brands are just too scared about where their message might appear if left uncontrolled. However, this is where Sorrell’s statement does have a point. The large tech giants don’t just own digital properties which support keyword related ads but they also own websites which are seen to be destination sites. Create media and seed it contextually on these distribution channels and a brand can really benefit from a wider reach (geographically too), than traditional television or print media.

However, look deeper and this needn’t be a threat to the advertising agencies. Just because that relationship is not as developed as the relationship between ad agencies and traditional media owners just yet, doesn’t mean it won’t happen.In fact, some of the best contextual digital campaigns from the last year have been partnerships with tech firms and ad agencies.

Two immediate examples spring to mind.

Mustafa, the Old Spice Guy

The Old Spice Guy, was created by Wieden + Kennedy and the platform used was YouTube. W+K were tasked with generation engagement and conversation around body wash. So they launched the first video of Mustafa, the Old Spice guy, during the Super Bowl last year. Very quickly, he became a cult figure and W+K quickly worked with strategists, developers and producers to film around a 180 videos over 3 days. These were not just canned videos. They were real time responses to fans requests on social media channels.

The results?

1) In just 7 days, the campaign had over 40 million views on YouTube.
2) By the end of the campaign, the Old Spice YouTube channel became the most viewed channel on the site, ever.
3) With over 1.4 billion impressions in 6 months, sales for the Old Spice boy wash for men, increased by 55% over three months and 107% in the last month of the campaign.

Here have a watch of W+K’s own case study video and see the result for yourself.

Desperados Beer

Another example is the Desperados beer takeover of YouTube. It was one of the first campaigns to integrate Facebook Connect into the YouTube experience. It led the user engage and interact with the video, by allowing you to party with your Facebook friends. This was another digital campaign created by the ad agency, Dufresne Corrigan Scarlett and produced by the digital production agency, MediaMonks.

Here experience it for yourself…

So the ad industry really shouldn’t worry about this new model but in fact, should see how beneficial it can be as part of the media mix. Perhaps this should also see the advertising industry hire more engineers, so that they can create new digital distribution paths, which provide the contextual environment brands created for them? This sort of thinking would certainly shift media budgets towards digital and redress the balance. The opportunity far outweighs the threat in this case.