What UA Managers think the future holds.
As of late, one topic has dominated my conversations with fellow growth marketers. The topic? How Facebook and Google are automating ad level workflows and deprecating the previous manual levers that UA Managers had to control those workflows in the past.
The fact that Facebook and Google are automating workflows is undoubtedly true.
Though everyone agrees about that, I hear so many differing opinions about what the future implications of these changes will be.
In this post, I’ll share a few of common opinions I hear from friends that I respect and my thoughts on them as of today.
Below are three common opinions I hear often and my thoughts on each.
Creative is the only remaining “edge” to be gained in User Acquisition.
With Facebook and Google layering automation into their bidding, budgeting, and targeting systems, there is a commonly held belief that creative is the only remaining edge to be had on the platforms.
I feel that this “creative is the only edge left” belief is most commonly held by folks who are already experts in the platforms. I believe they are discounting their own knowledge and existing advantages. Most advertisers are not world-class experts and they cannot automate bidding, budgeting, and targeting without more knowledge, operational support, data, and technical infrastructure.
All of this said, data-driven creative strategy and iteration is - and has always been - a huge edge in user acquisition. It’s just solidly not the “only edge left”. We meaningfully improve client growth programs outside of creative every single day.
User acquisition teams will shrink.
Eric Seufert of MobileDevMemo had a great post thinking through this shrinkage recently. I definitely agree that channel management teams should shrink due to automation over time, but I believe in-house teams could potentially shrink a lot more than we talk about — to the point that they are eliminated entirely by many advertisers.
As progressively more of the ad level workflows are automated, less “hands on keyboard” staff will be needed per dollar of UA budget managed.
At Bamboo, we’ve been executing on this vision of the future for years and we generally welcome as much automation as we can get into our workflows. When we gain real efficiencies from automation, we simply pass those cost savings on to our clients in the form of more value added services (like our Creative Studio) for the same rates or decreased rates (proudly, our rates are now 55% less per dollar managed than they were in 2014 and our net operating margins are still roughly the same).
My point of view is that as this loop (more automation -> advertising operations costs decrease) continues to compound, we’ll get to a point as an industry where outsourcing UA (specifically Facebook and Google channel management) will become more ROI efficient for 95% of advertisers than hiring in-house.
Everyone should just take UA in-house because “it’s all automated”.
The advertising industry has been claiming the death of the ad agency business since it was born. They’ve been wrong every year so far and I believe they’ll continue to be wrong. Some agencies who don’t adapt will die, others will evolve and be founded within the new paradigm and flourish.
If we’re heading toward a heavily automated future, I believe that a shared resourcing model (e.g. ad agencies + automation, working in close partnership) will be the most ROI efficient way to achieve the best overall results for almost all advertisers.
I believe this for a few reasons:
The more ad ops becomes automated, the higher leverage each individual decision becomes. This means wins and losses are both bigger. That fact is strategically important. Strategic agencies learn across clients more rapidly than individual advertisers do and all clients benefit from that learning.
With more automation comes cost efficiency gains that advertisers want to capture. Within the next few years, it’s possible we cross a threshold where two UA Managers can effectively manage 10 heavily scaled ad accounts without making a single tradeoff in terms of work quality. At that point, each advertiser could pay just 25% the cost of one full-time UA Manager and the agency still would have a healthy margin on services rendered. As of today, many in-house teams operate with >1 full-time UA managers per channel (for redundancy purposes, this makes sense). What executive wouldn’t want a 5-10x cost efficiency gain on their most important growth channel?
As “hands on keyboard” channel management work becomes more automated and higher leverage, performance advantages in other areas like creative, data infrastructure, product/engineering, etc will become even more important. I firmly believe that these functions all lend themselves better to shared resourcing models for 99% of advertiser who don’t have the capital or expertise to build these multi-disciplinary in-house growth teams.
As far as the future of ad agencies go generally, the only appropriate adage is: The King is Dead. Long live the King.
As far as the future of User Acquisition overall, no one really knows.
One thing I believe for sure: The future of UA will be similar to the past. Scattered with a few outsized winners, many losers, and hallmarked by rapid change.
That future is exciting to me and I’m excited to scale the outsized winners in it!
What other opinions about the future of UA do you have that I didn’t cover?
Where do you believe my thoughts are flawed?