Interesting article revealing excerpts from the unredacted anti-trust law suit brought by the State of Texas (and others) against Google. Should anyone be surprised by these revelations? The question remains, how will advertisers voice their displeasure? Are they ready to rethink their digital investment resource allocations to demonstrate their unwillingness to pay exorbitant, non-transparent fees… to any intermediary? Clearly the federal government has concerns, as do other countries around the globe … Read More
Content curation and production continues to grow in importance as marketers expand their message distribution to multiple devices across a myriad of channels including mobile, web, social media, shopper marketing, public relations, etc. The result is an ever-growing quantity of brand specific content that needs to be managed and shared.
For most marketers this content is being accumulated, produced, and stored by multiple of their marketing service providers. This can create logistical challenges when it comes to managing and accessing these critical assets, invariably creating risks related to compliance, brand consistency and usage rights violations while driving up operational costs.
The solution can be straightforward… a centralized enterprise-wide content management system (CMS) that improves a marketer’s ability to manage and protect this disparate set of images, videos, logos, and text files across its marketing agency network. Further, creating a content management “center of excellence” makes it easier to search, access, transform and distribute these assets in their proper format for use by each marketing partner.
The centralization of this function, whether in-house, with a designated “lead agency” or with a specialized CMS provider can boost productivity and improve both time and cost efficiencies. How? Eliminating the redundancies in labor and costs related to accessing content curation, creation, formatting and cataloging from multiple agency providers. This allows brand management personnel, and their advertising agency partners to focus on their specialty… “origination” rather than “adaption” projects.
As both government regulatory bodies and the advertising industry have become serious about data privacy, browsers such as Chrome, Safari, Firefox, and Explorer have announced safety measures that include restricting first-party cookies and blocking third-party cookies by default.
These moves will clearly have an impact on a range of outcomes, including user experience, data access, ad targeting and attribution. This will limit marketers ability to personalize content, target their advertising to individual users or assess which impressions had an impact on a consumer’s actions.
That being the case, how should marketers view the value of programmatic advertising in a post-cookie world?
For some, their focus has turned to first-party data for which consumers have given their consent. Yet, gathering this data and harnessing its value will take time. Further, this approach still requires an ad ID solution for which there is currently no standard or consensus among publishers, AdTech companies or device makers. That said, there is hope on the horizon as organizations such as the Advertising ID Consortium have emerged and are offering people-based identifiers that are compliant with “self-regulatory codes” and applicable privacy and security laws.
While the industry awaits a robust, unified ad ID solution, the loss of behavioral or deterministic targeting tools will clearly weigh on the efficacy of programmatic digital media.
According to Statista, global digital ad spend will reach $389 billion in 2021, with nearly 85% of that being place programmatically. In light of the challenges posed by the restrictions on third-party cookies, the question is, “Should marketers continue to allocate such a high percentage of their overall media spend in this area?”
In the words of 19th century author, Henry David Thoreau, “It’s not what you look at that matters, it’s what you see.”
With COVID-19 vaccination rates increasing, organizations across the globe are evaluating whether and or when their employees will be required to return to the office. As part of the consideration process, many are deliberating on whether to allow all or select employees to continue to work remotely.
The question being assessed by employers considering extending remote work privileges is, “How will this decision impact employee compensation?”
Many organizations are weighing different pay scales for remote workers. As an example, Google is planning to adjust employee compensation based upon the local market wages where an employee works from. Which certainly seems like a reasonable trade-off.
By way of example, in a recent article by Reuters, which had seen Google’s “salary calculator,” an employee living in Stamford, CT, which is an hour from New York, would earn 15% less if they opted to work from home, rather than commuting into New York City. Of note, Google is but one Silicon Valley company that has implemented location specific compensation models for employees living and working in less expensive areas.
As advertising agencies evaluate their post-pandemic approach to the use of flexible staffing and or remote workers, it stands to reason that while some will opt for location agnostic pay models, others may implement location specific remuneration programs for remote workers. In the case of the latter, the obvious question is, “How will cost-of-employment adjustments impact the fees charged to advertisers?”
Will those on commission-based fees adjust rates downward? Will those employing direct-labor-based compensation programs reduce bill rates?
It is certainly reasonable to assume that if an agency reduces its salary and overhead expenses, that the fees charged to advertisers should be reduced accordingly. That said, it is likely that any adjustment to agency bill rates will need to be the result of collaborative discussions, initiated by the advertiser, between themselves and their respective agency partners.
At a minimum, location-based employee compensation adds an interesting dimension to the ongoing quest for a fair and balanced agency remuneration system.
This is an issue for advertisers. Audience deficiency shortfalls not made up in flight or earlier in the broadcast year create these types of problems. Advertisers really need to push their agency partners to be more diligent in tracking and securing compensatory media weight, rather than rolling these credit balances forward or accepting makegoods in streaming inventory as opposed to linear TV… where they were planned and purchased. Read Article…
Looking for reasons as to “why” advertisers should monitor working media spend in addition to the myriad of other analytics utilized to assess effectiveness? Beyond the fact that eliminating waste is part of a marketing organization’s fiduciary responsibility to their enterprise, there is now another consideration for monitoring this particular productivity metric. While many in the ad industry eschew the concept of “working media” it is interesting to see the importance CEOs, CFOs and financial analysts place on this important metric … Read More
Do your client-agency agreements require your agency partners to disclose their use of related parties? To secure your permission prior to engaging affiliates? To document how those affiliates are compensated?
If so, then you are in a better position than many. At a minimum, testing for agency compliance to such contractual requirements is an option that you can pursue. If not, the level of work being channeled to related parties by your agency may surprise you.
In our contract compliance and financial management audit practice, it is not uncommon to see 5 to 7 different related parties engaged by an advertiser’s agency. Examples of services provided by affiliates include items such as barter, programmatic buying, direct response TV, event marketing, principal-based buying and ad serving. Yet, oftentimes these affiliates and the manner in which they are compensated are not known to the advertiser.
Why should an advertiser care? For one, if work is assigned to an agency affiliate without undergoing a competitive bid process, what assurance can the advertiser have they are not being charged above-market rates? Secondly, the added profitability by recommending certain affiliates, such as those engaging in the procurement and resale of media inventory through principal-based buys or barter, could adversely influence an agency’s recommendations to the advertiser. And to compound matters, if said affiliates are also applying non-disclosed mark-ups to the media inventory procured or services provided, can an advertiser fairly assess whether the total fees the agency is generating from its business are commensurate to the services being delivered?
Thus, it is important to revisit contract language to ensure that the following controls are in place:
- Principal-Agent language that requires the agency’s fiduciary responsibility is to the advertiser and that all decisions and actions are undertaken in a manner that maximizes benefits to the advertiser.
- Require the agency to disclose any and all related parties that it intends to deploy on the advertiser’s behalf and to secure the client’s prior written approval. Requiring quarterly updates to this list would provide an added layer of protection.
- For instances where principal-based buys, barter or other non-disclosed transactions are being considered, require a double opt-in process:
- The first step would be a formal letter of notification from the agency to be signed by the advertiser granting permission.
- Secondly, any purchase authorization form presented by the agency to the client for approval should reiterate the agency’s intent in this area.
With these agreement guardrails in place, advertisers can further protect their interests by periodically auditing the agency to validate compliance and verify the accuracy of charges made by and or for related party activities.
Ultimately, this approach will allow an advertiser to leverage the full breadth of its agency partner’s resource offerings in a very transparent manner, providing comfort that its agency’s practices are aligned with its expectations.
Interesting findings from Horizon Media’s study on post-pandemic employment trends. As Madison Avenue rethinks the concept of “agency” and the potential use of independent workers versus employees, the industry will also have to come to grips with the impact on current remuneration models. With direct-labor based agreements dominating the current compensation landscape, the attendant formula of direct salary costs + benefits + overhead + profit does not readily extend to “free agency”… Read More
Identifying the right methodology and optimal rate at which to compensate advertising agencies has been an ongoing quest for advertisers. With the shift to project-based versus retained relationships this, driven in part by a desire for greater flexibility and responsiveness this challenge has intensified. As always, the question remains; “What rate can advertisers expect to pay under different agency remuneration models? Does a greater commitment lead to more efficient rates?” The following article from Leah Montebello of Producers & Procurers iQ presents an excellent framework for fairly evaluating this scenario. Read more…
Oli Orchard, Founder of Fuel Media & Marketing a London based media consultancy and auditor recently published a LinkedIn post featuring this comic strip by Tom Fishburne. While funny, Mr. Fishburne’s take on digital media is sadly reflective of reality. In spite of the risks and questions around the “true” effectiveness of digital media, advertisers continue to increase both absolute dollars and share of spend on digital media in general and programmatic in particular… which is fraught with an even greater level of risk. Controls and rigid monitoring are cost of entry for advertisers in this area and in spite of the money being spent on adtech solutions, the scenario captured in this comic strip is as real today as it was when originally published years ago.
