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Marketing MathTM

Category Archives: AdTech

Investigation Reveals That DSPs Are Charging “Hidden Fees”

10 Jan

fraudsterInteresting article from Adexchanger, which reveals that marketers are still subject to a range of hidden fees being charged by DSPs. This in conjunction with DSPs earning non-disclosed rebates from exchanges that certainly raises questions about DSP objectivity. Of note, these non-transparent charges and sources of revenue can be in excess of 20% of media spend.

While the subjects of “transparency” and “accountability” have been at the fore of industry discussion over the course of the last few years, it is quite surprising to see how little progress has been made across certain segments of the digital media supply chain. It is clear that marketers cannot rely on their media agency, trading desk or DSP partners to safeguard and optimize their programmatic investments.

Strong contract language establishing an advertiser’s expectations for “cost-disclosed” transactions, coupled with independent oversight and financial penalties for violations are required if marketers are truly interested in boosting their working media. DSP’s desire to offset rising costs or to recoup investments in ad technology and infrastructure are not valid reasons for the application of hidden fees. Marketers should continue to push for full disclosure of all transactional cost detail from each player in the digital supply chain. Read More

The Transparency Premium

20 Dec

price riseIt was with great interest that I read an article on Digiday.com regarding the “media transparency fallout.” An underlying theme of the article was that advertisers should be prepared to pay more for transparency if they want to continue to work with the top tier media agency brands.

The notion that advertisers are not fully embracing transparency, because it “costs more” to reveal to clients how their media dollars are being invested is a laughable premise. If this is truly the position being taken by the agency holding companies, then it easy to understand why independent media agencies could carry the day in 2018.

From our perspective, advertisers are already paying a premium for the lack of transparency. This comes in several forms, including:

  • Non-transparent agency fees and mark-ups
  • Poor quality inventory driven by non-human and fraudulent traffic
  • Soaring non-disclosed ad tech and intermediary fees
  • Brand safety risks tied to questionable ad environments
  • Sub-par performance tied to untenable declines in working media

The fact that an agency would purport that it costs more to provide their clientele with a direct line of site into their media placements, the net cost paid and all of the related fees is a ludicrous proposition. Since when does honesty and transparency come at a premium? Isn’t that the cost of entry?

As we all know, there has been a recurring narrative that advertisers forced agencies to adopt non-transparent, unethical practices by squeezing agency compensation over the course of the last several years. This couldn’t be further from the truth.

Importantly, there are two parties involved in negotiating agency remuneration agreements, clients and the agencies themselves. In the end, no one forces an agency to accept a bad compensation deal. If that occurs, it is only because the agency has agreed to those terms, rather than pushing back or walking away from the negotiation. The notion that accepting remuneration deal terms that are less than an agency’s desired outcome makes it okay for them to pursue opaque practices to pad their bottom lines on a non-disclosed basis is simply wrong.

Thus the position that an agency would abandon such practices for a premium is disingenuous at best. There is never a wrong time to do the right thing.

When will the agency holding companies learn? Practices such as non-transparent revenue, media arbitrage, non-disclosed mark-ups, float income and volume based kick-backs are what led to the lack of trust among the advertiser community toward media agencies. This combined with the fact that the agency community repeatedly denied that they engaged in these practices when questioned repeatedly by advertisers and the trade press.

It wasn’t until the infamous Association of National Advertisers (ANA) media conference in 2015 when Jon Mandel, former CEO of Mediacom blew the lid off of those denials that the industry began to sharpen its scrutiny of these practices. Ultimately, this led to the seminalMedia Transparencystudy conducted by K2 Intelligence and Ebiquity for the ANA in 2016, where these behaviors were acknowledged and quantified.

Agencies that continue to ignore the cost of their non-transparent practices and the potential for irreparable harm that it may cause them do so at their own risk. Now more than ever, advertisers have bona fide options ranging from working directly with publishers and media sellers, moving their media planning and buying in-house to engaging independent agencies or management consultants that embrace full-disclosure.

If the agency community is ready to have an honest discourse on remuneration, we remain fully supportive and would encourage advertisers to openly embrace healthy discussions on this important aspect of client/ agency relationships. In our agency contract compliance and financial management practice, we have never encountered a client organization that begrudged their agency partners the opportunity to earn a fair and reasonable profit. All of these client organizations would welcome collaborative discussions on the development of mutually beneficial compensation systems.

So enough of the pretense that regaining the higher ground comes at a premium.  As the independent media agencies have already realized; “Take the high road, there is much less traffic there.”

 

Can Advertisers Justify Mobile Ad Price Escalation?

19 Dec

agency compensationMobile ad prices to increase at more than 12 times that of the growth in U.S. GDP. Really?

While one must always consider the “source,” one programmatic agency is estimating that mobile ad prices will increase 45% between now and 2019. This in a market where supply still exceeds demand on a broad basis.

Advertisers must be wondering; “What percentage of that increase in price is going to agencies and ad tech providers?”

Full transparency is required, moving from non-disclosed to cost-disclosed buys so that media inventory prices are broken out along with full detail on data, tech and agency fees Read More

Has the ads.txt Program Been Corrupted by Bad Actors?

13 Nov

fundingIs this a sad state of affairs or what? Ad tech firms, programmatic agencies, ad networks and resellers are actively trying to game the ads.txt system to further their own agendas. The sole reason that the industry got behind the implementation of ads.txt was to safeguard advertisers from domain spoofing and unauthorized inventory selling.

For these stakeholders to view this as an opportunity to manipulate the guidelines to drive their fees and or reseller revenue is inappropriate. Sadly, these actions shine a light on the number of “middlemen” firms operating between advertisers and publishers, and focused on their self interest are detrimental to reforming the digital media marketplace. Ad agencies, programmatic trading desks, DSPs, exchanges, ad networks, resellers, SSPs… what a mess. Can programmatic digital survive? Read More

Exchanges and DSPs Engaged in a Price War. Who Knew?

10 Nov

scam adsInteresting question for advertisers; “Were you aware that your agency was paying its ad tech partners (Exchanges, DSPs) fees equivalent to 20% to 24% of your digital media investment?” Further, did you know that an exchange operating as both a DSP and an SSP can lower its fees on its SSP platform to incent its DSP to route demand to their exchange.

Ironically, while this is totally self-serving, it is being merchandised to  advertisers as “Supply Path Optimization.” What it really is, is a method for building ad tech revenues at the expense of working media.

Not occurring on your watch? For grins, ask your digital media agency to arrange a visit with you to review the vendor billing detail from their ad tech partners. Of note, if they agree to share this information, which they may not, that invoicing won’t likely identify the fees being charged. So why all the secrecy? Read More

Advertisers: Beware of Shiny New Tech Solutions

10 Nov

Interesting perspective, but the premise that CMOs will “turn their brands into platforms” and “will become obsessed with understanding consumer emotion, measuring it and tapping into it with precision” is one that is unlikely to materialize simply by doubling ad tech expenditures in 2018.

There remain many challenges to be confronted by marketers along the path to enlightenment. Issues including data accuracy, relevancy and quality along with assessing the viability of the myriad of technology solutions looking for problems to solve. If marketers aren’t careful they will end up funding the growth of a new genre of tech toys at the expense of boosting working media and driving brand performance  Read More

Can Facebook Build on It’s Advertising Success?

05 Nov

facebookSay goodby to the concept of the “long tail” of web advertising and potentially to the layers of middlemen ranging from ad tech vendors to exchanges to media agencies standing between advertisers and publishers (at least Facebook). Performance drives media investment decisions and Facebook appears to be doing very well on this front. At least with one sector Read More

 

 

Advertisers Can’t Afford to Accept Digital’s Current State of Affairs

02 Nov

time for actionRecently, Mike Baker, CEO of DataXu, a programmatic ad tech firm, wrote an article for AdExchanger in which he rhetorically asks a question regarding Marc Pritchard, CMO at P&G and his leadership position on cleaning up the digital media marketplace; “Is this the battle we should be fighting?”  

Mr. Baker suggests that “Instead of working toward a slow, incremental uphill battle against the tech giants’ entrenched digital positions, brands have an unprecedented opportunity to shape and accelerate the future of TV.”

Of note, we agree with Mr. Baker’s premise regarding the need to proactively work on TV to prevent the same mishaps negatively impacting advertisers within the digital media space as TV expands their use of programmatic buying. That said, we don’t believe that anyone within the ad industry can afford to wave the white flag when it comes to reforming the programmatic digital media space. Ad expenditures in this area are too significant to give up the fight.

We take our hats off to Marc Pritchard and other marketing leaders who are fearlessly confronting the issues of brand safety, fraud, viewability, self-reporting and a lack of transparency when it comes to digital media, and all other channels Read More

Are We Missing the Real Issue with Ad Blockers?

26 Oct

blocker

 

The advertising industry is rightly concerned about the financial impact related to consumers growing use of ad blockers, which can filter out ads before users ever see them. A recent study by OnAudience.com highlights the reasons why:

  • 26% of U.S. consumers now use ad blockers, resulting in lost publisher revenues of $15.8 billion in 2016, up from $11.0 billion in 2015. The U.S. represents approximately $45 billion of the $100 billion global display market.
  • Internationally, the loss of publisher revenue from ad blocking is projected to rise to $42 billion, up from $28 billion in 2016.

In addition, Google has announced that the 2018 version of its Chrome web browser will allow consumers to automatically block “annoying, intrusive” ads, which will accelerate the financial impact of this trend given that Chrome represents approximately 60% of the desktop/mobile/tablet browser market (source: NETMARKETSHARE, September 2017). Google’s motivation, it claims, is that they are simply introducing the Coalition for Better Ads recently announced best practices standards to enhance the consumer’s web browsing experience.

It is no surprise how we got where we are. Advertisers wanted to improve consumer engagement and publishers wanted to drive revenues. This, in turn, led to publishers placing more ads on a web page, including higher paying video units, making ads larger or forcing visitors to somehow interact with these ads to get to the content. This involves video ads that automatically refresh or blast audio automatically or force consumers to wait for :05 to :10 seconds before they can access the content they seek.

In the end, advertisers and publishers have not realized greater levels of engagement, but rather helped to fuel greater levels of consumer irritation and therefore ad blocker usage.

Thus far, the industry has been focused on blocking the ad blockers. It is true that many publishers believe that being exposed to ads is a user’s obligation if they want their content to be free. Others, however, share the consumer’s disdain for obnoxious, intrusive ads, and would like to see them banned from their sites. The problem is that ad blockers tend to block all ads.

So what is the ad industry to do? Busting the use of ad blockers or implementing web browser workarounds would appear to be somewhat short-sighted. Consumers have clearly signaled that they find the level, number, positioning and type of online ads served to them on a regular basis to be discordant with their intended browsing habits. Pursuing a more measured approach on the part of the industry is warranted. As Supreme Court Justice Ruth Bader Ginsburg intoned:

“Reacting in anger or annoyance will not advance one’s ability to persuade.”

The challenge is clear, finding a mechanism for publishers to fund their content creation at least in part through the use of online advertising. The answer, however, is not so readily apparent.

Let’s face it, by in large, consumers do not want to view online advertising. This can be evidenced by plummeting open and click-through rates, reductions in conversion rates and declines in average viewing times. Advertisers and publishers want “engagement” and sadly, consumers want nothing to do with most of the advertising foisted on them.

Is the answer better creative that informs, educates and entertains in the hope that users will both notice the ads and choose to interact with them? Or is it fewer, less intrusive ads that can take away from a user’s web browsing experience? Or will publishers finally have to solve the “pay to view” content dilemma, which consumers have largely been resistant to thus far?

If consumer engagement is the goal, the answer is likely “Yes” to all of the above.

 

Scathing Review of Programmatic & Media Agency Standing

03 Oct

cautionIn the recent edition of Marketing Week, writer Mark Ritson profiled a recent Advertising Week panel discussion featuring Martin Cass, CEO of MDC Media Partners and his stated view that clients simply do not have a “grasp of ad tech.”

He believes that: “They don’t understand it. We have become experts on the top of a pinhead and there are probably 1,000 people operating on the top of that pinhead. It’s so utterly bewildering and confusing. If you sat down with a CMO and asked him what most ad tech does he would not have a clue.” Read More

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