Join our list of informed global advertisers seeking to improve the financial stewardship of their marketing investment. Click Here to Subscribe

Marketing MathTM

Tag Archives: programmatic media buying

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

4 Questions That Can Impact Your Digital Buys

15 Nov

gour

According to eMarketer, in 2017 advertisers will spend 38.3% of their ad budgets on digital media – in excess of $223 billion on a worldwide basis. Yet, in spite of the significant share-of-wallet represented by digital media, there is generally little introspection on the part of the advertiser.

Looking beyond the “Big 3” [ad fraud, safe brand environment and viewability concerns], the lack of introspection begins much closer to home. Simply, in our experience, client-agency Agreements do not adequately address digital media planning and placement roles, responsibilities, accountability or remuneration details.

Standard media Agreement language does not adequately cover digital media needs. By this we mean specific rules and financial models need to be included in Agreement language that cover each potential intermediary involved in the buying process and to guarantee transparent reporting is provided to the advertiser. It is our experience that Agreement language gaps related to “controls” can be much costlier to advertisers than the aggregate negative impact of the Big 3.

And, regardless of Agreement language completeness, a compounding factor is that too few advertisers monitor their agencies compliance to these very important Agreement requirements. To assess whether or not your organization is at risk, consider the following four questions:

  1. Can you identify each related parties or affiliate that your ad agency has deployed on your business to manage your digital spend?
  2. Does your Agreement include comprehensive compensation terms pertaining to related parties, affiliates and third-party intermediaries, that handle your digital ad spend?
  3. Is your agency acting as a Principal when buying any of your digital media?
  4. What line of sight do you have into your ACTUAL media placements and costs?

If you answered “No” to any of the questions, then there is a high likelihood that your digital media budget is not being optimized. Why? Because the percentage of your digital media spend that pays for actual media inventory is likely much lower than it should be, which is detrimental to the goal of effectively using media to drive brand growth.

Dollars that marketers are investing to drive demand are simply not making their way to the marketplace. Often a high percentage of an advertiser’s digital media spend is stripped off by agencies, in-house trading desks and intermediaries who have been entrusted to manage those media buys. A recent study conducted by AD/FIN and Ebiquity on behalf of the Association of National Advertisers (ANA) estimated that fees claimed by digital agencies and ad tech intermediaries, which it dubbed the programmatic “technology tax” could exceed 60% of an advertiser’s media budget. This suggests that less than 40 cents of an advertiser’s investment is actually spent on media.

A good place to begin is to ask your agency to identify any and all related parties that play a role when it comes to the planning, placement and distribution of your digital media investment. This includes trading desk operations, affiliates specializing in certain types of digital media (i.e. social, mobile) and third-party intermediaries being utilized by the agency (i.e. DSPs, Exchanges, Ad Networks, etc.). The goal is to then assess whether or not the agency and or its holding company has a financial interest in these organizations or are earning financial incentives for media activity booked through those entities.

Why should an advertiser care whether or not their agency is tapping affiliates or focusing on select intermediaries to handle their digital media? Because each of those parties are charging fees, commissions or mark-ups for services provided, most of which are not readily detectable. This raises the question of whether or not the advertiser is even aware charges are being levied against data, technology, campaign management fees, bid management fees and other transactional activities. Are such fees appropriate? Duplicative? Competitive? All good questions to be addressed.

When it comes to how an agency may have structured an advertiser’s digital media buys, there is ample room for concern. Is the affiliate is engaged in Principal-based buying (media arbitrage)? Is digital media being placed on a non-disclosed basis, versus a “cost-disclosed” basis where the advertiser has knowledge of the actual media costs being charged by the digital media owner?

Evaluating your organization’s “risk” when it comes to digital media is important, particularly in light of the findings of the Association of National Advertiser’s (ANA) “Media Transparency” study released in 2016, which identified agency practices regarding non-transparent revenue generation that reduces an advertiser’s working media investment.

The best place to start is a review of your current client-agency Agreements, to ensure that the appropriate language safeguards are incorporated into the agreement in a clear, non-ambivalent manner. Once in place, monitoring your agency and its affiliates compliance to those contract terms and financial management standards is imperative if you want to assure compliance, while significantly boosting performance. 

“Today, knowledge has power. It controls access to opportunity and advancement.” ~ Peter Drucker     

Interested in learning more about safeguarding your digital media investment? Contact Cliff Campeau, Principal, AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on this important topic.

 

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

Trust is Causing Issues Across the Advertising Landscape

26 Sep

questionThe Chief Marketing Officer (CMO) Council just released a study, which suggests that a lack of trust is causing issues for marketers that reach beyond their relationship with agencies and publishers.

The study, which surveyed 300 senior marketers and which was profiled in Mediapost.com, found that “63% of consumers said they respond more positively to the same ads when they find them in more established and trusted media environments.” Thus the perceived risks to marketers emanating from today’s programmatic media buying and automated digital media are more pervasive than Read More

In China, Ad Platforms Are Bypassing Media Buying Agencies

14 Sep

big dataInteresting article from Digiday profiling the fact that advertisers in China, seeking more transparency, are moving budget dollars from agency trading desks to Baidu, Alibaba and Tencent (BAT).

Not surprisingly, the agency community is a little less supportive of this approach due to the lower margins affiliated with BAT (i.e. 5%) versus the 50 percent earned from their trading desksRead More.

Is Programmatic Advertising Worth the Risk?

26 Jul

RiskConceptually, it is easy to understand the potential of programmatic media buying. It is obvious to most that using technology to supplant what is a manual, labor intensive process to drive efficiencies and improve media investment decisions could be a plus for advertisers, agencies and publishers (not to mention ad tech vendors).

The only question to be addressed is “when” will the benefits of programmatic outweigh the costs and the risks to advertisers?

Proponents of programmatic will argue that this buying tactic has already generated economic benefit for advertisers when it comes to digital media buying. After all, streamlining the processes related to the issuance and completion of RFPs, buyer/ seller negotiations and preparation of insertion orders clearly saves time and reduces labor costs for all stakeholders.

No one would argue this premise. However, reducing labor costs associated with traditional buying is but one component of programmatic buying costs. Consider the broad array of programmatic buying related fees and expenses currently being born by advertisers:

  • Data Management Platform (DMP) fees
  • Demand Side Platform (DSP) fees
  • Data/ Targeting fees
  • Pre-Bid Decisioning/ Targeting fees
  • Ad Blocking (pre/ post) fees
  • Verification fees
  • Agency Campaign Management fees

It should be noted, that there are “other” non-transparent charges and fees linked to sell-side platforms (SSPs), bid processing, real-time bidding auction methodology and principal-based buys (media arbitrage) that are born by advertisers and limit the percentage of their digital media spend that actually goes toward inventory.

In a recent Ad News article by Arvind Hickman, the author referenced studies conducted by both the World Federation of Advertisers (WFA) and the Association of National Advertisers (ANA) that demonstrate the magnitude of these programmatic fees and expenses. The WFA study determined that $.60 of every dollar spent on programmatic digital media buying goes to cover “programmatic transactions and fees.” The ANA study suggests that advertisers could be paying between $.54 – $.62 of every dollar on digital supply chain data, transaction fees and supply side charges.

Bear in mind that neither of these studies addressed the impact of media arbitrage or ad fraud. Industry studies, focused on assessing the level of digital ad fraud, fielded by the Association of National Advertisers (ANA) and WhiteOps found that fraudulent non-human traffic in the form of bots was “more prevalent in programmatic environments.” According to the research, display ads purchased programmatically were “55% more likely to be loaded by bots” than non-programmatic ads.

And yet, in-spite of the challenges still being faced with programmatic digital media buying, this media investment model is being rapidly rolled out to out-of-home, print and television.

Who do you think will bear the learning curve costs and risks associated with expanding programmatic to other media categories? The answer, is primarily advertisers and to a lesser extent, publishers.

We certainly understand that programmatic is the future of media buying. That said, rushing headlong into this arena, without satisfactory levels of transparency and or fraud prevention, combined with the upfront costs of the industry’s investment in technology, that are ultimately passed through to the advertiser, are both risky and costly to advertisers.

Is there a need to reach and take risks in order to secure positive progress? Yes. But, it might be best to follow the approach advocated by one of this country’s greatest military leaders, General George S. Patton:

“Take calculated risks, that is quite different than being rash.”

 

 

 

 

 

Advertisers Can Shield Themselves From Digital Ad Fraud… Somewhat

19 Jan

fraudLet’s set the stage, so that we are all clear on the risks faced by advertisers when it comes to digital media in general and programmatic digital media buying in particular. Consider the following quote from Bob Liodice, President and CEO of the Association of National Advertisers (ANA):

The level of criminal, non-human traffic literally robbing marketers’ brand-building investments is a travesty. The staggering financial losses and the lack of real, tangible progress at mitigating fraud highlights the importance of the industry’s Trustworthy Accountability Group in fighting this war. It also underscores the need for the entire marketing ecosystem to manage their media investments with far greater discipline and control against a backdrop of increasingly sophisticated fraudsters.”

What prompted Mr. Liodice’s comments? Quite simply, the ANA and White Ops updated their 2015 “BOT Baseline: Fraud in Digital Advertising” study, which suggested that the ad industry would see $6.3 billion in digital ad fraud in 2015. In light of the fact that the Interactive Advertising Bureau (IAB) reported that digital ad revenue surged almost twenty-percent through the first half of last year, can we be surprised by the fact that the level of fraud escalated as well. To what, you ask. According to the ANA report, it is estimated that the level of digital ad fraud will grow to $7.2 billion in 2016.

The challenge for individual advertisers is to determine how best to insulate their organizations from digital ad fraud, while continuing to support industry initiatives focused on the same end.

For many advertisers the question is quite simply; “But where do we begin?” The answer as the late Stephen Covey once intoned is to; “Begin with the end in mind.” So what is the end goal? For most advertisers the aim is to focus digital media investment on media sources that can reliably drive the highest level of effectiveness using the best quality inventory at the lowest possible price.

One important component of this challenge is obviously the continued growth of programmatic digital media buying. It should be noted that of the estimated $60 billion in digital media spend, programmatic will account for $15 billion or 25% of the total spend. However, one must consider that programmatic buying represents a very high percentage of digital ad fraud, up to 90% according to some industry experts.

The range of tactics employed by entities and individuals seeking to profit from the growth of digital spending are many and varied, they include; click-fraud, the use of BOTs, hidden ads and impression laundering. However, the primary source of digital media fraud is in the form of URL masking, which makes it impossible for advertisers or their agencies to know where their digital ads are running. Studies have shown that nearly 45% of transactional digital URLs do not match the URL where the impressions were actually served… a sobering statistic to be sure.

In our experience there are three things that advertisers can do to mitigate the level of risk posed by fraudsters.

First and foremost, advertisers must improve the level of transparency between their programmatic buying partner and their own organization. This can be done by employing contractual language and controls which narrow the transparency gap that more than likely exists today. Too often, agencies simply introduce their trading desk operation to their clients, without amending their current agreement or allowing the advertiser to contract directly with the trading desk entity.

Contract language should provide limitations on the percentage of total digital media spending that can be allocated to programmatic and impart clear “signing authority” guidelines in the event those levels are to be altered. Additionally, the agency should be required to provide a staffing plan, which includes data scientists and data analysts, along with the team’s estimated utilization rates and hours by individual. Complement this by incorporating copies of the media verification and performance tracking reports that will be utilized to monitor impression delivery, ad viewability and fraud detection. Finally, we suggest requiring the agency to separate the costs for media, data and technology licensing from agency fees, each of which should be reconciled to actual.

The second line of defense for advertisers comes in the form of requiring their programmatic media buying partners to utilize a Media Rating Council (MRC) accredited digital technology/ platform provider. Firms such as Integral Ad Science and Double Verify, for example, have a range of tools that can integrate with pre-bid platforms to provide real-time impression authentication to improve the odds that an advertisers impressions will be delivered in a contextually relevant, brand safe and fraud free environment. When nefarious behavior is identified, these tools can block impressions from being delivered there and dynamically blacklist those sites. In addition, there are tech solutions now available, which can assess inventory hygiene within ad networks and exchanges, allowing advertisers to target higher quality impressions.

Finally, advertisers must apply their buy-side leverage and demand that their agency partners and third-party vendors work collaboratively to optimize their digital media investment. Those parties that cannot demonstrate that they are continuously improving their tools, methodologies and compliance monitoring processes should be dropped from consideration set. Voting with one’s dollar has always been and remains one of the best ways to incent the behavior and secure the types of results that diligent advertisers deserve.  

In the words of Samuel Johnson, the celebrated eighteenth century English writer:

What we hope ever to do with ease, we must learn first to do with diligence.”

 

Programmatic: Promising, but is the Benefit to Advertisers Real?

19 Oct

cautionIn 1997 rock legend David Bowie told his fans at a Madison Square Garden concert; “I don’t know where I’m going from here, but I promise it won’t be boring.” While his comments were a reflection on life after his 50th birthday, they could just as easily be used to describe the future of programmatic media buying.

Put yourself in an advertiser’s position and consider your reaction when your media agency approaches you with this enticing proposition;

Through our proprietary programmatic buying platform we have the ability to deliver quality, targeted inventory to precise segments of your target audience at a time and in an environment when they’re most receptive to your message and at rates that are a fraction of market pricing.” 

For many advertisers, the response to this enticing offer has been “sign us up.”

The programmatic revolution began with digital media, evolved to print and OOH and is now being implemented in the television marketplace. Many industry pundits consider programmatic to be one of the advertising industry’s most prominent developments. This algorithmic based method of connecting media sellers and buyers to conduct inventory transactions in an automated, real-time manner clearly holds much promise.

Benefits to advertisers are said to include; rate efficiencies, advanced targeting, message personalization and enhanced access to premium content. For media sellers the benefits allegedly include the ability to move less desirable remnant inventory and optimize CPMs across their inventory portfolio. Ad tech firms, such as demand side platforms, sell side platforms and ad exchanges, which here-to-for never existed earn transactional fees on programmatic activity and or licensing fees from organizations that utilize their technology tools. Agencies are able to leverage their clients’ “Big Data,” do more with fewer people and when programmatic buys are executed through their trading desk operations, there is incremental revenue to be gained from media arbitrage (buying low, selling high).

Assuming that each stakeholder realized the aforementioned benefits ascribed to this approach, programmatic buying, irrespective of the issues experienced to date in the digital media market, certainly holds the potential to be a win, win scenario for all of the players.

Unfortunately, the underlying technology behind programmatic buying is not fully understood by many in the industry. To be fair, programmatic digital media buying is a highly nuanced and complex process. It greatly impacts digital display ad spending in general and mobile in particular. It can involve real-time-bidding (RTB) or programmatic direct, where advertisers can still secure inventory guarantees, it can be applied in an open exchange or private marketplace and can include traditional banners or non-standard rich media and video.

Given that programmatic buying is still in its infancy, one might logically assert that a greater level of refinement is required to support programmatic buying’s current share of digital media spending, prior to even considering expansion of programmatic buying to other media. Supporting this perspective are some of the challenges which the industry is grappling with to improve the programmatic experience for digital media:

  • Reducing the level of non-human traffic and fraud
  • Minimizing the % of ad spend accruing to “facilitators” or middle-men
  • Serving up environmentally relevant programmatic creative across devices
  • Improving advertiser transparency

We agree that programmatic media buying holds much potential. However, the industry’s experience to date suggests that advertisers have born the bulk of the risk involved with this emerging technology and its application in the digital market.

So when the talk turns to the expansion of programmatic to other media segments one has to wonder if advertisers are ready to embark upon another investment spend scenario in media segments with much steeper learning curves and higher degrees of risk.

Relative to the digital market sector, television, OOH and print are much more complex when it comes to the variety of non-digital assets, lack of uniform inventory management processes and disparate mainframe environments. Throw in the fact that there are multiple ad tech providers already offering a variety of non-standard platforms/ technologies in an attempt to solve for these considerations and the near-term prospects appear quite challenging.

In a recent article in MediaPost, Joe Mandese shared insights on some of the pioneering work being conducted in programmatic/ addressable TV by Mitch Oscar, Programmatic TV Strategist for US International Media (USIM) and his peers. During the interview, Mr. Oscar shared results from one client’s programmatic TV ad buys, which suggested they had generated “improved results and efficiencies” relative to conventional TV buys.

Compelling to be sure, however, one must pause to consider the observation that the data shared by Mr. Oscar indicated that the “mix of networks and dayparts were all over the place and it was difficult to find meaningful patterns from it.” Further, when USIM asked the programmatic TV suppliers to document what actually ran, “it generated a report with 163,866 lines of code covering 3,563 pages, something most traditional TV buyers and advertisers might not consider practical to evaluate.”

Hopefully advertisers, agencies and media property owners take a more measured approach to expanding programmatic buying to other media segments to avoid some of the pitfalls currently being experienced in digital media. Perhaps we can all benefit from the words of St. Jerome, the Catholic priest, historian and theologian, who once intoned:

“The scars of others should teach us caution.”

 

 

Compensation: One Key to Improved Digital Media Transparency

10 Sep

loyaltyLong troubled by the concept of ad agencies as media re-sellers, it has been my belief that the agency trading desk model and the resulting media arbitrage mode of compensation employed by most trading desk operations is one of the key drivers of advertiser transparency concerns with regard to digital media.

To be completely candid, our bias is that any activity in which ad agencies are engaged, that challenges the notion of a principal-agent relationship between advertiser and agency, is detrimental to establishing meaningful trust and mutual respect. Non-transparent agency revenue sources such as media arbitrage, AVBs and the awarding of jobs to related parties, without the appropriate level of due diligence or client awareness create a serious schism when it comes to marketing accountability. As importantly, they often form the basis for “me first” behavior on the part of agencies, which is not in the best interest of those clients that have entrusted them to act as their fiduciary partners with the goal of optimizing the advertisers return-on-marketing-investment (ROMI).

When it comes to digital media, there are too many competing forces focused on selfish financial interests, rather than those of the advertiser. Publishers, ad networks, exchanges, demand side platforms and agencies all seeking to optimize their share of an advertiser’s digital media investment.

Consider WPP’s recent second-quarter 2015 earning release in which the organization announced a first-half revenue gain of 6.8% and a profit increase of 51.7%. What was most telling was the following statement, within the release indicating that “net sales growth, which excludes inventory, purchased and resold to clients directly, was 5.2%.” So while media reselling makes up a relatively small portion of the agency holding company’s revenue base, it obviously contributes significantly to agency profitability. To WPP’s credit, it is the only agency holding company which breaks out organic net sales growth. 

During the spring of 2014, the Association of National Advertisers (ANA) raised concerns on behalf of its members with regard to the lack of media transparency and cited issues related to “programmatic digital buying and agency trading desks” in particular. Supporting the ANA’s perspective was information from the World Federation of Advertisers (WFA) and DataXu, which suggested that “only 55¢ of every media dollar in programmatic digital buying ends up with publishers,” with the rest going to “agencies, trading desks, demand-side platforms and ad networks.”  

Unfortunately, the odds are stacked against advertisers in this equation. Further, absent a principal-agent relationship to govern the interactions between advertisers and advertising agencies, one can legitimately ask; “Who is looking out for the advertiser’s interests?” 

Perhaps the simplest way of shifting the balance of power is to better align the roles and responsibilities of advertisers and agencies. This process should begin with a review of the media scope of services and the resulting agency remuneration system. Secondly, as part of this process, we believe that advertisers should seek to eliminate media arbitrage as a source of agency trading desk revenues. Why? To return to a fiduciary standard, where a principal-agent relationship is the hard and fast rule. 

To be fair, clients will need to consider a compensation schema, which offsets, at least in part, the revenue currently being generated by their agency partners under the current system. Such an approach could very well incorporate incentives tied to performance based criteria including but not limited to; inventory quality, CPM rate optimization, timeliness of digital buys and programmatic creative development and frequency cap/ curve management to reward extraordinary agency performance. 

Revising compensation is perhaps the quickest and most effective means available to revitalize advertiser confidence in their digital agency partners and in removing any agency qualms with regard to fully disclosing comprehensive digital media buy details to advertisers. Executed in combination with contract language dealing with the disclosure and disposition of other potential non-transparent revenue sources, such as rebates, AVBs and volume discounts and advertisers will have eliminated a couple of key items that have caused some within the client organization to question the loyalty of their agency partners. 

“Where the battle rages, there the loyalty of the soldier is proved.” ~ Martin Luther

Is Legacy Thinking Impeding Your Progress?

07 May

ana agency financial management conferenceEmerging media, rapidly expanding technologies, a changing tax and regulatory environment, talent shortages and a global paradigm shift where marketing is being “outsourced” to the end user. These were just some of the topics addressed by Marketers and Agencies alike at the ANA’s annual “Agency Financial Management” conference in Naples, Florida in early May.

While there may be significant issues to be faced in the near future, the marketing industry remains a significant component of the global economy whose rate of growth outstrips that of most developed countries GDP growth.  That said there are changes required of the industry’s stakeholders to better prepare their organizations’ to successfully navigate a complex landscape fraught with both risks and opportunity.

This dynamic will require a fresh approach by clients and agencies alike along with a willingness to shed the bonds of legacy thinking, which has retarded industry progress on a number of key fronts in recent years.

One of the themes to emerge from the conference is that marketing is difficult, expensive and challenging.  When combined with talent, resource and education restraints being faced by many marketing organizations there is a belief that marketers are leaving dollars on the table.  Contributing factors range from digital media value erosion to a lack of transparency into certain aspects of the supply chain such as trading desks to the absence of industry governance on the issue of cross platform audience delivery measurement.

Underlying these challenges is the fact that client-side marketers, procurement professionals and marketing service agencies are still working on evolving their relationships and gaining better alignment on how best to optimize the advertisers’ return on marketing investment (ROMI).  Central to the success of this collaborative effort is the need to build trust and mutual respect among these stakeholders.

Interestingly, marketers expressed a strong, almost universal need for the introduction of uniform controls, competitive fee structures, tighter statements of work and the use of agency performance incentives to assist in positively driving change.  One aspect of boosting ROMI is the elimination of “waste.”  Based upon our experience in the area of agency financial management consulting, we have found that an excellent starting point for marketers in this area is to clarify the roles and responsibilities of their agency partners, minimizing redundancies and identifying those agencies that are considered strategic partners versus those that provide project-based support.  This provides a solid starting point for determining  “where” to begin in terms of initiating change and inviting those select partners to be part of the process.

On the “good news” front it was clear from the results of a recent survey conducted by the ANA and presented at the conference, that the trend toward an increased level of collaboration between marketing, finance and procurement is taking seed.  Further, as evidenced by findings from a separate survey conducted by the 4A’s, the agency community has clearly begun to accept procurement’s role in the agency sourcing and contract negotiation process.

There is one area however, which has the potential to seriously disrupt marketers’ efforts to optimize their ROMI… transparency, or more specifically, the lack of transparency that permeates the industry.  This was reflected in the results of survey data from the ANA, WFA, ISBA and ACA where “transparency” was identified by advertisers as one of, if not their top concern.  The lack of clarity and in some instances, honesty surrounding issues such as data integrity, audience delivery, trading desks, reporting and financial reconciliations creates financial risks for advertisers and undermines attempts to improve trust levels between clients, agencies and media sellers.  As Mike Thyen, Director of Global Procurement for emerging markets at Eli Lilly and Company so aptly stated:

“Where there is mystery, there’s margin.”

Examples of the potential for financial leakage related to a lack of transparency included the results from the aforementioned WFA study, cited by ANA President and CEO Bob Liodice, which found that for every dollar invested by advertisers in digital media, only fifty-five cents on the dollar flowed through to the publisher.  Inherent in this single example is the lack of transparency surrounding programmatic media buying, agency trading desks and the lack of auditable outcomes in terms of audience delivery, media rates paid and trading desk margins.

Changing times require firms to evolve and innovate in order to remain relevant with their customers and to improve their operations.  When it comes to marketing, the rate and rapidity of technology driven change is such that viewing today’s opportunities through an “old school” prism is certain to create risks and limit marketers’ ability to fully leverage their investment.   Keeping an open mind, forging strong relationships between marketing and procurement, implementing controls and reporting to enhance transparency and investing in one’s agency partnerships represent key actions to be considered to successfully face the changes which are underway.

Follow Blog

RSS Feed

OR

Enter your email address to follow this blog and receive notifications of new posts by email.

Featured Posts

Sign-up for a complimentary “Mitigating Market Risk” Consultation.