Reflecting at the end of 2022 there were two articles that piqued my interest (links below). The articles dealt with two issues that have plagued the ad industry for years now… the monetary impact of ad fraud and the lack of transparency surrounding programmatic digital media. According to Nick Swimer, an Entertainment and Media Partner at Reed Smith, LLP; “The lack of transparency is costing businesses millions and driving false impressions, which in turn is undermining trust in the industry.”
Advertisers, on the whole, currently invest more than half of their budgets in digital media. A high percentage of this activity is purchased programmatically. Based upon a review of these articles, the monetary impact and attendant risks faced by advertisers in this area are eye-opening. This is on the heels of the 2020 study by the ISBA and PwC which found that only 51% of spending in this area made it to publishers. Of the remaining 49% balance, 15% of total advertiser spend could not even be tracked or attributed.
Given the economic climate and the negative impact on marketing budgets, it is natural to wonder why there isn’t a greater proclivity for action on this front among marketers.
Support for industry trade associations such as the ANA, IAB, and their key initiatives (i.e., Trustworthy Accountability Group (TAG), regulatory outreach and lobbying efforts, etc.) are important steps in this area that will yield results for marketers over the long haul. However, immediate action is required if marketers want to safeguard their investments sooner than later.
Near-term, there are a few key steps that marketers can take to mitigate the negative economic impact that fraud and non-transparency related risks can have on their budgets:
- Update media agency contracts to secure comprehensive audit rights, establish a principal-agent relationship and clarify expectations regarding the agency’s fiduciary responsibilities.
- Conduct periodic contract compliance, financial management, and performance audits of media agencies.
- Assess and tighten media controls including Media Authorization Form language, Buying Guidelines, campaign monitoring and post-buy reporting, agency-generated third-party vendor insertion order language, and client sign-off requirements before using agency affiliates or Inventory Media buys.
Too much time has elapsed since these issues originally surfaced. And while there has been much talk about corrective measures, these trends have continued unabated. It feels as though now is the time for action, not indifference. What do you think?