Money Must Grow on Trees

21 May

digital mediaIronically, shortly on the heals of the Association of National Advertiser’s (ANA)  “Agency Financial Management” conference where the ANA presented survey results suggesting that for every dollar spent on digital advertising, only fifty-five cents made it through to the publisher comes the following announcement from PwC and the Internet Advertising Bureau; 

“Internet advertising revenues hit $42.8 billion in FY 2013, up 17% from $36.6 billion in 2012.  Internet ads brought in 7% more than broadcast TV ads.” 

Confused?  Wait.  Given the rise in programmatic buying within the digital marketplace (up 43.4% according to eMarketer), consider the following finding from another recent ANA survey conducted with Forrester; 

Of the client-side marketers surveyed for the study on the topic of programmatic buying, “29% said they’ve heard the term, but don’t have a clear understanding of it” and 12% said they were “completely unaware of programmatic buying.” 

In light of the lack of transparency, limited marketer understanding of this space and no uniform measurement standards, the continued double-digit growth of digital media certainly seems an oddity.  In fact, it is difficult to come up with a sound rationale to support the share of advertising spend represented by digital at this stage of the media’s development.  The term “potential” comes to mind, but the lofty spend levels for digital are more likely being driven by marketers’ fear of “being left at the station.”  Unchecked, this trend poses serious reputational and financial consequences for marketers.  In the words of M.W. Harrison; 

“The waste of money cures itself, for soon there is no more to waste.” 

That said if the desire to spend heavily on digital media is burning a hole in marketers’ proverbial pockets, perhaps it makes sense to focus on improving the transparency and controls surrounding the financial stewardship of an advertisers investment in digital.  

A good place to start from an accountability enhancement perspective is with a sound master services agreement between the client organization and its digital agency partners (which likely includes most of an advertiser’s agency network).  The integration of contract language and reporting requirements governing the agency’s use of affiliate organizations such as trading desks and offshore digital production hubs, agency staffing, media delivery verification and I.P. infringement indemnification should be viewed as integral controls in an age of patent trolls and media arbitrage.  Unfortunately, in our agency contract compliance practice, it is not atypical to find that legacy agreements or lapsed agreements are in place, creating an element of risk and uncertainty. 

Additionally, advertisers may want to consider the use of independent contract compliance and performance monitoring consultant that can work with their marketing teams to provide training and insights along while improving the transparency surrounding the organization’s digital media spend.  Without some layer of financial protection and performance vouching, it is difficult to categorize the money being allocated to digital advertising as anything more than discretionary spending.




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