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Impossible: 1 + 1 Can’t = 3

23 Mar

dreamstime_xs_6452736Late last week a group of marketers filed an amended lawsuit against Facebook alleging that it knowingly overestimated audience reach levels.

Court papers filed in the suit indicate that:

“Facebook’s internal documents show that Facebook personnel knew for years that the Potential Reach metric that it provides to Facebook advertisers on its advertisement purchasing interfaces (including on Ads Manager and Power Editor) was inflated and misleading.”

The evidence for these actions was identified in the original complaint and were based upon analysis conducted by independent groups, including the Video Advertising Bureau. In their 2017 report, the Video Advertising Bureau found that Facebook’s purported reach in every state in the U.S. exceeded their populations. A red flag to be sure.

Not excusing Facebook’s alleged behavior, one would think that an observant marketer or agency media buyer would question reach levels that are greater than the population of a given market(s) and raise questions, long before such revelations are made in relation to a lawsuit.

The irony is that reach estimates apparently were not questioned by agency planners or clients during the media planning process, nor at the time of post-campaign performance summary meetings. The seminal question is, “Why not?” Further, if and when suspicions were raised, wouldn’t it be reasonable to expect media buyers to exclude any publisher suspected of inflating reach levels from consideration to begin with, and cease allocating client media funds to that entity moving forward? The answer is obviously “no.”

When one sees examples of this type of lackluster media stewardship, it is easy to understand why the C-Suite might question the efficacy of their organization’s advertising investments.

The fact of the matter is that Facebook has seen its annual global ad revenues grow from $1.8 billion in 2010 to over $69.5 billion in 2019 (source: Statista, 2020). Along the way, there had been publicly aired concerns about the accuracy of Facebook’s user base, culminating with the platform’s acknowledged purges of 3.3 billion “fake” accounts in 2018 and another 5.4 billion in 2019.

Certainly, as part of the heralded duopoly, media professionals have been keenly aware of the share of digital ad spend which Google and Facebook have accounted for as part of the digital media sector’s meteoric growth. eMarketer estimates that the duo represented 56.3% of total U.S. digital ad spend in 2019, with Facebook accounting for 19.2% of the total.

During this period of increased digital ad spend, advertisers paid their digital agency partners plenty in the way of fees and commissions to provide consultation, planning support, buy stewardship and oversight. So why did it take so long to identify the fact that a media seller’s reach exceeded the audience universe?

“The obvious is that which is never seen until someone expresses it simply.” ~ Khalil Gibran

When it Comes to Programmatic Digital the “Same-Old, Same-Old” Isn’t Working

26 Feb

EinsteinMedia’s murky supply chain, wrought by fraud and congested with too many intermediaries between advertisers and publishers, continues to serve up challenges for digital media advertisers.

The fraudsters at it again with a devious approach to separating advertisers from their media spend. As if digital ad fraud practices including fake devices, fake locations, fake impressions and fake consent strings weren’t enough, the media industry now has to deal with a sophisticated domain spoofing bot.

According to an article in The Drum, fraudsters have now launched bot networks to evade ads.text protections, which was introduced by the IAB to allow publishers to “list authorized sellers” of their inventory. Both DoubleVerify and Integrated Ad Science (IAS) have unearthed fraudulent activity using 404bots, which employ domain spoofing techniques that misrepresent URLs, making buyers “believe that they are getting valid inventory, when in fact it does not exist.” IAS suggests that more than 1.5 billion ads have been impacted since September of 2019.

When will it end? Likely never. Ad fraud is to lucrative and too difficult to detect, creating a literal gold mine for fraudsters. In fact, the World Federation of Advertisers (WFA) estimates that “over the next 10 years, the global cost of ad fraud is projected to rise to $50 billion. The best defense for advertisers according to Shawn Lim, author of the aforementioned article, is “Brands and publishers need to work with transparent supply chains, reputable supply partners, and know what ads are appearing – and where.”

If you’re an advertiser, you would be right to pose the question; “Who has my back?” For all of the money invested by digital advertisers in specialist agency support, fraud detection services and brand safety tools, who is safeguard their funds? It seems as though the only thing advertisers have to show, for the promise of efficiency that was ushered in by programmatic digital media, is suppressed working media ratios.

The risks continue to mount as the amount spent on digital media in the U.S. is approximately $79 billion, with 85% of the total transacted programmatically (source: Interactive Advertising Bureau, February 2020). eMarketer estimates that advertisers spent 38% of their non-social programmatic display budgets on programmatic fees in 2019, a 20% increase over the prior year.

As one example of the congested digital media ecosystem, Danny Khatib, CEO of Granite Media wrote an excellent article in AdExchanger illustrating the inefficiency of the programmatic digital media supply-chain. Entitled; “Can We Please Reduce This Link In The Programmatic Chain Already?” the article advocates for consolidation between the DSPs and SSPs, long thought to function respectively as buyer and seller advocates, with “each taking a 15-20% cut and confusing the heck out of the web ecosystem in the process.” According to Mr. Khatib, “there really shouldn’t be a traditional SSP business separate from a DSP business – that distinction no longer makes sense, if it ever did.”

No wonder advertisers have stepped up compliance and performance audits of their suppliers and have heartily begun to embrace supply-chain optimization. The madness has to end and fueling investments in specialist agencies and adtech solutions is simply not achieving the desired result.

 “Insanity: Doing the same thing over and over again and expecting different results.”          

~Albert Einstein

 

Accenture Exiting the Media Auditing Space Creates an Accountability Gap

17 Feb

Acc_Logo_Black_Purple_RGBIt was a move many industry pundits saw coming. With a focus on expanding its interactive marketing services business, which accounted for $10 billion in revenue in 2019, Accenture made the announcement that it was going to “ramp down” its media auditing, price benchmarking and pitch management business by the end of August.

Advertising agencies and competitors within the media audit space were quick to celebrate the news, for differing reasons.

Agencies for their part have long felt that as Accenture grew its interactive marketing services practice, their audit services represented a conflict of interest. Afterall, how could a marketer trust the objectivity of the advice of an audit firm reviewing an incumbent digital agency, when the parent company offered services that were competitive to the incumbent? One fear among agencies was that Accenture could leverage the information taken in on the audit side and generate competitive insights that would yield an unfair advantage when pitching their digital capabilities to advertisers.

Media audit firms, which stand to gain business as Accenture winds down media audit activity, point out that Accenture’s approach to auditing, pitch management and media rate analysis, which relies on its proprietary rate benchmarking pool was dated and less relevant than in the past.

While there may be merit to both group’s perspectives, Accenture’s decision creates a major resource gap when it comes to global media accountability and transparency.

Make no mistake, there are a number of experienced, highly reputable independent media audit firms that will help to fill the void left by Accenture. That said, most lack the scale and or depth of resources to truly backfill this resource gap. This perspective was echoed by Rob Rakowitz of the World Federation of Advertisers’ (WFA) Global Alliance for Responsible Media, who stated that at a time when the “media supply chain needs more clarity” Accenture’s decision to exit the audit space “creates a hole” when it comes to independent oversight.

Interestingly, the holding companies have focused their commentary in the wake of Accenture’s announcement on the “competitive conflict” aspect of the discussion. However, some holding company financial executives, who know full well the impact of independent oversight on their media agency bottom lines, are likely breathing a sigh of relief. Since the Association of National Advertisers (ANA) 2016 report on media transparency, scrutiny of media agency practices and the resulting downward pressure on margins tied to curtailing some of the non-transparent agency revenue practices cited in the ANA’s report have been costly to agencies.

The good news is that there has been progress since the issuance of the ANA report four short years ago. Client/ Agency agreement language has improved, more advertisers have conducted contract compliance and performance audits and media supply chain transparency initiatives have gained traction. The global fraternity of contract compliance and media performance auditors, along with advertiser trade associations such as the ANA, WFA and ISBA have all played an important role in ushering in reforms tied to improved accountability and transparency practices.

Now is not the time for less oversight and one can only hope that the loss of Accenture Media Management and the $40 billion of annual global media spend coverage it represented will not impede industry media accountability efforts. Advertisers can ill afford further reductions in their working media.

 

Supply Chain Optimization: A Concept Whose Time Has Come for Marketers

28 Jan

Supply Chain Management word cloud, made with text only.Much has changed since the diminished role of the full-service agency in the 1980’s. Decoupling and specialization initially swelled the size of marketers’ agency networks, then the meteoric rise of digital and social media further expanded the ranks of specialist agencies and gave birth to the adtech and martech industries. In the end, all served to significantly expand the advertising supply chain, adding complexity and cost.

A biproduct of these events is downward pressure on marketers’ working dollars, as an increasing portion of the budget is funneled to agency fees and underwriting the growing costs of advertising related technology. Thus, a key challenge faced by marketers today is evaluating how to reduce supply chain related fees as part of their efforts to improve efficiencies, drive revenues and build strong brands.

Strategies for addressing this challenge include; consolidating supply chain partners, reducing the number of agencies and intermediaries in the roster, and establishing distinct roles and responsibilities among agency and intermediary partners to eliminate redundancy and clarify deliverable and KPI ownership. Along the way it’s important to seek better alignment between agency remuneration programs, resource allocation needs and business outcomes.

Scrutinizing and monitoring supply chain partner performance, in the context of the client/ agency agreements that govern the relationships, is a necessary ingredient for successful implementation for each of these strategies. Establishing a formal marketing supplier accountability program also mitigates supply chain related risk while providing a foundation for improving supply chain efficiency.

Unfortunately, too often there is no clear organizational “ownership” around marketing supply chain accountability. While marketing clearly serves as the relationship management lead with suppliers, their principal focus is and should be on brand building, customer acquisition and demand generation.  Therefore, it may be unrealistic to expect marketing executives to serve as the “principal in charge” for supplier accountability. This is particularly so considering the number and nature of obligations that comprise an accountability program, including but not limited to the following:

  • Agency contract compliance reviews
  • Agency remuneration reviews
  • Annual agency fee reconciliations
  • Annual marketing supplier billing reconciliations
  • Annual 360-degree supplier performance evaluations
  • Supplier performance reviews
  • Supplier pricing reviews and competitive bidding
  • Supplier contract and SOW reviews

Based on experience, we firmly believe that involvement and support from corporate groups such as; Procurement, Finance and Internal Audit are critical to marketing supply chain optimization. Involving individuals and leadership from these groups to shoulder responsibility for the accountability program is important to drive supply chain efficiency – or at the very least these individuals can support Marketing’s efforts, ease Marketing’s burden, and bring cross-functional perspectives to bear.

At the end of the day, there are two overriding goals for any marketing supply chain optimization program:

  1. Strong supplier relationships
  2. Optimized use of corporate marketing budgets

In a growing, complex, rapidly changing market sector which represents over $1.3 trillion in global marketing and advertising spend (source: PQ Media) the need to embrace supply chain optimization has never more clear, nor the associated benefits more meaningful.

 

 

How Will You Assess the Benefit Delivery of Your In-House Agency?

14 Nov

Advertising concept: Ad Agency on digital backgroundThe number of marketers transitioning portions of their advertising from agency partners to in-house operations has grown in recent years. According to the Association of National Advertisers (ANA) 2018 study on this topic it found that “78% of its members had in-house agencies,” which was up from a level of 42% in 2008.

As marketers seek improved levels of speed, control and efficiency, the trend of marketers transitioning select services in-house or, in some instances, seeking to build full-blown internal agencies will likely continue.

Company management’s goals regarding this decision often revolve around the procurement of advertising support with shorter turn-around times and lower costs than what can be achieved through its external ad agencies. The question to be asked is; “How will in-house agency executives measure and report on their operation’s benefit delivery?”

Capturing data and providing feedback on the effectiveness and efficiency of in-house operations is a must when it comes to validating its existence, assessing project through-put potential and evaluating colleague satisfaction. That said, determining what performance criteria to measure and the methodology to be employed is an important decision.

In a recent article entitled; “Taking your marketing in-house? It is time to improve productivity” Darren Woolley, Global Chief Executive of TrinityP3, an Australian based marketing management consulting firm, suggests that when it comes to benefit delivery, in-house agencies are overlooking the “single biggest financial benefit” that they provide, which is “improving productivity.”

Measurement of “what” an in-house agency produces in addition to the cost of delivery aside, Mr. Woolley rightly points out that in-house agency executives have the unique ability to enhance the productivity of their operations by “streamlining structures and processes” between their internal clients and the in-house agency team. This is a structural advantage, not always available to a marketer’s external agency partners who have to adopt to their clients’ internal processes, no matter how inefficient they may be.

The good news is that there are resources available to assist marketers with crafting in-house agency effectiveness measures and to benchmark their performance. As an example, the In-House Agency Forum (IHAF) offers its members access to a normative database of performance benchmark and the ability to customize a performance survey that they can field to assess their service delivery where it counts most… with their internal clients.

Establishing the storyline for assessing in-house agency value delivery is critical to driving productivity and positively shaping stakeholder expectations. In the words of Paul Meyer, “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.”

 

 

 

 

 

 

 

 

Work from Home or Not at All. The Evolving Role of Perks in Attracting Talent.

12 Oct

Ping pong table, rackets and balls in a sport hallThe ping-pong table sat idle, covered with stacks of paper, the modern day version of an in-home treadmill as hanging plant holder. Once considered an important perk and a reflection of a firm’s employee-centric culture, ping-pong tables in the workplace may have seen their halcyon days.

The marketing industry as a whole is wrestling with the issue of attracting and retaining talent. So much so in fact that the Association of National Advertisers’ CMO Growth Council made “talent and capabilities” one of its five core pillars for “driving business growth and societal good.” Globally, business leaders are working with their counterparts in academia to help attract young people to the marketing profession, while aligning curriculums with the emerging needs of a fast evolving industry to better prepare students for a marketing career. Additionally, consumer marketing companies, advertising agencies, media firms and others within the marketing sector have stepped up their on-campus recruiting efforts in an effort to identify and secure the next generation of marketing practitioners.

Thus it was with great interest that I read a recent article in Knowledge@Wharton entitled; “Wither the Ping-Pong Table? Which Perks Matter Most to Employees.” The article focused on the role that perks play in attracting and retaining employees.

One of the principal benefits of perks is their appeal to “top performers,” that small percentage of a firm’s employees that drive disproportionate value. Modern day perks range from paternity leave to flex time, unlimited vacation, on-site gyms and dry-cleaning service. Equally as important as their appeal to top talent: “Perks are symbolic of valuing employees, and people will give more when they are in a culture which is supportive and caring.” This according to Nancy Rothbard, Professor of Management at Wharton,

For the marketing and advertising industry, which has increased its efforts to replenish its ranks of energetic, knowledgeable professionals across a range of functions, perks play an important role in their talent sourcing efforts. Aside from helping to attract newcomers, perks also play a vital role in helping to energize a work place, build comradery among co-workers and reinforcing a firm’s cultural identity.

According to the Wharton article, perks that emanate from an organization’s culture tend to resonate with its employee base in a way that yields significant symbolic value. One example cited by Sigal Barsade, Professor of Management at Wharton was the offering of pet bereavement days, which can reinforce the notion that a company’s culture traits include “affection, caring and compassion.”

So what perks will provide the greatest value for your firm? Unlimited vacation, while appealing, is also quite costly. Perhaps goat yoga will yield the same results, with lower costs to the organization. Either way, the role of perks, rather than a reliance on the escalation of salary dollars, cannot be underestimated in winning the talent game.

Time for a Financial Review?

26 Jul

knowledge and ignorance puzzle pieces signdreamstime_xs_53502419

Really?

No triple bid.

No staffing plan.

No reconciliation.

Fixed fee

100% advanced billings.

Slow job cost reconciliation.

Poor Agreement language.

Old Agreement.

No examples / templates.

No breakout of retainer vs. out-of-scope fees.

No agency reporting of costs / hours.

Programmatic supply chain not understood.

Use of in-house agency services, no rate sheet.

Use of in-house agency services, not reconciled.

Freelance billed at full retainer rate.

Interns billed at full retainer rate.

Credits held.

Low Full Time Equivalent basis.

High Rate per hour.  No fee detail.  Non arms-length use of affiliate.

Mark-up applied.

Float.  Kick-back.  Favored expensive suppliers.

Duplicate charges.

Time reported doesn’t match time system.

Overpayments.

Luxurious Travel.

Gifts.

That’s the short list.

Don’t let this happen to your critical marketing dollars.

Update and lock down financial terms in Agreement.

Tighten up definitions.

Enhance Agency reporting required.

Perform routine spot checks.

Follow the money to the ultimate end user.

Vet Agreement with ANA template.

Ask the Experts.

Maintain consistence of control and visibility across the Marketing supplier network.

Maintain trust but validate Agency financial activity.

Strengthen the Agency relationship through understanding and alignment.

Really.

 

Things Are Looking Up for Marketing

26 Apr

What do these seemingly disparate items have in common?

Building Momentum Clock Time Words Moving Forward

  • According to Gartner Research, North American and UK companies will spend 11.2% of corporate revenue on marketing in 2019.
  • Nearly two-thirds of CMOs are expecting to see marketing budgets rise this year.
  • The recent IPA Bellwether survey indicates that UK marketers saw an 8.7% increase in the size of their advertising budgets during the first-quarter of 2019.
  • Martech budgets will account for almost 30% of marketing expense budgets in 2019.
  • On the strength of its break-through brand building efforts Burger King is “cool againproclaims INSEAD.
  • Former Anheuser-Busch InBev CMO, Miguel Patricio is promoted to CEO of Kraft Heinz.

In short, organizational confidence in both marketing and marketers appears to be on the rise and zero-based budgeting (ZBB) has helped, not hindered marketing’s resurgence.

By way of background UK marketers, including Unilever and Diageo, have been at the forefront in adopting ZBB, AB InBev is a ZBB organization, 3G Capital, which owns Burger King and Kraft Heinz has employed ZBB. And finally, martech budgets are soaring because organizations have driven out marketing budget inefficiencies, applying savings to fund productivity enhancing research and innovation initiatives.

Over the last decade or so, marketers had to renew their focus on demonstrating that the marketing function could in fact drive business, including both top line revenue and net profit. Importantly, marketers had to do this at a time when companies had shifted their focus to cost management and categorized marketing as an expense… not an investment.

The message sent to marketing was clear, budgets and the success of the CMO would be tied to achieving quantifiable results that supported the organization’s goals. For many firms, ZBB was an integral part of this process. ZBB provided a framework for eliminating unproductive costs and identifying areas, which better supported firm strategies and that were worthy of financial support.

At a time when “faster, better, cheaper” has become a guiding principle and where big data and technological advances are driving dizzying rates of marketplace change, building a successful marketing infrastructure has become increasingly difficult. Yet, there are numerous indicators that would suggest things are moving in a positive direction. The structure, processes and accountability that is part and parcel of a ZBB process appears to have aided marketing’s resurgence.

In the words of American economist, Emily Greene Balch:

The future will be determined in part by happenings that it is impossible to foresee; it will also be influenced by trends that are now existent and observable.”

 

 

 

 

Heritage or Baggage. What’s Your Perspective?

2 Apr

ddb-content-logo2-2019-1320x660Two different agency holding companies, with two different perspectives on the value of brand heritage and the role that heritage will play in their respective cultures moving forward.

In late 2018, WPP made the announcement that it was going to merge J. Walter Thompson, the world’s oldest agency brand with Wunderman. The new agency was christened Wunderman Thompson. This came on the heels of WPP’s decision to consolidate digital agency VML with Young & Rubicam renaming the combined entity VMLY&R.

Make no mistake, we are proponents of the holding companies moves to consolidate their brands to streamline operations, improve accountability and to simplify marketer access to agency services. That said, for the nostalgics among us, it was sad to witness the disappearance of two of the industry’s most venerable brands.

Thus, we were pleasantly surprised when Omnicom introduced its new corporate identity for DDB in March. The firm chose to leverage its heritage, adapting its original logo and paying homage to its three founders Ned Doyle, Mac Dane and Bill Bernbach by incorporating the agency’s original name, Doyle Dane Bernbach into its new identity.

A spokesperson for the agency stated, “As other agencies are commoditizing their agency names and turning away from their founding principles and visions, DDB is doubling down on the values that Doyle, Dane and Bernbach founded our agency on – creativity and humanity.”

In the words of Bill Bernbach: “Getting your product known isn’t the answer. Getting it wanted is the answer.”  

U.S. Advertising On the Rise In 2019

5 Mar

dreamstime_xs_29951176Good news for the U.S. advertising industry as revenues are expected  to grow 2% in the first quarter and 7.6% for 2019. This according to Standard Media Index (SMI).

Of note, SMI data is generated from raw invoices — actual dollar amounts spent on each ad buy — from five of the seven media agency holding groups and independent media agencies Read More

 

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