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Why Are Media Agencies Forgoing Objectivity?

24 Jul

dreamstime_m_35343815Consumer media consumption behavior is ever evolving. And advertisers must select from an expansive array of content venue choices to communicate their messaging. Balancing these two dynamics is the key to optimizing media investment decisions.

Time was when agencies based their media resource allocation recommendations on insights gained from an exhaustive, objective review of media performance and audience delivery data. 

In traditional principal-agent relationships, agencies have a fiduciary responsibility to act in the best interest of their clients. This includes providing advertisers with informed recommendations, free of bias or conflicts of interest, that are advantageous to the advertiser. Most advertisers understand that in the twenty-first century, unless the principal-agent relationship is firmly established in the Client/ Agency agreement, all bets are off when it comes to their agency being bound to adhere to principal-agent guidelines.

Over the course of the last decade or so, practices such as “principal-based media buys” and ABVs (rebates) came into vogue. This is where an agency takes ownership of the media inventory and resells that inventory to the advertiser at a non-disclosed mark-up, making a profit on the spread and or receives an incentive based upon its total spend with a media seller. Good Client/ Agency agreements require the agency to secure the client’s written authorization before employing these type of practice and in the case of rebates to remit the advertisers pro-rata share of such rebates.  

Fair enough. Buyer beware. Trust but verify. Got it.

There is another practice that seems to be gathering steam between media sellers and media buyers that raises questions about the objectivity of an agency’s media planning and buying recommendations. Simply stated, media owners, seeking to lock-in a revenue stream from a given agency holding company, are offering to reserve inventory in bulk for that agency to allocate to its client base at some point in the future.

One recent example of this is Omnicom Media Group’s (OMG) commitment earlier this month to spend $20 million of its clients’ media funds to advertise in podcasts distributed by Spotify. Given the nature of the advertisers represented by OMG (McDonalds, AT&T, P&G, PepsiCo, etc.), their total media spend and the fact that 2020 media plans have been completed and buying commitments presumably made perhaps there is little risk of such a deal influencing whether or not an advertiser should commit dollars to Spotify podcasts.

Separately, it was recently reported by Digiday that TV networks and agencies, in an effort to jump-start the annual upfront marketplace, were considering share of spend deals to “address advertiser commitment issues.”  In this scenario, an agency holding company would commit to spend a percentage of its clients’ aggregate upfront budgets with select network groups. However, client budgets are in flux and there are multiple questions surrounding the traditional upfront marketplace. Thus, the commitments being made by agencies are being done in advance of any client media authorization process. It would be natural for one to ask; “What incentives are being offered by the network groups to facilitate such deals? And How are such benefits distributed to an agency’s clients?”

The primary concern with this type of approach is the potential for these buying commitments to bias an agencies recommendations to its client base. As the author of the Digiday article points out if aggregate spend projections come up short, the holding company may find itself in a position where it may “need to push clients to spend their money” with a given network group.

Practices such as these are fraught with risks. When an agency has already committed to a pool of inventory on a network group based upon hypothetical aggregate spend levels across its client base objectivity is lost.

We are simply not fans of this practice, believing that agencies have a fiduciary responsibility to their clients to make media recommendations, based upon an unbiased fact base, that are in the best interest of the advertiser.

 

 

Bots Don’t Buy Products or Services. People Do.

22 Jun

digital media fraudIs human viewing of your ad message important to you? Then, whether as an advertiser and or their agent, investing in programmatic digital media is deserving of a renewed level of scrutiny. Why? Because as Dr. Fou contends in the following article, purported efficiencies and low CPMs are meaningless if bots represent the source of a marketer’s ad trafficRead More

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 was 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 have 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

 

Brand Suitability vs. Brand Safety

29 Nov

Many Brands One Unqiue Best Brand Sphere Top ChoiceAmused, yes. Concerned, potentially. Shocked, no longer when it comes to the cavalier attitude exhibited by some in the digital media supply chain when it comes to an advertiser’s digital media investment.

That said, I have been intrigued by the nuanced manner in which agencies, ad tech providers and publishers now address the topic of brand safety. Interestingly, many in the digital media supply chain have begun to differentiate between “brand safety” and “brand suitability.” Ultimately, marketers will have to weigh in on whether or not there is a difference and why they should give any provider relief when it comes to protecting the brands that they steward.

Recently, Integral Ad Science (IAS) released the results from a research study which they conducted that suggests that while approximately one-half of those surveyed understood that there was a difference between these two perspectives, 27% of the digital media buyers surveyed were unaware of the difference. To be fair, as defined, the differences are subtle to be sure. One deals with controls to mitigate potential damage to a brand’s reputation and the other with targeting parameters such as viewability and content adjacency.

Candidly, it is fair for marketers to ask the obvious question, “Why isn’t content adjacency considered a risk to brand safety? Why the need to segregate this important variable from overall brand safety efforts?” It would seem that the industry should view any threat to the integrity of a brand as a brand safety issue. The cynic in me can’t help but believe that parsing this issue, creating a sub-category for brand suitability is simply a way to mask the industry’s inability to determine where an advertiser’s digital ads are served and to maneuver around the enhanced controls and stricter guidelines that marketers have attempted to enact to protect their brands.

It should come as no surprise that industry participants cannot agree on whether or not the 4A’s Advertising Protection Bureau (APB) guidelines issued in 2018 are adequate or too restrictive… assuming they were even aware of the guidelines to begin with. This also helps to explain why only 9% of the IAS survey participants indicated that they were “very” satisfied with the digital ad industry’s overall efforts when it came to brand safety. 

For a marketer, there is nothing more important than the sanctity of a brand, the relationship it enjoys with its customer base and the long-term value, which that represents to the organization. Any attempt to subjugate the topic of brand safety for the convenience of being able to scale a campaign, extend campaign reach or to enhance supply chain participant revenues, is simply not appropriate.

Questioning the efficacy of or the need for brand safety policies, whitelists, blacklists and or the money being invested by brand marketers to monitor ad placements and adherence to these guidelines comes across as extremely self-serving and contrary to the notion of brand safety. Brand safety should not be an either or proposition.

While progress has been made, the digital ad industry must be pressed by its advertising base to remain vigilant to protect the sanctity of their brands. When it comes to the philosophy of brand safety and the industry’s commitment to it, marketers cannot allow their supply chain partners to relax their standards on this front for any reason. The industry should never forget that it is the brand marketer that bears all of the risk when it comes to challenges to brand safety.

Clean Up in Aisle 12. Sponsored by…

28 May

Asian grocery noodle aisleSome of the world’s largest retailers have their sights set on garnering a larger share of the ad market. And why not. Amazon is expected to generate $11 billion in advertising revenue this year, growing to $15 billion in 2020 (source: eMarketer).

So it comes as no surprise to learn that other retailers have taken steps to shore up their ad platforms. In April, Walmart acquired Silicon Valley-based Polymorph Labs and their content sensitive digital ad serving and analytical capabilities to help strengthen its Walmart Media Group and Target is rumored to be interested in acquiring WPP’s Triad Retail Media unit to support its Roundel media division. All three retailers are actively courting advertisers and their agency partners to pitch the media and product sales benefits of their data driven advertising offerings.

On one hand, one might question why is this even newsworthy? Traditional retailers have long been in the ad business, selling advertising to the brands that they carry on in-store media, in weekly ad circulars, in price-item television and radio spots and in OOH. Thus the expanded focus on sophisticated, data-driven digital advertising solutions should come as no surprise.

That said, the potential to integrate target audience information with web browsing data, shopper data and location data to serve up relevant ads in an environment where consumers can immediately click-to-buy and receive their merchandise in a day or two has the potential to revolutionize the retail ad industry.

As retailers refine their offering and simplify platform use, they will quickly cannibalize traditional search and digital display advertising activity. Factor in the ability to tap retailers omnichannel databases, with the goal of refining ad targeting to drive digital media efficiency and the appeal of retailer digital ad platforms increases exponentially.

Consider Walmart Media Group’s pitch to advertisers; with “90% of Americans shopping at Walmart every year” and “160 million visitors” in-store and online every week, Walmart Media Group helps brands to “reach more customers at scale and measure advertising effectiveness across the entire shopping journey.” 

On the surface this evolution of retail advertising certainly appears to be a win-win for the industry. Retailers benefit from a new, high margin revenue stream that is largely technology driven, relying on automated platforms. For the agency community, specialist agencies are already coming to the fore that focus exclusively on assisting brands in assessing and realizing opportunities associated with these retailer digital ad platforms. And, from a brand perspective, serving up targeted ads in a brand safe, fraud free environment with the potential to immediately convert consumer interest to sales is a compelling value proposition.

Perhaps the greatest challenge for manufacturers as more retailers join the fray, will be to balance the ongoing need to strengthen their brands and for some, to build their own direct-to-consumer offerings, while funding their participation in retailer digital ad platforms. Make no mistake, while a brand may be able to build a solid business case for investing with their retail partners, retailer leverage over brands to influence whether or not they buy-in and at what level will be real as the balance of power pendulum continues to swing in favor of omnichannel retailers.

 

 

 

 

Working Media or Tech Tax?

2 Apr

dreamstime_xs_40032570Fact: Digital media expenditures have grown to represent the lion share of advertisers’ media spend, with programmatic being the dominant form of digital media advertising. According to Zenith’s recently released Programmatic Marketing Forecast, “65% of all money spent on advertising in digital media in 2019 will be traded programmatically.”

As marketers continue to focus on increasing working media ratios, they must confront the rise in expenses ranging from agency campaign management fees, data fees and adtech fees associated with their digital media investment.

According to WARC, which provides guidance to many of the world’s largest advertisers, advertising agencies and publishers, in 2017 “over $30.0B of the $63.4B spent on programmatic advertising went to technology vendors.” Thus, it is understandable why so many refer to these fees as a “Tech Tax.”

Come On in, the Water’s All Right

17 Jan

jawsOver the last several weeks, there have been many pronouncements from ad tech providers, publishers and agencies that ad fraud and transparency concerns, which have beset advertisers for the last several years, have largely been addressed and that it is safe for advertisers to resume their programmatic digital real-time bidding (RBT) media activities.

What? Sounds a bit like the movie Jaws where a profit minded Mayor, Larry Vaughn attempts to convince Sheriff Brody to keep the beaches of Amity Island open for the 4th of July holiday, when tourists will flock to the Island, driving tourism revenues.

Granted, there have been positive developments including the efforts of the Trustworthy Accountability Group (TAG), the adoption of Ads.txt, the implementation of fraud solutions by ad tech providers and agencies and the involvement of the FBI, which has successfully busted a number of email, digital and cyber fraud operations over the course of the last year.

However, it would be a mistake for advertisers to let their guards down and assume that ad fraud has been solved and non-transparent practices have been cleaned up. Sadly, invalid, unviewable and non-human traffic continues to plague the industry and requires continued vigilance.

Honest, in-depth conversations between advertisers, their agencies and ad tech vendors should be ramped up before advertisers eschew the safety of private marketplaces (i.e. programmatic direct, premium, reserved, private auctions) to reallocate funds to RTB. Discussion topics should include, but not be limited to:

  • Determine whether or not the agency and ad tech vendors are using TAG Certified channels.
  • Assess if these same entities are screening programmatic domains to eliminate those that have not yet adopted Ads.txt from consideration.
  • Scrutinize the efficacy of the fraud and brand safety software solutions being deployed on the dvertiser’s behalf.
  • Confirm whether the advertiser is being provided a direct line of sight into the fees being charged for data, technology, and campaign management for both the demand and sell side of the ledger.
  • Verify whether the agency and ad tech verification vendors are examining 100% of the advertiser’s programmatic impressions for suspicious activity or whether they are instead sampling.
  • Check if agency and ad tech vendors are retaining log level files and if so, substantiate they will make them available to the advertiser or their auditor.
  • Assess how the agency and or ad tech vendors identify platform auction methodologies (i.e. second-price, first-price, header bidding) and adapt their bid strategies to optimize the advertiser’s investment.

We would counsel that it should be the results and learnings from these conversations, rather than self-serving proclamations, that the “water is all right” that influences an advertiser’s decision as to whether and when to jump back into the RTB marketplace. In the words of the Roman writer Publilius Syrus:

“It is a good thing to learn caution from the misfortunes of others.”

 

Who Says Advertisers Don’t Want Transparency?

26 Nov

transparency“No one wants full transparency.”

It was alleged that this intriguing pull quote echoed the sentiments of agency buyers at a gathering of agency executives dealing with the topic of “Transparency in Media Buying.” The event, hosted by Digiday in London, provided participants with complete anonymity with regard to their name and or company affiliation in order to encourage an open exchange of information on the topic. Understood.

Participants shared a range of thoughts as to why advertisers weren’t truly interested in media transparency. The ideas proffered by this group included:

  • A belief that advertisers were concerned about the costs associated with revamping how digital media is purchased.
  • Advertiser concern related to the impact of “overhauling how much” they spend on media.
  • A general lack of advertiser interest in the “mechanical” detail that underlies the media acquisition and delivery process.

There are two major problems with this perspective.

The first is the belief among digital media supply chain participants that advertisers should bear the financial burden related to the poor decisions made by agencies, ad tech vendors and publishers with regard to how media buys were executed, tracked and reported on. For years these intermediaries knowingly shirked their fiduciary responsibility to serve the advertiser’s best interest and to safeguard their media investment. To come back now and suggest that if advertisers want a return to normalcy it will cost them more in fees and the actual rates paid for media inventory is preposterous. Did these firms reduce their fees and costs to advertisers while they were participating in media arbitrage and purchasing low quality, high risk inventory (often without the advertiser’s knowledge)? Of course not. They padded their respective bottom lines at the expense of advertisers.

Secondly, the notion that advertisers aren’t interested in the mechanics and science behind the planning, buying, stewardship and performance analysis of media buys seems to be misguided. Or at the very least, not representative of the views held by a majority of advertisers, many who have cited media transparency as one of their most important concerns in industry survey after industry survey. Additionally, Gartner Research recently released the results of its “CMO Spend” survey and noted that chief marketing officers at advertiser organizations in the U.S. and UK were focused on areas such as email marketing, online media management and digital analytics as their top tech priorities. This further underscores advertiser interest in leveraging technology to improve transparency and drive media performance.

Perhaps the clients represented by the agency personnel at the Digiday event are different than those with whom we interact with on a regular basis or those who participate in industry surveys.

Or perhaps the more accurate sentiment is that no one on the agency, ad tech or publisher side wants full transparency. Either way, if the media supply chain doesn’t recognize and begin to address client concerns and the corrective actions that advertisers are already taking the risk of revenue contraction and ultimately disintermediation is real.

One only needs to read the Association of National Advertiser’s (ANA) October, 2018 study; “The Continued Rise of the In-House Agency” to understand the cost to intermediaries of not taking advertisers’ best interest to heart:

  • 78% of ANA members surveyed had an in-house agency in 2018 versus 58% in 2013 and 42% in 2008.
  • 90% of the survey respondents indicated that the workload of their in-house agencies had increased in the past year, including 65% for whom the workload had increased significantly.

Media supply chain stakeholders may want to heed the words of 20th century Russian-American writer and philosopher Ayn Rand:

“We can ignore reality, but we cannot ignore the consequences of ignoring reality.”

 

Programmatic Digital Media Reforms. Too Little, Too Late?

23 Oct

toolittletoolate

There was an interesting announcement earlier this month, regarding the potential for introducing much needed reforms to the programmatic digital media marketplace.  Specifically, several of the top exchanges announced that they had reached out to the Trustworthy Accountability Group (TAG) for help in cleaning up some of the non-toward practices that have plagued digital advertisers. 

As part of the group’s efforts, these exchanges have agreed to not charge hidden fees or offer rebates that unduly influence agency holding companies. Further, they have pledged to notify buyers in advance if they change auction dynamics, to clearly mark first-price and second-price auctions and to not bid cache without notice.

Translation, the exchanges have been employing these practices all along to the detriment of advertisers as a means of shoring up their bottom lines. Step in the right direction or affirmation of the ongoing murkiness associated with programmatic digital? Advertisers will have to decide, or have they already weighed in on this initiative.

Coincidentally, findings from an important research study and a forecast on digital marketing were also released earlier this month. The results of these efforts may very well shed some light on how advertisers are viewing the ongoing malaise within the digital media marketplace.

In the first study from the In-House Agency Forum (IHAF) and Forrester Research called “The State of In-House Agencies” it was revealed that 64% of corporate America have in-house agencies, which is up 50% from 2008. Interestingly, of those firms with in-house agencies, 38% have digital capabilities. The second piece of information came from an eMarketer forecast “Flight to Quality” which predicted that by 2020 open exchanges will see a declining share as programmatic money goes direct.” eMarketer is predicting that $4 of every $5 will go to private marketplaces. For reference, today, approximately 58% of all programmatic display spend, which totals $27 billion goes to private marketplaces.

The reasons for the move to programmatic direct are clear and compelling and have been at the root of advertiser concern for several years:

  • A desire to minimize the risk of digital ad fraud
  • The need to improve brand safety
  • A concerted effort to move away from low-quality, non-viewable inventory
  • Interest in a greater level of transparency (both as it relates to pricing/ fees and the content/ sites where their ads are placed)

Thus, it would appear that while the announcement by top exchanges to engage TAG to assist with reforming the practices employed by the exchanges may be a little too little, too late.

The time to take action to safeguard advertisers’ digital media investments and address advertiser concerns may have come and gone, at least as it relates to the open exchanges. Rebuilding advertiser trust and confidence was an excellent strategy… in 2016 at the height of the U.S. media market’s “Transparency Crisis.”

Unfortunately, as results from the aforementioned studies suggest, many agencies, adtech firms, and exchanges may have waited too long to remedy the woes that led to the epic level of waste that has negatively impacted advertisers’ programmatic digital media spend.

In the words of Og Mandino, the late 20th century American author:

There is an immeasurable distance between late and too late.

 

 

 

 

 

 

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