Tag Archives: media seller

If Not an RFP, Then What?

15 Mar

RFP ProcessIt was with great interest that I read a recent article on Digiday entitled; “End of an era: Media buyers are ditching the much-hated RFP” that heralded the demise of the digital RFP.

For those of us with a media background, we’re certainly familiar with the longstanding list of complaints leveled by media sellers at agencies on the multitude of abuses heaped upon them by what is perceived as an unfair or at least highly disorganized and inefficient RFP process. I get it and I empathize with the media sellers for the inequities which they have suffered at the hands of misguided or poorly trained media buyers.

Let’s face it, the RFP does serve an important role in allowing media agency buyers to gather the requisite detail from media sellers as it relates to their ability to deliver on the agency’s media plan and to solicit inventory, audience delivery and pricing feedback.

Yes, the standardization of RFP templates appears to be a pipedream and the resulting impact on the time and effort required by media sellers to complete these RFPs is onerous, the process cumbersome and meaningful feedback from agency media buyers rare. For these and other reasons, it is understood that agency media buyers and publishers alike dislike RFPs.

That said, some of the reasons cited in the aforementioned article to support the declining use of RFP’s should raise concerns among advertisers. I’m not talking about the reduced role of price negotiations due to the increased use of biddable media, but rather the notion that an uptick in the use of digital direct buying, agencies relying on meetings with sellers rather than an RFP or a seller’s ability to “figure out what the strategy is” do not support abandonment of this important tool.

Properly executed, the RFP process allows an agency buyer to communicate strategic and tactical instructions to the seller. In turn, asking sellers for feedback on how best to drive performance for the advertiser’s brand can yield a treasure trove of information. The RFP also provides an excellent opportunity for publishers to make a compelling case as to why they should be on the buy.

Additionally, RFPs serve as an ideal tool for establishing parameters on items such as site retargeting, frequency capping and content considerations (including restrictions). It allows media buyers to gather the requisite detail on items ranging from data segments and sources to audience specifications and universe estimates. How better to communicate creative unit specifications or cross device allocations and target consumption levels or to establish measurement requirements for everything from impressions and video completion rates to qualified site visitors, viewability levels and cost per completed view. What about identifying verification sources and costs, third-party tagging requirements and or establishing the level of reporting granularity.

Last, but certainly not least, the RFP serves a vital “accountability” role by clearly establishing advertiser expectations and communicating guidelines that a seller will need to adhere to, should a deal be transacted.

So while the RFP process is far from perfect, rather than scrapping it, I would advocate that the process be revamped to make it more relevant to all stakeholders, less onerous for media sellers and more productive for agency media buyers. In the words of the noted journalist George Will:

“The pursuit of perfection often impedes improvement.”

 

 

 

 

 

 

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Agent and Seller. Can an Ad Agency Serve Both Roles?

2 Sep

digital trading deskThe answer to this question may seem fairly obvious and can be answered most succinctly with another question;

“How can an ad agency fulfill its fiduciary duty to an advertiser when they are not primarily focused on the advertiser’s best interests?”

In the context of digital media, agency trading desk operations are functioning both as media sellers and buying agent.  Perhaps even more vexing is the mode of revenue generation which agency trading desks employ… media arbitrage.  Simply put, agency trading desks purchase digital media inventory at one price and re-sell that inventory to their base of advertisers at a higher price, pocketing the difference.  The higher the spread between the media cost and the rate at which it is sold, the greater the margin of profit which the agency can derive from their trading desk operation. 

This dynamic would suggest that an agency’s profit motives could overshadow their obligation to provide reliable independent counsel to their clients and to secure the highest quality media inventory at the best possible rate for those advertisers.

Further skewing transparency concerns over this practice are the non-disclosure agreements which most trading desks ask their clients to sign.  These agreements greatly limit advertiser insight into the true cost of the media, data analytics and technology costs and as importantly the percentage gain being realized by their agency partners. In the words of the noted twentieth century essayist, Erich Heller:

“Be careful how you interpret the world: It is like that.”

From our perspective, the trading desk operation model currently being employed by agencies is not serving advertisers best interests.  Forgetting cost transparency, how can it when there are real questions regarding the quality of the inventory being sold to an advertiser; “

  • Was this truly the best audience for my brand’s message or was it simply the best inventory which the agency owned?
  • Was it even the best inventory which the agency owned or was that sold to another of their clients with a comparable target audience?”

No one is challenging the potential benefits of deploying technology which matches available inventory to an advertiser’s target audience within the timeframe and environment that has been identified as optimal for delivering that advertiser’s message.  The concept of leveraging advertiser data, sophisticated analytical tools and engagement models to further enhance the targeting process in a real-time automated bidding process makes a great deal of sense. 

The question to be asked is simply one of “Who” should be driving the bus.  Perhaps that is why larger advertisers have begun to assess the potential for transitioning this activity in-house.  In those instances where advertisers assume control of that portion of their digital media buying currently being handled by an agency trading desk it is logical to consider whether or not there is any role for the agency to play on a pre-bid or post-buy analysis basis.

Concerns over advertisers migrating programmatic operations in-house was at least partially responsible for WPP’s decision to re-evaluate its trading model and to consider a more “flexible” approach.  In an interview with Ad Age, Rob Norman, Chief Digital Officer for WPP stated that; “Agencies need to retain their place in the value chain as new channels emerge. If we don’t do that, there’s the temptation for clients to take more of those [buys] in-house…”  Interestingly, WPP is apparently not re-assessing their role as a media re-seller given Mr. Norman’s suggestion that their moves are in part driven by a desire “for clients to test Xaxis inventory in the open market against other inventory sources.” 

To the extent that a greater number of advertisers would prefer a truly independent agency partner, WPP’s consideration of a more “flexible” approach may fall short of the market’s expectations.  On the other hand, agency holding companies that look to leverage the investment which they have made in the technology, analytical processes and operational support required to deploy and maintain a trading desk could find an accepting market for monetizing that experience and those resources… without being involved in media arbitrage.

 

 

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