Tag Archives: Nielsen

Time for Action, Not Apathy

31 Jan

ActionFraud continues to run rampant as digital media and programmatic buying continue to surge in popularity, garnering ever larger shares of global advertising spend. Regulatory actions around consumer privacy and data protection are presenting a plethora of challenges for the industry and its ability to use data to customize advertising messaging and delivery.

These are seminal issues that the advertising industry has been talking about for years. The risks and costs to advertisers and other industry players are significant. So how effectively has the industry dealt with these critical issues? If one were to generate an opinion based upon results, it would be easy to adopt the perspective that the ad industry has not dealt with these issues well at all.

Let’s start with the topic of ad fraud. While we all read the headlines, the question is; “Have we become numb to the impact of ad fraud on working dollars?” Consider that according to Juniper Research, advertisers lost $51 million per day to ad fraud in 2018. AFFISE estimates that 35.3% of all processed traffic in the first two quarters of 2019 was fraudulent. The World Federation of Advertisers (WFA) has stated that ad fraud will hit $50 billion per year by 2025.

One short year ago Facebook, in a highly publicized move eliminated 2.2 billion fake accounts, this following the elimination of 1 billion fake accounts during the 4th quarter of 2018. Interestingly, Facebook, one-half of the vaunted “duopoly” which captured over 65% of U.S. digital ad spend in 2019, itself accounts for 1 out of every 5 dollars spent on digital media in the U.S. (source: eMarketer) before and after this move.

While surely an astute media planner could readily make the case for Facebook’s appeal to advertisers, the justification for its share of the digital ad market is mystifying to the layman. According to the United Nations Population Division, there are 7.7 billion people in the world. Nielsen Online has identified 4.5 billion internet users globally. So, if Facebook eliminated more than 3.2 billion accounts, albeit fake over the course of four months, how many accounts could it possibly have had? What level of due diligence were agencies and advertisers undertaking to verify the base? Or, could it be that the industry simply has no valid means of verifying or measuring key digital audience factors?

The term “Big Data” was coined in the early part of the 1990s, referring to the vast amounts of data being gathered as the internet expanded. The data allowed marketers to conduct computational analysis that could reveal patterns, trends and associations related to human behavior. As the use of algorithms, artificial intelligence and marketing automation technology has come into vogue, the ability to more finitely target an advertiser’s message to specific niches, based upon this data, held great promise. This led to the meteoric growth of AdTech and MarTech solution providers vying for a share of advertiser dollars.

Then, in 2016, the European Union introduced the General Data Protection Regulation (GDPR), ushering in laws designed to protect consumer data and privacy. GDPR has since served as a model for regulatory action in countries around the world and within the United States, with the introduction of the California Consumer Privacy Act (CCPA). The impact on the ad industry has been significant as marketers, technology providers and publishers have struggled to comply with these varying laws. In turn, this led one important player, Google to announce the elimination of third-party cookies from its Chrome browser to avoid some of the risks associated with privacy regulation. The impact on marketers’ audience targeting and attribution modeling efforts will be swift and significant. Some have suggested that this could even signal the end of personalized marketing.

From this author’s perspective, the industry has not effectively dealt with these challenges. There are simply too many disparate interests at stake, which have served as very real impediments to progress in tackling these issues.

Let’s face it, in spite of the impact of fraud, fake devices, fake locations, fake impressions, fake consent strings, ineffectual brand safety and fraud detection services and a lack of uniform industry measurement and verification standards, advertisers continue to spend on media types, intermediaries and technologies that are simply not generating a return worthy of their investment. So where is the impetus for change?

Rather than working on real solutions to address real problems, the industry adopts labels or coins phrases that cover its retreat. Examples such as “Human Marketing” and the need to treat our target audiences as “people” as a solution to the inability to deal with the challenges presented by big data, technology and regulation to customize and personalize at scale. Or the use of the term “Contextual Marketing” in which ad delivery is based upon scanning texts of web pages and serving up a marketer’s ads based upon relevant keywords, rather than behavioral data. Or the nuanced notion of “Brand Suitability” versus “Brand Safety” to mask the inability to adhere to advertiser blacklists and or to ensure proper editorial adjacencies. Really? How is this all of a sudden more appealing than the noble quest, funded by advertisers, that gave birth to the “MarTech 5000” list.

From the outside looking in, it appears as though the industry is content with taking the path of least resistance, opting for a safer, more self-centered approach to issue resolution, rather than focus on doing what is best for the entire industry and ignoring advertisers’ desires to increase the effectiveness of their marketing spend.

To paraphrase American author, Richard Yates from his novel about 1950’s suburban life entitled Revolutionary Road; “It’s a disease. Nobody thinks or feels or cares any more; nobody gets excited or believes in anything except their own comfortable little mediocrity.”

 

 

Benchmarking: What is it you want to know?

25 Mar

benchmarkingWhen it comes to advertising related expenses, most marketers want to know; “What am I paying relative to the market?” and “What am I paying relative to my competitors?” For organization’s focused here, much energy is expended in their search for the ideal source for “industry norms” or the perfect “pool” against which to benchmark the rates that they paid vis-à-vis others.

This pre-occupation with what others paid clouds the real issue, which is; “Did we get optimal value for our advertising investment?”

Let’s start with a little dose of reality. There are no industry norms when it comes to advertising. Whether in the context of agency remuneration, overhead rates, media pricing or production costs…there is no such thing as rate card. The price an advertiser pays is reliant on multiple variables, variables that differ from one client/ agency relationship to the next.

Consider the following scenario; Advertiser #1 is paying a blended billable rate of $150 per hour for creative, while Advertiser #2 is paying $170 per hour. Is Advertiser one getting a better deal? The answer is; “Who knows?” What market is Advertiser #1’s agency sourcing talent from? New York, NY or Bogota, Columbia? How broad and deep is the creative talent pool available to Advertiser #1? What is the experience level of the individuals in that talent pool? Does the agency have a track record of success when it comes to creating break-through advertising? How solid is the agency’s creative development methodology? Do the processes which they employ (or the lack thereof) result in multiple re-works?  Is the agency deploying their top creative personnel on Advertiser #1’s business or the “B” team? You get the point.

Similarly, when it comes to media there are a number of factors which determine “value” that cannot be captured when benchmarking rates paid against Nielsen, SQAD or media pools. Items such as position in pod, lead-in or lead-out break position, premium placements, editorial adjacencies, relevance and topicality of the content environment, the level of no-charge weight secured to supplement the paid schedule ultimately drive advertiser return on media investment as much or more than the rate paid.  

Additionally, in the context of media rates, one has to weigh their comfort level with the limited transparency into the benchmark source data. Is the data self-reported by advertising agencies based upon what they claim they paid? Given that those same agencies may someday be compared to those self-reported rates is there a remote possibility that some agencies may inflate reported rates, thus artificially increasing benchmark levels? If rate data is provided by media sellers, do you think that they want to show how little they actually charged advertisers, thereby suppressing the rates that they would like to secure? Media auditor and agency search consultant rate benchmarking pools also represent a viable source of information. However, can the size and or composition of their pool be validated? How relevant is it for your demographic target, category or market? How current are the rates in their pool versus older data that has been modeled and rolled forward?  Will your media rates end up in their pool once they’ve completed the audit?

For the record, we are staunch proponents of benchmarking advertising costs. It’s just that in our experience, we have found that the best source for assessing value attainment is not what others paid, but what an advertiser has previously paid. As the old adage goes:

“Put your future in good hands — your own.”

This can best be done by developing and maintaining files that include both quantitative and qualitative information as part of their strategic supplier database. These could include items such as:

  • Fee detail (direct labor costs by position/ function, overhead rates, profit margins)
  • Billable rates for studio & digital production
  • Media rate detail (based upon final reconciled costs)
  • Days payable outstanding detail (agency payments to 3rd party vendors)
  • Annual agency evaluation scores

Of note, organizing this information in a manner that allows for comparisons by agency type, by holding company, by agency brand and by office will afford the advertiser the flexibility to compare both performance and costs across their marketing services vendor network.

For those organizations still interested in assessing the direction of their advertising costs, once they have established their own benchmarking “pool” they can compare year-over-year cost variances relative to published data that might include sources such as the Consumer Price Index, Producer Price Index and or Annual Media Inflation Rate.

Interested in learning how to create your own proprietary benchmarking tool? Contact Cliff Campeau, Principal at Advertising Audit & Risk Management, LLC at ccampeau@aarmusa.com for a complimentary consultation.

 

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