Tag Archives: Programmatic Media

Life in a Post-GDPR World

28 May

GDPR LogoWhat can advertisers posit from the early market indicators in the wake of the May 25, 2018 enforcement of the European Union’s General Data Protection Regulation (GDPR)?

There are three takeaways that would seem to portend the near-term challenges for the ad industry:

  1. Consumers aren’t that interested in allowing companies to use their personally identifiable information to target them, contact them, monitor their online behavior or to profit from the sale of that information.
  2. The advertising industry as a whole was not prepared for the onset of the GDPR.
  3. Limitations on access to consumer data could greatly impair the efficacy of programmatic media.

The results of poll recently announced by TopLineComms found that 41% of those surveyed were “planning to opt out of current email subscriptions” with 82% indicating that they were “concerned about how companies use their data.” Many believe that the news surrounding the recent Cambridge Analytica scandal has helped to fuel consumer concerns about data privacy protection. Either way, consumers increasingly want their privacy protected and both marketers and publishers are going to have to find ways to deal with that concern and the growth in global regulatory actions in this area.

Adopted in April of 2016, the advertising industry had a two-year transition period too ready for the May 25, 2018 date, when the GDPR regulations would become enforceable. Unfortunately, too many companies proved to be lax in their preparations. According to a global study conducted by SAP Hybris, “49% of companies either have no plan for compliance or have not yet implemented one.” Readiness was made more complex because of different regulatory compliance burdens for data controllers and data processors and the role of third-party data processors. Gaining clarity among stakeholders as to who was responsible for what and how they were progressing on their compliance readiness proved challenging at best.

While early in the process, since GDPR went into effect, ad exchanges have seen dramatic drops in ad demand, with exchange volumes dropping up to 40%. According to digiday.com, “some U.S. publishers have halted all programmatic ads on their European sites.” In turn, this has led to a drop in publisher inventory in Europe. Of note, many within the industry are blaming Google for its lack of preparation and the company’s inability to vouch for whether or not its third-party exchange partners were compliant or not heading into May 25th. Unfortunately, Google did not notify advertisers of this issue until May 24th leaving them little “time to change media-buying tactics or inform clients.”

In addition, Google, Facebook and a couple of other internet portals have been hit with complaints and potential legal action by independent consumer advocacy groups over “forced consent,” claiming those entities threatened service cutoffs or restricted access if consumers did not consent to Google and Facebook’s privacy and data usage terms.

Near-term, organizations will have to focus on complying with GDPR. Looking ahead marketers, publishers and ad tech providers will need too ready for the likely expansion of privacy protection regulations to other countries and municipalities (e.g. California Consumer Privacy Act). After all, these new regulations are coming at a time when the importance of data and the value that it plays in an organization’s corporate strategy and marketing efforts has never been more critical. 

Perhaps most importantly, organizations will have to focus on developing sensible solutions to placate consumers that have legitimate concerns about how their personally identifiable information will be used. This is a necessary step if using first-party data to inform audience segmentation decisions, personalize consumer communications and monitor behavior is deemed a critical element in their marketing and content strategies.

Achieving these goals will require ongoing remediation efforts and will involve personnel from many disciplines within an organization. It is for this reason that many firms may turn to appointing a Data Protection “Tsar” to lead their efforts to embellish their consumer privacy protection policies, processes and compliance efforts. Not a bad move for companies that have the means to formalize this function.

In spite of the inauspicious start by many to comply with the GDPR regulations it is never too late to heed the old adage; “Proper preparation prevents poor performance.

 

 

 

 

It’s Only Money…

5 Jun

digital mediaThere was one particularly startling revelation that came from the ANA’s recent Agency Financial Management conference in San Diego. During the presentation of this year’s “Agency Compensation Trends” survey results it was noted that the ANA found that almost half of the members it surveyed had not reviewed the findings of the ANA’s 2016 Transparency study.

Think about that. If an organization did not review the Transparency study’s findings, that means that there must not have been any resulting internal dialog with or among marketing’s C-Suite peers, no direct interaction with their agency network partners, no review of existing Client/Agency contracts, no improvements in reporting and controls in which to illuminate how an advertiser’s funds are being managed.

This, in spite of the level of trade media coverage regarding transparency issues ranging from rebates, discounts and media arbitrage, to the Department of Justice investigation into potential ad agency bid rigging practices or the level of ad fraud, traffic sourcing or non-disclosed programmatic fees on both the demand and sell side of the ledger.

There is only one conclusion that can be drawn from this remarkable revelation…many marketers simply don’t care how their organization’s advertising investment is being allocated or safeguarded. Unfortunately, we regularly see the ramifications of this attitude of indifference in our contract compliance audit practice:

  • Client / Agency agreements that haven’t been reviewed or updated in years
  • Failure among clients to enact their contractual audit rights with key agency partners
  • Limited controls regarding an agency’s use and or disclosure of its use of affiliates
  • No requirement for agency partners to competitively bid third-party and affiliate vendors
  • Lack of communication to media sellers regarding ad viewability standards
  • Failure to assert an advertiser’s position on not paying for fraudulent and non-human traffic
  • No requirement for publishers to disclose the use of sourced-traffic
  • Incomplete instructions on buy authorizations to media vendors, minimizing or blocking restitution opportunities
  • Poorly constructed media post-buy reconciliation formats that lack comprehensive information and insights

Interestingly, there have been many positive developments from key industry associations such as the ANA, 4A’s, IAB and public assertions from leading marketers such as P&G and L’Oréal to further inform and motivate marketers on the topic of transparency accountability. Yet, given the materiality of an organization’s marketing spend and the publicized risks to the optimization of its advertising investment, many organizations have not yet taken action, tolerating the risks associated with the status quo. As the noted British playwright, W. Somerset Maugham once said:

Tolerance is another word for indifference.”

The failure to proactively embrace transparency accountability can pose perilous risks to an organization’s marketing budget which in turn directly impacts its company’s revenue. Many would rightly suggest needlessly.

In these instances, the fault for the increased level of attendant financial risk, fraud and working media inefficiencies lies squarely with those companies that have adopted an attitude of indifference toward these very real proven threats. One cannot blame an ad agency, production house, tech provider, publisher or media re-seller for taking advantage of the status quo and acting in manners that, while not in the best interest of the advertiser, are not expressly contractually prohibited.

The good news is that advertisers can address these issues head-on in a quick and efficient manner, mitigating the risks posed by transparency deficiencies. It all begins with a review of existing Client/Agency contracts and engaging one’s agency partners in dialog regarding the adoption of industry best practice contract language to facilitate an open, principal-agent relationship. The Association of National Advertisers (ANA) has a wealth of information on this topic and can also recommend external specialists to assist an advertiser with agency contract development and or compliance auditing.

Interested in safeguarding your marketing investment? Contact Cliff Campeau, Principal at AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a no-obligation consultation on this topic.

Is Your Contract Worth the Paper It’s Written On?

25 May

partnershipThe Association of National Advertisers (ANA) recently released its study on programmatic media. The study was conducted in conjunction with the Association of Canadian Advertisers (ACA), Ebiquity and AD/FIN.

While the study provided fascinating insights into programmatic media performance and costs at the transactional level, there was one particular item that stood out:

88% of the advertisers that were interested in and 75% of the advertisers that signed up to participate in the study could not or had to opt out.

Why was this? According to the study’s authors, “because of a myriad of legal, technical and process roadblocks put up by players in the ecosystem.” Long story short, those advertisers did not have contractual language providing them with clear data ownership or usage rights with their agency, trading desk and or ad tech partners.

The obvious question to be asked is, How can an advertiser’s programmatic media transactional data not belong to the advertiser? After all, it was their media investment that funded the buys. It was their agency partners who invested those funds on their behalf (or not). So, who could possibly own that data if not the advertiser?

What would you do if your agency partner denied your organization access to programmatic performance data that you had requested. Data that would shed light on your programmatic media performance and costs (i.e. third-party costs, agency fees, tech fees, data fees). It certainly seems short-sighted that an agency would deny their clients access to this data, both in the context of the ANA study and for providing transparency into how their programmatic investment is being stewarded to disclose what their true working media percentage is.

Sadly, this is but one example of Client/ Agency contract language omissions that create disclosure and accountability gaps, which can lead to legal and financial risks for advertisers. Other examples include:

  • No requirement for an Agency to disclose or competitively bid in-house production resources or affiliate companies.
  • Media arbitrage deals in which the Agency is marking-up media by an undisclosed amount on inventory that it owns stemming from principal-based buys it has made.
  • Agencies acting as principals, rather than agents, when investing the Client’s creative production funds. One example might be the Agency or its production studio filing for and retaining incentives offered by states and municipalities for shooting or post-production work completed in their geography.

Marketing spend is on the rise and is certainly considered a material expenditure, which can represent 12%+ of a marketer’s revenue base (source: 2015 CMO survey).

And yet too often, an advertiser’s contractual audit rights are not broad enough to ensure unmitigated access to the data files, records and reporting necessary to evaluate an agency’s compliance with the agreement and or their financial management performance. This can and should include:

  • An advertiser’s right to select an internal or external auditor of its choice (i.e. contract compliance, media performance, financial management).
  • The right to audit the agency and its related parties (i.e. holding company, affiliates, related entities, etc.).
  • Assertion of the advertiser’s right to limit or eliminate an agency’s non-transparent revenue (i.e. AVB’s, rebates, non-disclosed fees, mark-ups, float income).
  • The right to audit principal inventory and or mark-ups.

Contracts are also a great vehicle for communicating performance guidelines for items ranging from brand safety and viewability policies to fraud monitoring requirements and an advertiser’s policy on not paying for bot traffic, all of which are designed to safeguard an advertiser’s investment.

From our perspective, it makes sense for advertisers to engage in dialog with their agency partners to talk through contract terms and conditions, such as these, to secure their perspective and ultimately their buy-in. After all, the contract is a document that will govern most aspects of the Client/Agency relationship. Thus, open dialog that leads to a transparent relationship can form the basis for a trusting partnership that will last for many years to come.

As Stan Musial, the legendary baseball hall of fame member of the St. Louis Cardinals once said:

The first principle of contract negotiations is don’t remind them of what you did in the past – tell them what you’re going to do in the future.”

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