Tag Archives: Viewability

4 Questions That Can Impact Your Digital Buys

15 Nov

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According to eMarketer, in 2017 advertisers will spend 38.3% of their ad budgets on digital media – in excess of $223 billion on a worldwide basis. Yet, in spite of the significant share-of-wallet represented by digital media, there is generally little introspection on the part of the advertiser.

Looking beyond the “Big 3” [ad fraud, safe brand environment and viewability concerns], the lack of introspection begins much closer to home. Simply, in our experience, client-agency Agreements do not adequately address digital media planning / placement roles, responsibilities, accountability or remuneration details.

Standard media Agreement language does not adequately cover digital media needs – specific rules and financial models need to be included in Agreement language that covering each potential intermediary involved in the buy process and to guarantee transparent reporting is provided to the advertiser. It is our experience that Agreement language gaps related to “controls” can be much costlier to advertisers than the aggregate negative impact of the Big 3.

And, regardless of Agreement language completeness, a compounding factor is that too few advertisers monitor their agencies compliance to these very important Agreement requirements.

To assess whether or not your organization is at risk, consider the following four questions:

  1. Can you identify each related parties or affiliate that your ad agency has deployed on your business to manage your digital spend?
  2. Does your Agreement include comprehensive compensation terms pertaining to related parties, affiliates and third-party intermediaries, that handle your digital ad spend?
  3. Is your agency acting as a Principal when buying any of your digital media?
  4. What line of sight do you have into your ACTUAL media placements and costs?

If you answered “No” to any of the questions, then there is a high likelihood that your digital media budget is not even close to being optimized. Why? Because the percentage of your digital media spend that pays for actual media is likely much lower than it should be, which is detrimental to the goal of effectively using media to drive brand growth.

Dollars that marketers are investing to drive demand are simply not making their way to the marketplace. Often a high percentage of an advertiser’s digital media spend is stripped off by agencies, in-house trading desks and intermediaries who have been entrusted to manage those media buys. A recent study conducted by AD/FIN and Ebiquity on behalf of the Association of National Advertisers (ANA) estimated that fees claimed by digital agencies and ad tech intermediaries, which it dubbed the programmatic “technology tax” could exceed 60% of an advertiser’s media budget. This suggests that less than 40 cents of an advertiser’s investment is actually spent on consumer media.

A good place to begin is to ask your agency to identify any and all related parties that play a role when it comes to the planning, placement and distribution of your digital media investment. This includes trading desk operations, affiliates specializing in certain types of digital media (i.e. social, mobile) and third-party intermediaries being utilized by the agency (i.e. DSPs, Exchanges, Ad Networks, etc.). The goal is to then assess whether or not the agency and or its holding company has a financial interest in these organizations or are earning financial incentives for media activity booked through those entities.

Why should an advertiser care whether or not their agency is tapping affiliates or focusing on select intermediaries to handle their digital media? Because each of those parties are charging fees, commissions or mark-ups for services provided, most of which are not readily detectable. This raises the question of whether or not the advertiser is even aware charges are being levied against data, technology, campaign management fees, bid management fees and other transactional activities. Are such fees appropriate? Duplicative? Competitive? All good questions to be addressed.

When it comes to how an agency may have structured an advertiser’s digital media buys, there is ample room for concern. Is the affiliate is engaged in Principal-based buying (media arbitrage)?  Is digital media being placed on a non-disclosed basis, versus a “cost-disclosed” basis where the advertiser has knowledge of the actual media costs being charged by the digital media owner?

Evaluating your organization’s “risk” when it comes to digital media is important, particularly in light of the findings of the Association of National Advertiser’s (ANA) “Media Transparency” study released in 2016, which identified agency practices regarding non-transparent revenue generation that reduces an advertiser’s working media investment.

The best place to start is a review of your current client-agency Agreements, to ensure that the appropriate language safeguards are incorporated into the agreement in a clear, non-ambivalent manner. Once in place, monitoring your agency and its affiliates compliance to those contract terms and financial management standards is imperative if you want to assure compliance, while significantly boosting performance.  

“Today, knowledge has power. It controls access to opportunity and advancement.” ~ Peter Drucker                                                                                                                    

Interested in learning more about safeguarding your digital media investment? Contact Cliff Campeau, Principal, AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on this important topic.

 

Here We Go Again…

5 Jul

mobilityIs the ad industry about to make the same mistake with mobile as it did with digital? Early on in the platform’s development, it would appear so.

On a positive note, according to new figures from eMarketer, mobile ad spending will surpass $100 billion in spending in 2016, accounting for more than 50% of all digital ad expenditures.

However, there are challenges that need to be addressed. Chiefly, there are a lack of uniform viewability and audience measurement standards in place to validate publisher performance. Today, different publishers utilize a variety of different methods for counting impressions. The key point of contention with mobile is whether or not the publisher delivers on ads rendered or fully loaded as opposed to ad calls.

According to the Media Rating Council, which issued their “mobile viewable ad impression measurement guidelines” this past spring “Each valid viewable impression originates from a valid rendered mobile served impression. In no case should viewable impressions exceed render mobile served impressions counted on a campaign.”

When you look at the numbers, the waste factor in mobile advertising is alarming. In a recent article by Allison Schiff on Adexchanger, entitled; “The Buy Side Doesn’t Want Impressions Counted Before They Hatch” mobile ad server, Medialets, suggested that in a review of “2.7 billion impressions across its mobile ad server” that it found that “roughly 20% of ad calls on the mobile web were “wasted,” aka they don’t ever fully render on a device.”

Concerns over ad delivery and measurement issues related to mobile sound all to familiar to the growing pains suffered by advertisers with online display advertising served to desktop devices. Add in the newness and complexity of the segment, and advertisers would be foolish not to be mindful about their investment in this area.

In the near-term, the best path forward for advertisers to take is to enforce an ad rendered versus ad called verification approach, establish minimum viewability thresholds and utilize only MRC accredited vendors that are willing to adhere to industry standards. It should be noted that while the Interactive Advertising Bureau (IAB) established a 70% viewability threshold for measured impressions in 2015 many mobile platforms are “guaranteeing” viewability levels as high as 100%.

When you consider that according to eMarketer, over 31 million U.S. internet users will only go online using a mobile device in 2016, it is clear that the segments potential is high. Let’s hope that the learning curve is not as steep as the adoption path.

 

 

What if Advertisers Suspended All Digital Media Spend?

23 Jul

committeeSound preposterous? Perhaps not when you consider how much of an advertiser’s investment is siphoned off by digital fraudsters and criminals. One has to wonder if the efficacy of a reallocated media mix would really hamper in-market performance.

Let’s face it, in spite of the incessant level of press coverage, advertiser, agency and publisher posturing and the formation of numerous industry task forces, digital ad fraud has continued unabated.

In March of 2014 the IAB estimated that approximately 36% of all web traffic was fake, the result of bots. In December of 2014 a joint study by the ANA and White Ops, an ad security firm, estimated that digital fraud accounted for $6.3 billion out of a total estimated spend of $48 billion.

Various other studies have suggested that up to 50% of publisher traffic is bot related and that somewhere between 3% and 31% of programmatically bought ad impressions were from bots. During December of 2014 there was a research study done on FT.com which revealed that “in a single month, 72% of the ad impressions offered on open ad exchanges as being on FT.com were fraudulent.” The impressions were from sites pretending to be the FT and the ads appeared only on sites viewed by bots.

Ironically, in spite of the financial impact of these crimes, advertisers continue to spend an increasing percentage of their marketing budgets on digital media. According to Strategy Analytics, digital media will reach $52.8 billion in U.S. ad spending in 2015, accounting for 28% of every dollar spent, second only to TV. Further, while every other medium is either losing revenue or seeing low single digit growth, digital is anticipated to grow at 10% to 13% per annum over the next three years.

There are a number of industry stakeholders benefiting from the meteoric growth in digital spending, publishers, ad tech providers and agencies to name a few. For example, the major ad agency holding companies have seen revenues from digital media grow to represent up to 50% of their annual revenue base.

Thus it was with a slightly cynical eye that I viewed the recent press release from the Trustworthy Accountability Group (TAG) regarding their latest initiative to combat digital ad fraud. The focus of the release was straightforward enough, dealing with working to minimize “illegitimate and non-human ad traffic originating from data centers.” However, in the end it was about Google lending the group its blacklist of suspicious data center IP addresses for use in a pilot program.

As most industry participants know, TAG is the joint effort of the ANA, 4A’s and IAB launched in 2014 to work collaboratively with companies in the digital advertising space to combat ad fraud. While supportive of industry stakeholders teaming up to address key issues, one wonders how likely it is that TAG will be able to mitigate advertiser financial risks in the near-term.

Curiously, on July 23rd the 4A’s announced the formation of a committee that will focus on addressing “issues related to the digital supply chain.” Their press release pointed out that the newly formed committee will work closely with “other 4A’s committees and task forces, such as the Media Measurement, Data Management and Mobile committees, on policies and best practices.”

Have any of the existing task forces’ yet demonstrated tangible evidence of progress being made to combat digital fraud? It is difficult to imagine how the formation of yet another committee is going to make a difference. Do the organizations forming these ad hoc groups feel that the industry is so superficial and shallow that the news of a new committee will help advertisers feel better about the lack of measurable progress being made on this front?

If the industry doesn’t make concrete progress in the near-term, there is a strong likelihood that we will be welcoming a new “alliance partner” to the team… regulators. We know that historically business in general and the ad industry in particular have never been fans of government involvement. However, if the industry’s self-regulatory approach doesn’t begin to yield results, Washington will assert itself and they should, advertisers are literally being robbed. This is white collar crime at the highest level when you consider that in the U.S. alone, $6.3 billion is being siphoned off by bad actors on an annual basis, 13% of total spending in this specific area.

While the industry struggles to bring order to the chaos surrounding digital media advertisers might rightly ask the question; “Does it really make sense to continue to allocate hard earned dollars to a medium with the audience delivery and viewability issues that currently plague digital?”

What if advertisers were to place a moratorium on digital ad spending until more concrete actions are taken by the industry to protect their investment?

An extreme position? Yes. Unlikely? No doubt. However, this is the type of dramatic action required to force reform and provide advertisers with the transparency and controls required to yield satisfactory returns on their digital media investment. If nothing changes, every incremental dollar invested in digital media will continue to line the pockets of the tech-driven criminals which are preying on advertisers. In turn, this rapidly growing revenue stream allows fraudsters to expand their capabilities at an even quicker rate than those trying to police them creating a “no win” situation for the industry.

From this writer’s perspective, while industry task forces and committees can play a role in furthering the dialog, they will not suffice. Traditional outcomes from these groups include recommended best practices, guidelines, advisory white papers and the formation of new committees to continue the fight… hardly enough to strike fear in the hearts of digital criminals.

In the words of noted businessman Ross Perot:

“If you see a snake, just kill it – don’t appoint a committee on snakes.”

 

What is the True Cost of Opacity? (part 1 of 2)

29 Apr

icebergPart 1 in a two-part look advertiser concerns regarding “transparency” and the impact it is having on client-agency relations.

Ad industry concerns regarding the issue of transparency and the trust which exists between advertisers and their agencies have taken a new, decidedly negative turn over the course of the last month.  What had been largely an “in-house” debate focused on items such as AVBs, programmatic buying, media arbitrage and concerns over digital media viewability was thrust into the limelight as the result of one Wall Street analyst’s recommendation that ad agency holding company investors “sell their shares.”

The recent revelations about the utilization of media rebates or AVBs in the U.S. marketplace and the resulting firestorm in the advertising trade press seems to have been the tipping point that spurred Brian Wieser a Senior Analyst from Pivotal Research Group to downgrade the stocks of IPG, Omnicom, WPP and Publicis and to recommend that investors exit the category. Mr. Wieser’s recommendation provoked an additional round of denials by some holding company CEOs regarding the practice of agencies accepting rebates in the U.S. and spurred some debate amongst the holding companies about the transparency of their revenue realization processes. One notable CEO, Sir Martin Sorrell of WPP reiterated his company’s policy regarding rebates and encouraged WPP’s competitors to be more forthcoming on that front; “We said what the model is in the U.S., the way it’s a non-rebate model. We’ve made that quite clear. I would urge greater transparency in what’s happening to net sales and revenues, then we would have less black box and more open box.”

While the topic of rebates seems to have garnered a lion share of the attention, when it comes to transparency the rebate issue carries with it much less financial risk than the challenges associated with the rapidly evolving digital media landscape. Consider the fact that various research studies have suggested that digital media advertisers may be losing 50% + of their investment to click fraud, bots, piracy and excessive fees related to supply chain complexity.

Given that digital media now ranks second only to television in terms of media spending and that it continues to grow at double-digit rates the potential for Wall Street commentary regarding advertiser investment in this area could be much more problematic. For instance, at the recent ANA conference on “Agency Financial Management,” Peter Stabler, Managing Director, Senior Equities Analyst with Wells Fargo Securities raised concerns about one particular aspect of the digital media space… agency trading desks. Specifically, Mr. Stabler cited the inconsistent manner in which holding companies report on trading desk operations, the potential for the proceeds from trading desks to inflate revenues and create margin dissolution and the potential for conflict-of-interest concerns between advertisers and their agencies.

If there is a silver lining to this maelstrom, now that the genie is out of the proverbial bottle, perhaps the highly charged nature of these issues can serve as a galvanizing force to bring clients and agencies together to address these issues in an objective manner… without the emotion and finger-pointing which has characterized the discussions to date. Let’s face it, the last thing either party wants is to see their market capitalization rates decline because analysts and investors have concerns about how they transact business and or the state of client-agency relations. 

While the individual issues raised are substantive, many feel that they have taken on additional import as a result of an erosion of trust between clients and agencies. Thus, shoring up the strength of these strategic relationships could yield significant asset value both in the context of issue resolution and the ongoing business of building brands and generating demand. As automotive pioneer Henry Ford once said;

If everyone is moving forward together, then success takes care of itself.”

In our opinion, the best place to begin is to develop a sound client-agency letter-of-agreement, which clearly articulates both parties expectations and desired behaviors. Further, the agreement should specifically identify the level of disclosure required by the client of the agency, their related parties (i.e. holding companies, sister agencies, trading desk operations, in-house studios, etc…) and their third-party vendors. We believe that this is a critical first step in establishing accountability standards and controls.

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