Commentary
The ANA Study On Ad Transparency Is Spot-On: Now What?
- by Evan Barocas , Op-Ed Contributor, July 12, 2016
Let me state the obvious: The findings are 100% accurate, and included the following:
-- Agency holding companies pressure their own media buyers to direct client spend to higher-margin media — regardless of whether it’s in the client’s best interest.
-- Rebates in the form of cash, free space or equity, which may be structured as a payment for services, are pervasive.
After all this, the ANA has left us to figure out what to do next. Here are some ideas.
Advertisers have to close the education gap.
Most advertisers are not educated enough on programmatic ad buying and the surrounding ecosystem to be effective consumers.
Imagine taking out a mortgage on a new home. You ask the bank for your interest rate and they say, “We can’t tell you, but it’s fair.”
Would you buy that mortgage? Of course you wouldn’t. You’re an educated consumer. You’ve lived through a housing market collapse, and you know the dangers of an adjustable rate mortgage.
But more often than not, advertisers just buy the mortgage.
The first step in changing the culture of agency rebates and double-dipping fees is to stop financing it.
We need to have an honest conversation about this whole agency/advertiser relationship.
Agencies can provide incredible value to their clients in the programmatic era of advertising. They have invested in the scalable talent that makes programmatic a viable modality for buying online ad inventory.
So why are agency management fees constantly being squeezed by advertisers and their procurement departments? The ANA cites this as a principal reason agencies have chosen to build trading models that lack transparency.
The answer here is both complicated and relative to each advertiser/agency relationship. The underlying disconnect, though, is between how much it costs to effectively run a programmatic campaign and the value that campaign has to the advertiser.
Essentially, brands don’t know how to value what they’re buying, and agencies are doing a miserable job educating them, more often than not taking advantage of their lack of education. Neither is effectively playing the role they should with programmatic ad buying: the agency as the educator, and the strategy/activation partner and advertiser as the educated consumer.
Hit the reset button.
Wouldn’t it be amazing if we could reset as an industry and have an honest and open dialogue about programmatic ad buying and its role in the future of advertising for brands, agencies and platforms? The conversation might start off ugly, as it is now, because advertisers would first have to realize how much they’re overpaying.
Yet after the dust settles and everyone starts talking openly about cost and return, the dialogue would quickly pivot to a discussion of capabilities, looking at programmatic as a longer term investment. Because, when we strip away the cloud that is sitting over ad tech, which is this lack of transparency, we’re left with an amazing programmatic technology stack and the expertise to make incredible things happen. That is the value that is worth the investment, and ultimately will be the future of advertising.
Evan: Many fine observations! Regarding the education gap; might I suggest that the problem can be traced farther back than existing ad staffers...back to college and university programs in IMC and advertising/marketing (depending on how they label the program). Those programs would do both their students and the industry good by becoming more practical about skill sets required to effectively function in today's environment. Programmatic is just one of those areas needing more attention from academia.
Great observations. Transperancy is a beutiful thing.
I give a talk or presentation on "What you should know or what clients expect." It's also agency and client specific relating to what I wish I had known before I was a client and before I joined a large advertising agency. I have been giving it for 35+ years. Updating it constantly. It includes some salient points.
There is much more. There's always been a education and training gap. Agencies are not traiing like they did. Thought this was relevant. Hope it helps.
Two noteworthy points you mention here. First is the notion of "scalable talent." To me that simply means, "sell what we hired you to implement, or you're fired." Where is ythe client interest then?
Second is your example of the bank mortgage. Other examples that would come to mind iinclude car shopping. Say you go to a dealer and the salesperson gives you advice on the car you're looking at, plus all those available from other brands. Which do you think he/she will recommend? Would you take that recommendation?
Less obvious but just as pervasive is real estate, where a buyer thinks the broker is working for them, but is paid by the seller based on the final price. The only way to know is through full disclosure.
Assuming that the ANA report is 100% regarding digital media buying----though not neccessarily so for TV and other traditional media, I assume----many of the points are well taken for certain types of ad campaigns---direct response being one that comes to mind at once. With DM campaigns, at least you have a measurement that correlates with ROI, namely lead generation and/or sales. But what about branding campaigns by national marketers which do not call for a directly traceable response per ad exposure? In such cases it is often impossible to determine the ROI for any individual component of a campaign, only the overall result. How do you educate such advertisers about all of the other factors beyond CPMs and how they fit into place? So far, no one has done this with any degree of success because no one can really sort out all of the many interacting variables and pin a quantitative measure on each piece of the puzzle---except how much was spent on it and how many eyeballs were supposedly "reached".