A culture of media buying markups, rebates, and kickbacks is hurting advertisers’ bottom lines. Here’s what they can do to bring transparency back to the media buying process.
For those involved in digital ad buying, especially those coming from a traditional media buying background, the process can seem strange and opaque. That lack of transparency wasn’t highlighted for a large-scale audience until earlier this year, when the Association of National Advertisers released their authoritative Media Transparency Report.
Even after the groundbreaking report came out, however, little is being done to address the inflated pricing, unnecessary middlemen, and curious relationships between agencies and buyers that it outlined. How can the system be reworked, and what tools do we need in order to make it happen?
What’s the Problem with Media Buying?
The ANA’s report found that “Numerous non-transparent business practices, including cash rebates to media agencies, were found to be pervasive in the U.S. media ad buying ecosystem.” Even more disturbing is that some of these non-transparent practices were known and condoned by senior executives. This culture of ad buying markups, rebates, and kickbacks may not be affecting every corner of the digital media space, but it’s no exaggeration to say that it’s pervasive — or that it’s hurting advertisers’ bottom lines.
Marketers typically partner with either an agency trading desk (ATD) or a demand-side platform (DSP), both of which rely on technology and data for audience and performance — no humans needed. So why do companies still go through media buyers in the first place? The ANA report suggested that most advertisers aren’t fully aware of the degree to which much of this programmatic purchasing can be left to in-house technology.
And when media buyers are more useful — leveraging relationships with publishers to gain access to premium ad space — they’re often advancing the interests of the publisher rather than your own. Advertisers end up purchasing space not strategically linked to their goals, sometimes at a marked-up price, simply based on the fact their buyer has a relationship with certain media sellers.
As an advertiser, it’s your job to ask a lot of questions about how your ad is performing on a given publisher’s site. Your media buyer may have gotten you a “great deal,” but what about your KPIs? A responsible advertiser investigates the publisher’s click-through and traffic rates, ideally before purchasing space. After all, you’re the one paying the bill: that gives you much greater leverage and incentive to go after unscrupulous publishers who may inflate their reported KPIs and sell poor-performing media.
How Do We Fix It?
The thing that’s great about digital media is that KPIs are easy to quantify — click-throughs, conversions, and sales are all simple yet crucial statistics. Because they can go straight to a publisher and ask for exactly what they want, the power is in the advertiser’s hands. Ultimately, what should determine ad pricing is 1) supply and demand, and 2) a platform’s performance — and that’s it.
The approach of the world’s preeminent online advertisers, Google and Facebook, prove that this simple reasoning is far from outside the norm. Their platforms allow you to punch in your budget and KPIs, then put your ads in front of their audiences. You then decide whether to increase or decrease your bid depending on how close you come to meeting your targets. If this is how advertising with the world’s most successful digital marketing platforms works, why can’t publishers and agencies take the hint?
Another key aspect of successful digital media advertising is a marketing team’s ability to harness the power of technology. For example, artificial intelligence platforms like Albert™, an autonomous marketing platform from Adgorithms, can eliminate the need to do manual tasks associated with digital ads like buying media space and executing, optimizing, and analyzing campaigns across channels. Instead, the team is focused on higher-value problem solving, creating ideas for your next big campaign, and generally being smarter, more creative marketers. Plus, Albert isn’t working on behalf of the publishers, he’s working on behalf of you and the KPI you want, so he automatically makes the best selections and media buys for you.