The extent to which big advertisers have become dissatisfied with both their ROI and their agency relationships can be easily discerned by observing the formation of several cross-industry task forces to solve what have become pressing problems for them.
The first, a cross-industry task force set up by the American Association of Advertising Agencies (4As) and the Association of National Advertisers (ANA) seeks to address issues of transparency in the relationship between agencies and their clients. Agency trading desks have been marking up CPMs, and the people who are paying, the advertisers, do not have transparency into when or how much this is going on. Apparently, lack of transparency is now resulting in large enough operational losses to draw attention, although no one’s sure what the solution is just yet:
In a recent Digiday article the problem is explained this way:
Here’s how it breaks down: Traditionally, digital advertising platforms make money by marking media up somewhere between 40 percent and 60 percent. So, let’s say you bid a $3.50 CPM. As little as $1.18 of that could be going toward the actual media, but how would you know? It’s typical for the markup to be added by the exchanges, networks, and DSPs in the ad-buying chain. What’s more, when a high margin is carved out of a bid price, it limits the amount of inventory available for bidding. And if less money is being spent on actual media, the amount of available inventory shrinks, and that could be costing marketers valuable customers.
Meanwhile, marketing budgets take a hit — and it gets worse. Since black-box solutions use proprietary algorithms that providers can’t explain, you don’t know which metrics are being tracked. Who’s viewing your ads? Where are they being served? And, most importantly, why?
Unfortunately the article itself is a piece of sponsored content and advocates for a “partner” who understands media buying. But the core point is still the same: lack of transparency is hurting the entire industry.
ANA has also formed another cross-industry pact with the Alliance for Audited Media (AAM), this time to enlist AAM’s resources to confront today’s key digital advertising issues to ensure they operate in a more transparent and brand safe environment. This pact was announced by VP of Integrated Marketing Solutions for Bayer Consumer Care Christina Meringolo, who is also on the ANA board.
“Unfortunately, today’s online ad environment leaves many marketers suspicious and mistrustful, but it doesn’t have to be that way,” Meringolo said. “All sides of the industry have to do more – communicate more, be more transparent, be more informed and demand more of our vendors and partners.”
AAM works closely with groups like the Media Rating Council, Trustworthy Accountability Group, Interactive Advertising Bureau and Mobile Marketing Association to contribute its expertise to evolving industry standards, ad measurement guidelines and programs that promote transparency and trust among media buyers and sellers.
Our industry has evolved from one that is noticed by few into one that controls the deployment of large budgets, and to justify the place of digital advertising in the marketing ecosystem we have to evolve into trusted and transparent partners for the brands who pay the bills.