Updated September 2018.

Today’s digital media space can be confusing at best, and totally non-transparent at worst. We hear terms like “programmatic”, “closed ecosystem”, “total solution” and “proprietary tools” being thrown around, along with one of the trendiest buzzwords right now… “artificial intelligence”.

 

When it comes to several of the offerings on the market, it’s easy to accept these terms at face value rather than trying to understand their true function. The trouble is, without a deeper understanding of these platforms and terminologies, your media dollars could be managed in a less than optimum way, or even worse – falling victim to foul play.

 

But before we get into all that – let’s take a step back to ask a big question: Who is responsible? Amid all the recent bad press, you might be quick to answer, “Publishers and agencies, of course!” And for the most part, you would be right. With P&G publicly questioning its agencies regarding media transparency and Uber suing its agency for fraud, it’s clear to see there is an inherent gap in the way many agencies are communicating media spend with their brand partners.

 

Simply put, when you pick up the bill, you have a right to know how your budget is being spent.

 

Part of the problem is that many agencies find themselves in a kind of middle ground, with revenue streams coming from both media owners and their clients. This is just one of the elements at play in what can perhaps best be described as ‘murky waters’.

 

But worry not, we have some floaties at hand and a route to more ‘transparent’ waters ahead.  Here we share five important conversations you should be having with your agency partners to ensure you are in full control of your budgets.

 

1. Do You Fully Understand Your Media Buying Process?

 

Before your media dollars manifest as ads, there are many steps that affect their total value (Diagram 1). Do you know how to identify the costs associated with each step of your media buying process? If you don’t, we suggest you find out. A good place to start is to request a detailed fee breakdown, i.e. what is the actual cost of the ads purchased (from the end publishers)? Having clarity will only contribute to more insightful conversations, and a better grasp of your reports.

 

Diagram 1: Counting The Costs Through The Digital Media Money Flow (digital).

 

Source: WFA

Note: A typical media transaction includes various intermediaries, such as the trading desks, Demand Side Platforms (DSP), verification vendors and exchanges shown in Diagram 1. Each intermediary takes a share of your investment, so make sure you are aware of each step involved in your media buying process. For more details, see WFA’s full report.

 

2. Are You Getting Your Rebates?

Most media owners incentivise agencies to spend their client’s money with them through volume deals and rebates. Once a certain volume is spent with a publisher, the agency is given a rebate; either in the form of cash (Diagram 2.), inventories, or credit. Always check how these rebates are fairly reimbursed back to you. Having a better overview of the system in place will encourage a clearer understanding of your agency’s total remuneration and where their incentives lye.

 

Diagram 2: Flow Of Funds In A Cash Rebate Transaction

3. Do You Have First Right of Refusal on Deals or Partnerships?

 

Brands with higher media budgets often get the first right of refusal on deals and new partnerships, which helps them gain early exposure to market innovation. For instance, when Facebook rolls out new measurement tools, or Snapchat rolls out a BETA test for its latest feature, your agency’s highest-paying clients will likely be first in line to enjoy the benefits. If you don’t consider yourself to be at the top of your agency’s food chain with regards to media spend, be sure to have regular conversations around how these tools and partnerships can be used to better optimise your performance campaigns.

 

 

4. Do You Own Access To Your Accounts?

 

To ensure optimum transparency, you should have a direct overview on the clicks and history logs of your ad accounts. How do you know when a click or impression is real? Are you confident in your ability to navigate your accounts eg Google and Facebook Manager? If not, invest in training and ensure your core marketing team has the knowledge of how to use and navigate these platforms.

 

5. How Do You Measure Success vs Spend?

 

As early as possible in the planning of your next media campaign, confirm that you have all the necessary audit checks in place. Part of this is to ensure you have implemented solid KPIs.

 

However, you may also wish to run a compliance audit, which is likely to require a third party auditing company. It’s important to note that third-party auditors often rely on excel numbers for verification, as they lack ability to get into the ad-servers (Diagram 3), not to mention the understanding of how to navigate them.

 

Unfortunately, impressions, views, sessions and clicks alone do not tell the full story. When you measure, attribute and tie all activities to real metrics, eg sales, you are in a stronger position to verify spend. Impact on revenue is much harder to fake.

 

Diagram 3: The current media trading ecosystem is not built for proper audits

 

Note: Right to audit now needs to cover the full transactional cycle.

 

 

Moving Forward

 

Globally, we can see that there is momentum to solve the issue of media transparency, or at least implement some much needed counter-measures. In France for instance, an anti-corruption law called Loi Sapin  was updated in February this year to make the business of media-buying more transparent. The new decree means that as of January 2018, it is illegal for digital media-buying agencies to work as both the buyer and seller of advertising. Media owners will send invoices and detailed information about the services they performed directly to the advertiser to avoid any scope for potentially fraudulent figures.

It’s fair to say that industry observers will take great interest in how French ad spending plays out as a result; if programmatic does continue its meteoric growth, the French model could serve as a healthy example for the whole industry. But as many experts have voiced recently, this isn’t a straightforward issue. And despite some glimmers of best practice, there is still a long way to go.

 

 

In the meanwhile, have a think about the relationship you have with your agency. Are they a vendor reselling media from publishers, or would you rather describe them as your partners, acting only in your best interests to buy media in the best possible ways? We believe marketing agencies should only have one revenue stream (from their clients) as with all other professional service industries; one incentive, fair remuneration and no arbitrary percentage models.

At the end of the day, with so many considerations surrounding this topic – the better equipped you are to navigate your own dashboards, platforms and reports, the easier it is to spot anything untoward. For a more in-depth discussion, drop us a line on info@lionandlion.com.

 

Sources:

  1. https://www.wsj.com/articles/google-issuing-refunds-to-advertisers-over-fake-traffic-plans-new-safeguard-1503675395?platform=hootsuite
  2. https://www.wfanet.org/app/uploads/2017/04/programmatic.pdf
  3. http://www.ana.net/content/show/id/industry-initiative-media-transparency-report
  4. https://digiday.com/media/ads-txt-created-help-publishers-fight-fraud-isnt-adopted-publishers/
  5. http://www.businessinsider.my/france-loi-sapin-digital-advertising-transparency-update-2017-2/?r=US&IR=T
  6. https://digiday.com/marketing/digital-medias-credibility-crisis/
  7. https://www.bloomberg.com/news/articles/2017-09-18/uber-goes-on-rare-legal-offensive-suing-dentsu-unit-for-fraud