Marketers are increasingly facing a challenge with financial transparency when it comes to digital advertising.
Marketers are increasingly facing a challenge with financial transparency when it comes to digital advertising. How did the market come to be so complex?
In the past, it was rare for a media owner to trade outside of the domestic market or sell more than one medium. Media plans were developed by experts in the market, and trading was centred on picking up the phone or face-to-face meetings.
Digital media changed it all. By its very nature, digital media is globalised and borderless, with potentially unlimited reach and footprint, facilitated through the application of technology layers. As the medium matured, advertisers were encouraged to invest in digital advertising.
Agencies have taken the lead here on the advertisers’ behalf, leaving many of them with little knowledge about how deals are structured beneath the layers of technology. Programmatic media buying has grown to a large extent; by the end of 2020, it’s estimated that almost $85 billion of advertiser spends globally will be bought programmatically. The result is an increased risk of an obscure, non-linear supply chain.
With more and more links in the transactional chain, the digital ecosystem has made it challenging for advertisers to be confident that their agencies’ recommendations are objective, impartial, and free from vested interests.
Here are six approaches advertisers can use to navigate the digital media ecosystem and improve the level of transparency they receive from their media agency partners.
Contract framework: Separate digital media investment from the broader trading contract. Review terms and conditions annually to ensure they are up to date with the way the market operates. This ensures you have better control of the way your agency manages your digital spend.
Reduce the risk: Push back on contract clauses that reduce the level of transparency. Cap the percentage of investment that can be made in this area. Monitor the proportion of advertising space bought programmatically in each market. Advertisers who do this have a greater proportion of spends that are auditable.
Control inventory quality: If it is difficult to obtain transparency of cost, ensure you are monitoring fraudulent ad space and not paying for non-human traffic. Write verified appearances of ads into your contract and hold regular contract compliance reviews to determine if there are any monies owed back to you for ads that were delivered fraudulently.
Work with transparent partners: The explosion in outsourced specialist resourcing has resulted in a huge number of transactions that are either non-auditable or out-of-scope transactions. Eliminate this outsourcing from your media supply chain contractually.
In-housing supplier deals: Bring in commercial deals with ad tech suppliers in-house. Restructure fees to ensure that you only pay net for technology and a fee for agency services that are commensurate with the work being done. Auditing all invoicing for ad tech ensures agencies are only passing on the net cost to advertisers.
One should not accept non-transparent trading models. Also, be informed about the alternatives. There are many independent solutions available in the market, hence advertisers should treat agency-owned solutions the same way they treat any other media vendor.
It is clear how and why media trading in the digital age has become less transparent. With many more players in the ecosystem, and an increase in technology platforms, there is less human oversight. But it is relatively straightforward for advertisers to take back control and this is best achieved by tackling the issue of a lack of transparency in the system head-on.
The author is the India CEO of FirmDecisions