This post is by Darren Woolley, Founder of TrinityP3. With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.
There is much discussion on Marketing Technology and the impact it has on Media Agency Ethics and Transparency. In this post, myself and David Angell from TrinityP3 deliberately take differing points of view to explore the issues and encourage industry discussion on this important topic.
Media transparency has always been a problem, now it is worse – Darren Woolley.
The irony of media agencies being quick to deny there is a media transparency problem is that there has always been a transparency problem in regards to media buying.
The growth of digital media and the technology platforms required to deliver the associated transactions has simply made it easier for all involved to make additional revenue from the process at the expense of the advertiser.
Yet it is not as if the old media commission system was any better. The fact is that media buying has been rife with rebates and kick-backs, beyond the agreed and declared media commission rate.
In fact in the heyday of the media accreditation system there was significant money to be made for the media agency by making additional margins on volume rebates and the like.
Is it any wonder that media buying is open to corruption when so much money passes through increasing numbers of parties?
The difference today is that the very technology that makes this a dynamic and growing multi-billion-dollar market place is what also makes it the ideal way for everyone involved to make significant money on the side.
The digital media market is incredibly complex and fragmented and the technology allows huge numbers of transactions across billions of websites.
In fact there is significant evidence that the digital media market has attracted the attention of organised cyber crime groups as they have discovered opportunities for significant profits through creating fake audiences.
So how could marketers ever think that a media buying system that was already corruptible would not immediately embrace the opportunity to make infinitely more money when the technology enabled it to do so?
The difference is that the number of individual media buying transactions have increased exponentially and now are occurring in real time, meaning that the advertiser now relies on the integrity of their media agency more than ever before.
But could advertisers ever rely on their media agency?
So what is the solution? The first thing is for the advertiser to recognise that they have always been ultimately responsible for their media investment.
Their media agency is a contracted adviser and has never and is no longer acting as their agent. Therefore it is up to the advertiser to take responsibility for the performance of the media investment.
Practically this means that they may need to completely re-think their media buying process and explore options to decouple media planning from buying.
Or, they could look to bring media buying in-house, perhaps with a media-buying platform like Blackwood Seven, or more likely to renegotiate their media agency contract to focus and reward the agency for delivering media value and performance in a more transparent way.
It could be that you need to engage additional third party players to monitor and ensure that value is being delivered and to monitor the performance of your media agency.
Of course advertisers could continue to ignore the whole issue and increasingly be ripped off by their media agency and the other players in the digital media value chain, or they can face up to the fact that this has always existed, but the problem has been accelerated through the technology platforms developed for the digital media process.
But with recent estimates suggesting that ad fraud is costing advertisers more than half of their media investment, the question is can you afford to continuing ignoring this issue?
Yes, media buying and media agencies have been round for more than 175 years, so why now?
Because the evidence is in and to continue to ignore it and do nothing is simply negligent.
It’s time to redress the balance of this debate – David Angell.
Portraying the media agency as the evil character from a bad play has been prevalent for years. But characters in bad plays aren’t balanced. They aren’t nuanced, developed or realistic. It’s like this with media agencies, the pantomime villains of marketing.
We should look beyond headlines and redress the balance. Whilst recent ANA-backed reports are concerning, painting the whole industry as rotten – as if the sole focus is for the agency to unethically screw the advertiser – is simplistic.
Commissions, rebates. Yes, these things have occurred. Yet agencies work with what is in contract. The agency is a business; like most businesses, it explores contractual positions and additional revenue streams, within lawful boundaries.
This argument gains potency when we consider that agencies have for many years been financially squeezed. Advertisers want better agencies, doing more complex work, for less money. This is unsustainable.
Advertisers also want cheap media. Everyone talks strategy, but cheap media is always a core objective.
Do the naysayers consider that the way in which media agencies trade is necessary to maintain competitive cost? That to be ‘transparent’ about deals would compromise sensitive market positions, reducing agency leverage?
With digital media, it gets more complicated. There are numerous intermediaries involved in the process of media trading, necessary to success.
What do we expect, that they should perform without profit, or openly share details of commercial agreements?
The cost to agencies of doing business has never been higher. It’s not just the requirement for multiple intermediaries; its technology, people, training.
Yes, agencies profit from digital media – but they’re investing ahead of curve, re-training workforces and maintaining traditional trading practices.
The pace is unrelenting: agencies are having to balance the Now, the Next and the Later in a way that few comprehend.
For clients who think they can improve by going in-house – good luck. It can be done – but will it generate the same leverage as a media agency?
Will the advertiser access the same breadth of inventory, competitively?
Will an advertiser negotiate competitive agreements with technology and inventory providers?
Will an advertiser attract and retain the best people?
An advertiser may be able to do it all, but will the effort in be worth the reward out? I seriously doubt it.
In fact, I think most will realise that the line between the value an agency brings, and the importance of ‘transparency’ is not actually as clear as is supposed.
Media agencies have faults. In this, they are not alone.
The model isn’t perfect, which many have acknowledged and are addressing, via such means as alternative ‘higher transparency’ trading model options.
Agencies don’t open the innermost workings of their operation to public scrutiny. Name me one business that does.
They pursue various avenues designed to increase their revenue streams – like any other commercial entity.
It’s worth noting that some of the biggest ‘non-transparency’ challenges, such as bot-net fraud, are industry issues, and not the fault of media agencies.
They invest heavily in technology to prevent fraud, improve viewability, agnostically model campaign results and drive innovation.
When there has been an exposed issue, such as with GroupM in 2014, the response was to hire independent auditors, adjust processes and re-write internal compliance.
In Australia, the AANA has released extensive transparency guidelines to help advertisers. The AANA board includes many media agency leads.
Media agencies aren’t perfect. But they aren’t pantomime villains either.
To treat them as such does not only do a disservice to the thousands of agency employees who work extremely hard for their clients, with pure intention.
It deters future talent – surely critical to improvement, longer term.
What do you think?
This was first published on Marketing Magazine here on February 6, 2017.
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