Practical advice on navigating the media supply chain (An interview with David Angell)

media supply chain

Recently I was interviewed, in my role as Head of Media and General Manager at TrinityP3, by Tracey Porter for an article in Marketing Magazine, the Trust Issue June / July 2018. The interview is provided in full here because it provides a comprehensive view of the practical media advice we provide advertisers and marketers across the globe at TrinityP3.

The final article is published here in Marketing Magazine. But the original interview, which informed this industry view of the issues, is more than twice the length, filled with details that could not be accommodated in Tracey’s final version due to a limitation of space. So here it is in all its gritty detail. We hope you find it interesting and informative.

Tracey: The media agenda is a complex beast, what practical advice would you offer marketers running activity through media owners, agencies and programmatic campaigns in terms of using external third parties for their media buying activities or buying in-house?

David: Marketers should understand that between ‘in house’ and ‘third party’ there are a range of different options they could explore – essentially ‘hybrid’ structural approaches that split the responsibilities and ownership of digital media trading between advertiser and agency.

If a marketer is considering a change in model, there are a number of areas to consider.

First, is the marketer aware of the range of models offered by the agency? Most tier one agencies now provide a range of different servicing models, offering different levels of transparency, cost and scope. Have a conversation with your agency, be honest about your intentions and be prepared to explore the options.

Second, is the agency-marketer relationship properly set up for success, and what does ‘success’ mean? Marketers who are looking for the cheapest possible media at the broadest possible reach have a very different definition of success from those who prioritise the acquisition of quality leads or conversion in regulated or brand-safe environments.

Third, what is the base level of capability that already exists in-house? Digital trading, particularly in the programmatic area, requires specific skillsets that generally speaking are in high demand and short supply. Is the marketer prepared to increase head-count by bringing such skillsets in house? Is there no capability and no resource allocation to acquire it? Or is there a better way of mixing your current resource and skillset with that of the agency?

Fourth, what is your appetite to acquire, license or engage with the technology required to deliver effective digital advertising? Many Demand Side Platforms (or DSP’s, the platforms required to trade digital media programmatically) are basically plug and play models, so there isn’t much problem.

However, agencies perform a number of other tasks. To list some examples, agencies also invest in or partner with ad-fraud prevention and verification organisations, they work with data management platforms (DMPs) to develop stronger audience profiling and segmentation, and they develop proprietary tools and systems to aid the process.

Fifth, will bringing your media trading in house actually deliver a genuine performance lift? This is an obvious but amorphous question, as it depends on what the marketer’s performance metrics are, how strong the current performance is, and the scope of the current agency partner in delivering them.

But there are some immediate things to consider. For example, agency trading desks will generally aggregate a number of different DSP partners, which increases the pool of available inventory and therefore can benefit both cost and quality.

Agencies will generally have a number of bespoke deals with key publishers (sometimes known as ‘PMP’ or ‘Private Market Place’) deals that are designed to benefit the marketer via access to high quality inventory. Can these kind of things be replicated, and how much do they contribute to success?

At the end of the day, my recommendation is that marketers should always open a dialogue with the agency about the potential routes involved rather than try to go it alone; and they should approach that dialogue with an initial point of view on all of the above. A smart agency will not see the words ‘in-house’ as a threat, but as an opportunity to optimise the relationship and the operational structure with its client over time.

Tracey: Whether $10,000 or $10 million, ideally what percentage of their marketing budget should brand marketers look to allocate on media spend? 

David: I assume you mean in relation to cost of buying media, rather than agency remuneration? On that basis this is no longer a question that can be answered in blanket terms – perhaps it never was, but increased complexity over recent years has made it even less fathomable, without taking the individual needs of the marketer into consideration.

How complex is the brand or product proposition and what effect does this have on messaging; what does the cadence of messaging need to be; who are the consumers and how are the consumers segmented or targeted; what is the hierarchy of needs/prioritisation between top of funnel and bottom of funnel communications; what is the optimal balance between retention, acquisition and organic customer growth; how strong is the competition and what effect does competitive have; what’s the baseline of results off which the marketer is working and what is the need for improvement; what does historical spend data, channel insights and messaging insights tell us; what owned assets does the marketer have that can be brought into play? These are just a few of the questions that need to be asked.

The need to spend money on ‘media’ is constantly evolving, mainly due to the complexity of options available and the power of the consumer to engage or avoid.

The best marketers, in my opinion, are working with data and attribution modelling to evolve an as-live test, learn and evolve approach that serves to both establish ‘always-on’ norms, and constantly course-correct.

They are considering media expenditure, with their agency, as part of an overall OESP (Owned, Earned, Shared and Paid) framework, and as part of an integrated overarching strategy.

They are also focused on assessing budget based on maximising the value of their media investment in terms of ROMI outcomes, which is a completely different approach than the more traditional way of focusing on the cost of their media investment in terms of volume efficiency.

Tracey: What qualities do the best media owners and agencies share that allow them to stand out from the crowd?

David: Media agencies, on paper and in the way they position themselves as brands, can be hard to differentiate. The media agency that buys media efficiently and knows how to plan different channels is a table-stake in today’s world. The best media agencies need to demonstrate a whole lot more, attitudinally, structurally, and in terms of their people and skillsets.

The best media agencies are agnostic in approach to making recommendations.

They are prepared to get under the skin of commercial problems, rather than just media problems.

They approach strategy holistically, taking into account broader communication, marketing and organisational challenges, constructively leading their clients to get into this space.

They actually work, genuinely and collaboratively, with other agency partners, rather than just saying they do.

They have the right balance between leadership, management and execution, all of which are equally important in different ways. Their leaders, in particular, are seasoned, T-shaped individuals able to effectively pivot between their own organisation and the needs of their clients.

They are willing and able, within reason, to flex and adapt their structural or servicing model, their tools and processes around the needs of the client, rather than imposing their model on to the client.

They talk the client’s language, recognising the organisational pressure a marketer is under and delivering solutions in a way that their client can take to the broader business with minimal reworking.

They are prepared to stand up and be counted for both success and failure.

Their egos do not get in the way of a good idea that has come from someone else.

They have the ability to be with their clients in the boardroom, as a part of the team, to help articulate strategies, challenges, opportunities and results.

Finally, they are forward facing when it comes to consideration of alternative servicing or structural models and they are embracing change, building out real capability in areas such as data science and investing ahead of curve.

Tracey: What can marketers do ensure they are selecting the right firm for them and that they are getting the best value from their agency fees?

David: Agency pitching or tender processes are nuanced, and there isn’t enough space here to articulate everything that needs to be considered in selection.

In broad terms, an agency selection process should ensure that there is a strong balance between the provision of rhetoric (what the agency sells in an RFI) and substance (what the agency does to demonstrate actual capability in a live situation/response to a brief).

An agency selection process should ensure a level of evaluation against cultural fit, as well as actual deliverables.

An agency selection process should ensure a two-way discovery street – marketers need to remember that a pitch should be as much about the agency understanding the marketer as it should be about the marketer understanding the agency.

An agency selection process should be constructive in nature, allowing all contenders to put their best foot forward, with the right amount of time and guidance.

An agency selection process should involve setting up and agreeing to value-based performance measures, that are not just media-related but business outcome-related. Finally, the outcome of an agency selection process should be a commercial agreement that is both transparent, commensurate, fair and sustainable for both parties.

Tracey: Conversely, what are the red flags?

David: I’ve written two articles containing 15 reasons why agencies can lose pitches – for the sake of brevity and focusing on ‘media’, I’ve listed four here.

  1. Beware of the media agency that sells based on an unbeatable media cost deal, or who promises to ‘reduce the cost of your current agency by 20%’. First, the complexity of the landscape and the variables involved in evolving strategies and market conditions make such promises largely redundant, in my opinion, not to mention extremely difficult to prove. Secondly, unless detailed historical cost performance data has been supplied (highly unlikely) this agency has no clear way of knowing what the cost baseline of the incumbent agency is, and therefore is in no position to make such claims with absolute conviction. Such claims are also not value-based, but cost-based promises, which is not optimal to achieving the best overall performance.
  2. Beware of the media agency that submits a very ‘cheap’ remuneration or resourcing plan. The likelihood is that this position, and the relationship, will eventually become unsustainable.
  3. Beware of the media agency who is reluctant to field people who would actually, in theory, be working on the business, during a pitch. The caveat here is not to expect 100% clarity from day one of a pitch – the agency needs to get to know the marketer first. But the agency should at least be fielding some key people, certainly later in the process, who have both done the heavy-lifting work in the pitch and who would have a role in the business going forward.
  4. Beware of the media agency who provides an up-front credentials demonstration of whizz-bang strategic models, tools and frameworks, but then fails to bring such things to bear in a meaningful way when answering an actual brief.

Tracey: Are you able to share some of the more unsavoury stories (you don’t have to name names) you have heard in terms of poor media buying practice?

David: In my experience, poor media buying practice can originate from the marketer as much as it can from the agency.

Without getting into the weeds of process, tracking and measurement and taking a broad definition, I’d say that good media buying is based on expertise being used to make objective recommendations. It’s when objectivity gets blurred that media buying becomes poor.

But media buying made poor by losing objectivity and prioritising the wrong interests can originate from many places.

It can originate from the commercial contract. I’m still amazed at how many contracts I see where the agency is financially incentivised or KPI’d against driving year on year media cost reductions, mainly in TV – e.g. ‘5% cheaper CPM this year, then another 5% cheaper the following year’. Clearly, this doesn’t lead to great media buying.

The agency will likely need to compromise on quality of airtime in order to ‘buy cheap’. And what if there’s a premium TV event that is perfect for the client? Airtime in premium events is more expensive – so does the agency put its own bonus at risk by buying the expensive airtime, even if doing so is in the client’s best interest? Often, it won’t.

Poor media buying can originate from self-interest or myopia of marketers, who believe that they should be dictating media selection. Real-life examples I’ve witnessed during my agency career include junior staffers being yelled at or verbally abused, or being reduced to tears, by marketing clients unhappy that their personal favourite program is not included on a TV spot buy; or pressuring the agency to make several last minute changes based on personal preference or assumed knowledge, rather than considered expertise.

Briefing is often a key component in determining the quality of a media buy. Many client briefs I’ve seen over the years are extremely directive, basically telling the agency which channels to invest into – these clients will sometimes complain separately about lack of innovation on a media plan. The best media planning and buying is based on a two way process of due diligence, where respect is given to the agency by the client, and where the agency is allowed to utilise the tools, systems and skillsets involved in properly planning a media schedule.

Poor goal-setting or target setting, by client or agency, can very quickly lead to poor buying. All too often I’ve seen clients who’ve been told that ‘we aim to increase our share of spend in digital channels to 35% ’. Why? There’s no strategic rationale behind a goal like this, it simply results in money being invested into a channel for the wrong reason.

Another classic is the agency or client that recommends ‘matching competitor spend’ in a given media channel. Again, there’s no real strategic reasoning behind this kind of approach; it may, for example, be much better to invest in other channels to avoid the clutter and reach the consumer in different ways.

And, of course, agencies themselves are not always blameless; when the agency puts its own interests ahead of its clients, poor media buying can be the result. The best example of this is the agency that recommends media selection based on satisfying agency-wide trading deals or hidden cost mark-ups.

Tracey: How has programmatic buying technology changed the game?

David: Programmatic buying technology has changed the game in a number of ways, and will continue to do so as it extends into other media channels such as TV, outdoor and radio.

It is changing the way in which media inventory is costed and negotiated, and the structure of commercial agreements between agencies and publishers.

It is playing a role in changing the way in which audiences can be segmented and targeted (from both a medium and a messaging perspective) in more personalised and dynamic ways.

It has helped anyone trading media to deal with the complexities and plethora of options involved in reaching today’s consumers.

It has significantly increased the complexity of the overall media trading supply chain, and has played an inadvertent role in the creation of a multi-billion dollar ad-fraud problem in the industry.

It has changed the ways in which media agencies and other parts of the supply chain monetise their services.

It has opened up vast amounts of inventory to the market, much of which I would argue is of very low quality.

It has played a role in placing increased pressure on publisher advertising revenue streams and inventory yield, which some would claim has led to knock-on effects such as a reduction in journalistic quality.

It continues to change the ways in which agencies need to evolve talent and resource, and it has opened up new opportunities for marketing clients to in-house media trading.

Tracey: What do you see as the gaps that still exist in terms of ensuring media owners and agencies are able to provide marketers with clear accountability in terms of their media spend?

David: There are still significant gaps in contractual structure between agencies and their clients (identifying areas such as right to audit, the transparency of principal-based trading structures and data ownership), which are gradually evolving through the work of various industry bodies and standout individuals like Mark Pritchard and Bob Hoffman.

We’ve seen some big organisations exposed in discovery of hidden fees and charges, or incorrect charges, levied by their agency as part of the media buy (for example, in 2016 between Toyota with Dentsu in Japan, which according to reports, ultimately led to the identification of over 600 suspected cases of ‘over-charging’ affecting over 100 clients).

There are still big challenges to cost accountability not just by agencies themselves, but through the plethora of intermediaries used in the digital media trading supply chain and the hidden fees they take from the working media dollar. Various estimates indicate anything between 40 and 90 cents in the media dollar is actually eaten by the overall combination of non-transparent fees.

The industry still does not have fully standardised, independent performance measurement across all areas of the digital advertising. We’ve seen issues with huge advertising vehicles like Facebook making serious errors in its own measurement numbers, used by agencies to gauge performance.

However, it’s also fair to say that there have been big steps taken in this area over the last couple of years  – for example in 2017, Facebook, partly as a result of its own problems, developed or extended third party verification partnerships with the likes of ComScore, Nielsen and Integral Ad Science. Industry bodies such as the IAB (Internet Advertising Bureau) and the MRC (Media Ratings Council) have also done extensive work to clarify or move towards standardised digital advertising measurement.

An important part of the performance measurement debate is viewability. There is ongoing work in addressing viewability standards within digital media advertising, both in terms of making the standards more rigorous, and more compatible with traditional media such as television.

The current MRC (Media Ratings Council) definition of a viewed (and thereby paid for) digital advertisement is 50% of pixels being viewed for one second – which, intuitively, feels pretty low, and is also not compatible with measurement in analogue broadcast channels. But an increase of the rigour in viewability standards will likely have a negative impact on the amount of impressions publishers can charge money for, so there has been significant opposition to an improvement in the standard.

Some of the large agency networks have moved to impose a 100% viewability standard, and the MRC itself recently announced that it plans to role out a 100% viewability standard in 2018, that publishers would need to adhere to in order to gain MRC accreditation. Google and Facebook have historically resisted the MRC but it has been reported that both organisations are now working more collaboratively with the MRC, which is great news.

Cross-media measurement (understanding the consolidated reach or engagement of multi-channel campaigns across digital and analogue channels) also remains a very hard nut to crack, although it has to be said that agencies and other bodies do a lot of work in development of proprietary tools, models and systems designed to understand this. The MRC also has a huge focus on this area and plans to role out a ‘cross media standard’ by the fourth quarter of 2018.

Advertisers have suffered serious exposure to their messaging appearing in unauthorised and inappropriate environments – not just via the long, low quality tail of digital inventory, but via premium publisher environments, the biggest example being the struggles faced by YouTube last year. So clearly, more needs to be done in terms of controlling and regulating advertising environments.

But perhaps the biggest single accountability issue is the constantly evolving battle with ad-fraud, which exists throughout the industry and is something into which agencies and other organisations have significantly invested, in terms of ad-fraud prevention and ad-verification technology.

Overall, I’d say that whilst there are significant and multiple accountability challenges faced by the industry, we’re seeing much more promising shifts towards collaboration and standardisation, which is ultimately, in my view, going to benefit everyone and allow for future stability.

Tracey: How do you believe the media buying industry as a whole can raise the bar to ensure more transparency in its processes?

David: It’s really about all of the answers to the previous question. But in terms of what can immediately be controlled: I think media agencies and other members of the industry can do five things.

First, agencies need to be more willing to adhere to contractual standards laid out by industry bodies such as the ANA, ISBA and the AANA. There are many standards to address, but to take a particular example, when working with an agency that is part of a global network or holding company (such as WPP, Publicis, Omnicom or Interpublic), the relationship and commercial arrangement between the contracted agency and other third parties it subcontracts within its own holding company, and the rights the client has within such a structure, need to be clarified and strengthened in many cases.

Second, I think agencies can do  a lot simply by being more up-front in conversation with their clients about what can, and what can’t be controlled in media buying, and the associated risks. What I’ve seen over several years are clients who simply don’t understand the level of transparency that is appropriate for their own business – and what’s appropriate can vary greatly.

Third, agencies can always do more to train their people, functionally and culturally, and provide process and ethical playbooks for all members of staff to refer to. Group M’s response to the Mediacom measurement scandal in 2015 was very strong in this regard; as an organisation, it revamped processes and training across all of its agencies, making a concerted effort to avoid repetition.

Fourth, agencies can be more honest about the reality of ‘transparency’ in the market. In the wake of the ‘transparency’ issues raised by the ANA and others over the last few years I’ve seen media agencies repeatedly claim in pitches that they are ‘100% transparent’ and that this makes them unique in market.

Frankly, in my opinion that’s rhetoric and a fallacy, given the complexities involved, no business is 100% transparent, and I actually don’t believe that media agencies should be forced into this position. But they could do a lot more to educate in an honest way about the broader challenges inherent in the media trading ecosystem.

One thing that agencies have been repeatedly accused of is funnelling client money into digital media to make higher profits, presenting digital media as the bright shiny future and masking the inherent risks. The kind of open discussion I’m talking about would lead to a more informed marketer – at the very least, a marketer with a greater understanding of the achievable level of ‘transparency’ across the industry, and how much the agency can influence in different areas. Having said all that, marketers need to be prepared to listen and learn.

Fifth, agencies, publishers and technology companies need to continue working with industry bodies to work on all issues together, in some cases placing the interest of the industry ahead of their own, or at least accepting compromise. The role of industry bodies is critical to this process and as per my answers to the previous question I can see a lot of green shoots in this area, but it is a long and complicated journey, which will require constant navigation in order to gain incremental improvements. There’s lots of work to do.

Tracey: How frequently do you believe media agency accounts should be reviewed?

David: It depends on your definition of ‘reviewed’. Agencies and marketers should review their contracts, their scope of work or scope of services, their engagement agreement and operational practices and their resourcing/remuneration agreements on an annual basis, so that these critical areas remain up to date.

In fact the right to annual review should be stipulated in a contractual agreement. A lot of the problems we see with lack of transparency in contracts come from contracts being out of date, or simply missing.

There should also be a regular performance review in place (bi-annually is, I think, the best frequency), managed by an independent third party with expertise in this area, and based on an agreed methodology and KPIs set out in contract.

But reviews of this kind do not necessitate a pitch. In fact I recommend them to avoid the necessity of having to pitch too often. But if by review you mean go to pitch/tender – three year cycles is the minimum I would ever recommend, and preferably longer.

Tracey: Any final thoughts you would like to share?

David: Only that, in my view, when it comes to ‘transparency issues’, people are very quick to point the finger (media agencies in particular have copped a lot of flak, some of it justified and some of it unjustified), but ultimately there is no single door against which blame can be laid.

All parties, including marketers, should take a share of the responsibility for the current challenges facing the industry, and take a leadership stake in resolving them. And I think that is what’s happening right now. There is no magic wand to wave, but I think there’s real progress being made.

If you want to read more on Our Approach to Media Value and Performance you can download the latest White Paper here.

If you would like this thinking applied to improving your media performance, then you can find out more on how TrinityP3 provides this here.

If you would like to ask David Angell a confidential question about your media performance you can contact him here.

Are you concerned about the value you are obtaining from your media investment? Find out about TrinityP3’s comprehensive media assessment service here