Origami_Logic_Transparency.jpg

 

In the aftermath of the ANA’s initial Media Transparency Report  and follow-up recommendations, one thing is clear: media transparency is one piece of a larger transparency problem that advertisers and agencies need to discuss.

This is an urgent matter. For context, consider the conditions for agencies and advertisers:

Advertisers:

  1. Brands are struggling to operate and optimize an ever-expanding set of channels
  2. The number of tools to manage, measure, and optimize those channels have exponentially increased in number and complexity. Meanwhile, there’s more accountability, scrutiny, and ROI demands on their shoulders
  3. Few can afford experienced teams capable of managing the complexities of the digital supply chain
  4. With ad blocking, ad fraud, bots, viewability challenges, and poor engagement, there’s little effective spend left over for advertisers to generate the impact they’re accountable for delivering

Media Agencies:

  1. Agencies have been gutted by relentless fee reductions from client procurement departments and holding company margin demands. This has harmed their financial health and reduced capabilities and staff to overworked junior talent
  2. Many advertisers have brought capabilities in house while relegating agency relationships to less experienced staff. Moreover, agency relationships have largely been usurped in the board room by Management Consulting firms
  3. As ad spending has grown, so have their workloads. Meanwhile, they feel compromised by “frenemy” tech firms who’ve pursued direct relationships with advertisers
  4. Equity investments in technologies that were made to benefit clients are being questioned without understanding why those investments were made, or the challenges and conflicts associated with alternatives

This is not a sustainable situation. So who’s getting penalized here? While agencies have suffered of late, in the long run, advertisers are the ones who will suffer.

The smart advertisers understand the gravity of these circumstances. They know the current state of affairs ripens conditions for less transparency. They know the environment threatens agency survival and hampers their ability to address challenges their agencies successfully handled in the past. Absent collective learnings from their agencies, they know it takes in-house talent longer to obtain digital media supply chain knowledge. They know when agencies can’t offer collective bargaining power with big tech players whose network effects result in industry consolidation, the publisher ecosystem suffers and inventory prices increase.

Worse still, they know if the majority of talent goes to large tech firms, martech vendors, and management consultancies, there could very well be more entities focused on maximizing budget extraction instead of budget effectiveness. While that isn’t the genuine intent for those parties, it could very well be the resulting effect. Ironically, this means advertisers could face the same onslaught to their budgets that agencies have suffered to their fees.

To combat those effects, many of the advertisers we work with are establishing a more collaborative “trust but verify” approach with their agencies.

Generally speaking, that approach has involved three phases:

  • Start the conversation by assuming good intentions
    For advertisers, clarifying the intent to maintain the mutual health of both agency and advertiser has been a critical starting point in the conversation. Every relationship demands that type of dialogue to establish trust and transparency. But re-establishing trust in the wake of the ANA’s findings is easier said than done for some advertisers when they hear about 30% – 90% markups on media. Fortunately, none of the advertisers we work with have discovered [to our knowledge]  fraud or unethical practices to date, so we hope the worst of the ANA’s findings are limited to a few bad actors.
    For agencies, it’s equally important to understand that their in-house counterparts are having their data and credibility questioned as a matter of routine by executive stakeholders, and the ROI demands placed upon them have never been greater. In many circumstances, their jobs are on the line. When agencies have deeper context around that reality, they’re better equipped to understand their clients’ contractual inquiries, transparency requirements, and data demands.
  • Update contracts
    Lapsed contracts are not uncommon, and advertisers have been overly lax with media management while technological changes have accelerated in the digital media supply chain. The ANA’s contract template provides a helpful starting point for clarifying agency compensation and ad buying visibility. Used correctly, an updated contract should provide more transparency into programmatic, which continues to grow and is the source of several issues uncovered in the ANA’s report. It can also establish protocols for other channels that have been historically opaque, like mobile and video.
    On the other hand, if contracts are being revised for the sole purpose of fee extraction, it’s not going to resolve the fragile trust between agencies and advertisers when it comes to media buying transparency.

    Advertisers and agencies need to be on equal footing to combat rampant issues like ad fraud and ad blocking, and neither party is equipped or sufficiently incentivized to address them without an equitable, transparent contractual agreement.

  • Discuss data ownership
    We work with many of the largest advertisers and are finding that data ownership is perhaps the most important transparency issue that isn’t being discussed.
    Simply put, advertisers want more control and visibility over their data, and very few of them trust the accuracy or completeness of the data they have until they have some ability to control and verify it themselves (again, this should come as no surprise given the level of scrutiny being applied to highly visible marketing data, especially when the marketing director’s job is on the line).

    That challenge stems from internal and external sources. Internally, they’re grappling with data that’s measured, gathered, cleansed, and reported on differently within and across channels, campaigns, business units, and regions. Externally, the same conditions exist with agencies, and there’s a compounding effect when different agencies are employed across business units and countries.

    For large advertisers, obtaining a complete, accurate view of their data to evaluate and compare performance can be a massive burden. While the ANA recommends that “Advertisers should maintain full title over all data sets that relate to their business, with the unhindered ability to store, access, and use those data sets,” the time, resources, and expertise required often don’t exist (plug: that’s why they engage Origami Logic).

    The advertisers who are working to resolve their data transparency challenges – internally and externally – are seeing some noteworthy results. Namely:

    • Improved data accuracy and credibility with executive stakeholders
    • A consistent, comparable, unified view of performance
    • Enhanced trust in their agency’s media buying and reporting practices
    • Better insights from internal teams and their agencies of record 

Once the initial data accuracy and transparency challenges have been resolved, the best outcomes are being realized by advertisers who give their AORs visibility beyond the channel and campaign performance data they’re typically privy to. When that occurs, it enables the agency think more holistically about their client’s business. Moreover, it gives the advertiser the ability to enlist the agency in solving larger, more meaningful challenges rather than being viewed as a source of them.

At a time when advertisers are spending more in digital and getting less on a per dollar basis, resolving the transparency crisis has never been more critical. Unless agencies can be enlisted to help solve the core challenges advertisers are facing, many advertisers will be hard pressed to succeed on their own. If that happens, there are no winners.