Commentary
How Can We Counter 'Black Box' Trading?
- by Dave Morgan , Featured Contributor, February 29, 2024
Some years, one element was up; some years, another. But everybody was committed to building value for the entire media ecosystem over the long term. Regular communication, transparency, critical thinking and personal relationships were pillars upon which this business was conducted.
Not so much anymore. The past decade has seen the rise of “strategic” partner deals with opaque revenue shares, push-button “black box” trading with murky inventory pools, and a tendency for many in the business not to ask too many questions, since willful ignorance tends to be the favored state of many.
The Association of National Advertisers told us at the last Masters of Marketing event that sales growth among top companies is no longer correlating to ad spend in the U.S. Sales growth is anemic, despite lots of ad spend growth. I, for one, believe that the disconnect between advertising and sales growth is related to the growth of opaque, push-button ad buying, the fixation on slick-looking dashboards filled with faux precision analytics, and “strategic” partner lock-in deals.
advertisement
advertisement
This has fueled a growing resistance for many to participate in face-to-face sales calls, regular capabilities presentations and engaged dialogues on how to best solve industry and client challenges.
The issue isn’t just the slow re-adoption of in-person meetings. It’s about everybody with “camera-off” in video meetings, and a resistance to building the kinds of personal relationships and networks that have always been critical to making our industry work.
There’s no question that everyone is being tasked to do more with less. For sure, data-powered analytics and automated platforms are rightfully becoming more and more important in our business, and they should. However, transacting on smart, highly automated platforms does not have to be mutually exclusive to having lots of direct dialogue and communication with each other, being fully transparent across the ecosystem -- and getting back to building personal relationships.
We are not likely to fix what ails our industry -- anemic ad-driven sales growth -- if we don’t find ways to recapture the critical thinking, transparency, trust and communication at the personal level that built our business.
Agreed, Dave. Also, in times past, when most media ad sales were made between people, not machines, the buyers did check to see if what they thought thay bought actually transpired. This kind of "post buy" analysis was most true of national TV and often it took place while a buy's GRPs were unfolding on our TV screens---which allowed both buyers and sellers to make timely adjustments. This was especially important to the sellers as they could spot possible deficiencies in promised GRP delivery as they developed and take steps to prevent problems that might arise in the more detailed post buy evaluations. In some cases sellers could also take advantage of potential overdeliveries and, again, make adjustments that yielded them added revenues. I wonder how many programmatic buys get checked out now in this manner?
The black boxes enable and encourage fraud and fake ad impressions. Who can deny this is not a huge problem that is worse than ever. My guess is that's where we will find much of the disconnect between ads and their effectiveness.
Well said Dave, Ed & Jack.
Ed, Jack & John, my hope is that as CTV grows, and walled gardens, the publisher focus on controlling the ad experience and driving more yield will help us break open the black boxes.
That only happens if it benefits them financially. I don't see how that will happen. What comes next? Ask Walmart and Amazon who see the entire consumer journey.
Jack, yep. I do think that retailers and e-commerce companies will be key parts of the new measurement ecosystem going forward as retail media grows.