Let me state the obvious: The findings are 100% accurate, and included the following:
-- Agency holding companies pressure their own media buyers to direct client spend to higher-margin media — regardless of whether it’s in the client’s best interest.
-- Rebates in the form of cash, free space or equity, which may be structured as a payment for services, are pervasive.
After all this, the ANA has left us to figure out what to do next. Here are some ideas.
Advertisers have to close the education gap.
Most advertisers are not educated enough on programmatic ad buying and the surrounding ecosystem to be effective consumers.
Imagine taking out a mortgage on a new home. You ask the bank for your interest rate and they say, “We can’t tell you, but it’s fair.”
Would you buy that mortgage? Of course you wouldn’t. You’re an educated consumer. You’ve lived through a housing market collapse, and you know the dangers of an adjustable rate mortgage.
But more often than not, advertisers just buy the mortgage.
The first step in changing the culture of agency rebates and double-dipping fees is to stop financing it.
We need to have an honest conversation about this whole agency/advertiser relationship.
Agencies can provide incredible value to their clients in the programmatic era of advertising. They have invested in the scalable talent that makes programmatic a viable modality for buying online ad inventory.
So why are agency management fees constantly being squeezed by advertisers and their procurement departments? The ANA cites this as a principal reason agencies have chosen to build trading models that lack transparency.
The answer here is both complicated and relative to each advertiser/agency relationship. The underlying disconnect, though, is between how much it costs to effectively run a programmatic campaign and the value that campaign has to the advertiser.
Essentially, brands don’t know how to value what they’re buying, and agencies are doing a miserable job educating them, more often than not taking advantage of their lack of education. Neither is effectively playing the role they should with programmatic ad buying: the agency as the educator, and the strategy/activation partner and advertiser as the educated consumer.
Hit the reset button.
Wouldn’t it be amazing if we could reset as an industry and have an honest and open dialogue about programmatic ad buying and its role in the future of advertising for brands, agencies and platforms? The conversation might start off ugly, as it is now, because advertisers would first have to realize how much they’re overpaying.
Yet after the dust settles and everyone starts talking openly about cost and return, the dialogue would quickly pivot to a discussion of capabilities, looking at programmatic as a longer term investment. Because, when we strip away the cloud that is sitting over ad tech, which is this lack of transparency, we’re left with an amazing programmatic technology stack and the expertise to make incredible things happen. That is the value that is worth the investment, and ultimately will be the future of advertising.