Commentary

It's A Seller-Defined World And Advertisers Are Just Living In It

When the history of audience measurement eventually gets written, 2022 will be remembered as the year when the ad industry officially capitulated and let its suppliers define what they buy from them.

I first wrote a version of that lead sentence in this column nearly a month ago, shortly after NBC Universal announced it had begun "certifying" the audience measurement suppliers it uses as the basis of what it sells to advertisers.

I noted that during a prep call for a CIMM Summit debate I would eventually moderate about new "alternative currencies," it appeared to me that the buy-side had already capitulated. After moderating that session (see video at bottom), I'm convinced they already have.

"Is that the way the industry should be agreeing on new currencies, to have a supply-side company certifying," I asked my panelists, noting, "because that's the way it's been done in digital with Google and others?"

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"You don't get to new standards without testing," Omnicom Media Group's Kelly Metz responded, adding: "And the fastest way forward is to test with the partners."

Metz was conveying a sense of pragmatism that I've been hearing echoed from others on the demand-side -- especially ad-agency media executives, who say the world has become so complex, so quickly, and the industry's legacy currencies are no longer representative enough, that they are willing to let their suppliers develop, define and certify what they use as the basis of media buys. At least for now.

As someone who has covered media buying since the early 1980s, I know that there has always been an incestuous relationship between buyers and sellers, and also that sellers have always underwritten most of the cost of audience measurement, and I believe, had an undue influence on how measurement suppliers do that.

But I've also heard aspirations of "media neutrality," and the notion that media buyers are supposed to represent the interests of their clients, not the media. And that allowing the media to effectively grade their own homework would be a cardinal sin, although that's effectively what has become the default in digital media, and is now becoming the industry standard for legacy media like "linear TV" too.

I was convinced of that coming out of our CIMM panel, but just last week I covered two new developments that demonstrate exactly how much the demand side has capitulated to the supply-side, at least symbolically.

One was a story I wrote about GroupM building its next-generation programmatic marketplace using technology from “supply-side platforms” originally created to deliver the greatest yield for sellers, not buyers of digital audiences.

In GroupM's defense, it understood that in a digital world controlled by suppliers that actually is the smartest way to understand where the most "premium" inventory is, and to optimize it. Still, it's symbolic of the broader trend I'm writing about here, which is fundamentally about who's calling the shots: advertisers or their suppliers.

The other story was even more strikingly symbolic for me, because like the "certifiable" column I wrote about last month, this one was about the underlying language we use to describe value in our industry. In this case, it was the IAB Tech Lab announcing that it had finalized the ad industry's technical specifications for "seller defined audiences."

In the tech lab's defense, it originally began circulating that term a year ago, although it escaped my notice at the time, and has gotten relatively little attention to date.

And in a follow up interview with the lab's Senior Director of Product-Consumer Privacy, Identity and Data Ben Dick, he acknowledged how that term could be perceived as giving all the power to the sellers of ad-supported media -- the supply-side -- but he said the decision to use the term was "very much intentional."

By that, he said it was never meant to imply that the sellers of media were the ones defining their audiences, but that they were utilizing the lab's technical specification to ensure they were defining them in consumer-friendly and privacy-compliant ways.

And in the way he uses the word "seller," he said it could technically mean an advertiser, so long as they were publishing their own content to consumers.

"'That can mean any first-party 'seller'," he explained, adding that it could include "the context of a brand that might have a website and wants to message a consumer."

And yes, I know we live in a world of media industry nuances in which brands like Amazon, Walmart and other retailers are now also some of the biggest suppliers of advertising-supported media, but I still think language is important in terms of how we think of ourselves, our roles, and which side of a supply-and-demand marketplace we actually represent.

I don't think buyers of anything should accept seller definitions of those things.

That said, I also know that the ad industry has capitulated in other similar ways as long as I've covered media.

"The first thing we do is ask the agencies to register their budgets with us," the late ABC sales chief Jake Keever told me during my first off-the-record briefing as a reporter covering the upfront advertising marketplace in 1983.

He said this so casually and with such aplomb that it threw me for a second.

"You mean media buyers tell you how much they are going to spend before they start negotiating with you?," I asked to make sure I understood what he had just told me.

"Yes, otherwise we can't guarantee we'll be able to deliver their plans," he confirmed.

I left the meeting shaking my head, because I has assumed the ad industry conducted business in a supply-and-demand marketplace with the same objective rationality as Wall Street. But over time, I've learned it does not. And I'm still not sure I understand why.

And despite the emergence of programmatic media-buying, Big Data, identity resolution and all the other state-of-the-art market science that has emerged in advertising and media buying, I still ask the same question at MediaPost's Outfront Conference each year: "Do you still register your advertising budgets before you negotiate with the networks in the upfront?" And every year, my panel of media buyers says yes, they do.

I'll ask that question again at this year's Outfront Conference, but I don't expect the answer to change.

But let me end with one last story I covered last week that gives me hope for genuine change. And it's one that if I understand it correctly will finally put the power for defining the audiences they spend money to reach back in the hands of advertisers.

It's the story we picked up that was first reported by another trade publication, but which we initially botched, on an RFP that the Association of National Advertisers is about to issue to researchers to develop a new consumer panel. Initially, we incorrectly reported that the panel would serve as an alternative to traditional audience ratings supplied by Nielsen.

During a setting-the-record straight follow-up conversation with ANA Group Executive Director Bill Tucker, I got enough to understand that the panel will actually be something that is used to "calibrate" audience estimates as part of a more encompassing technical solution the ANA has been developing as part of its Cross Media Initiative.

Tucker promised to brief me in depth for a more complete story on how that's going and what the ultimate end goal is, but I got enough from him last week to understand that every advertiser will be able to use the panel and the solution as a way of defining their own audiences and then using it to develop broader reach and frequency strategies for applying it to the overall media universe.

It will start by doing that with TV, connected TV, online video, etc., because that's where the biggest money and needs currently are, but ultimately he said the goal is to give advertisers the ability to use it to model their audience reach and frequency across all media.

So, yes, we live in an increasingly seller-defined world and advertisers are just living in it. But that's just for now.

8 comments about "It's A Seller-Defined World And Advertisers Are Just Living In It".
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  1. Darrin Stephens from McMann & Tate, February 28, 2022 at 12:09 p.m.

    You have it pretty much right. Agencies have let the suppliers emasculate them.

    The only thing I'd take issue with is the idea of giving the network "a budget." I was a buyer in the Jake Keever era you mentioned and although you HAVE to give the network a number of dollars to work with, I never told them what the total budget was. I usually "over-registered," meaning ask each of the (then) three networks to submit plans that were in excess of the total budget. This would give me the ability to cut (or shut out) a network that had a lesser desirable package. I thought it worked well.

    I understand that buyers don't do that much anymore, and I think that's a huge mistake, but I'm of a different era.

  2. Jim Keever from KMS, February 28, 2022 at 12:17 p.m.

    Glad to see that that Jake lives on in the hearts and minds of all of us!

  3. Joe Mandese from MediaPost, February 28, 2022 at 12:33 p.m.

    @Jim Keever: Jake taught me everything I know about the ad marketplace. He was very generous with his time and willing to school a young trade reporter.

  4. Ed Papazian from Media Dynamics Inc, February 28, 2022 at 12:57 p.m.

    Excellent piece, Joe and Darrin, you are absolutely right. I've been pointing out the sorry fact that the sellers now almost completely control not only how "audiences" are measured---and reported--but how media is bought. And this is largely the fault of advertisers who have shunned the "boring"---to them---and numbers heavy media function in favor of that old canard---"creative is everything".

    I can't really blame the huge agency media buying conglomerates now that they have become a major income and profit center for the agency business---compared to my days at BBDO when "media" was seen by management as a drain on agency profits---a point of view shared by other agency brass hats at the time.Why make a fuss about TV ratings and related matters if your clients---despite what they say when pontificating on the rubber chicken luncheon circuit----don't really give a damn about media---except for low CPMs---and are unwilling to put up any funding to support more meaningful research or encourage their agencies---again,with some added fees--to become hyper active in such activities?

  5. Darrin Stephens from McMann & Tate, February 28, 2022 at 4:55 p.m.

    @Ed, when I was in the network buying group at a full-service agency (before "unbundling"), we were seen as a profit center because we were still charging a full 15% commission, and even though typically 2.5% was assigned to media costs, the agency's major billing came though us. Network departments were first-class operations then, and were rarely downsized unless there was a huge account loss.

    They were good times, the party's long over.

  6. Ed Papazian from Media Dynamics Inc, February 28, 2022 at 6:40 p.m.

    Sad but true, Darrin. At BBDO, we earned some AOR fees for buying TV network time for brands other than our own but over- all management had little use for the media planning function or any media buying that did not involve prime time AOR fees. All that mattered---or so they and most clients believed ----was the brand positioning strategy and "creative" followed by account handling.

    When I tried to convert the media department into a profit center---by offering our services to non-BBDO brands for planning or buying as well as getting involved in TV syndication sales for program owners and suggesting that we pool all of our branch office media activities together---sort of a small scale version of what we have now with the mega media shops---I  got no support. Since then the mega media agencies have, indeed, developed into major profit centers but I'm sorry to say that the "Mad Men"   attitude  that holds that "creative is everything" still prevails on the client side though many of the players wont admit it.

  7. John Grono from GAP Research, February 28, 2022 at 7:03 p.m.

    Great article and excellent comments.

    Most 'currencies' are primarily funded by the media owners.   Typically they pay 80% and the other 20% is borne by the buyers (media agencies + a sprinkling of advertisers).

    Has the 20% considered what the effect would be if they withdrew (or reduced) their financial contribution because the 'currency' no longer represented the audiences usage and behaviour?

    A bit more than a decade ago while working on a JIC, the media owners were adamant about one very specific aspect of a new currency we were collectively developing was essential.   My position was that (a) the data would be misleading, and (b) would be of little or no assistance for the media agency's planning of the advertisers spend, and in fact would make it more difficult ... therefore I would be recommending to the agencies that we withdraw support.   Gasp, shock horror!   About 18 months later we had a very successful launch.   Co-operation and transparency are the building block of trust.

  8. Ed Papazian from Media Dynamics Inc, February 28, 2022 at 7:28 p.m.

    John, I doubt that the agencies---the large mega media shops---would back off from funding a seller dominated national "TV" rating service that included streaming and digital venues and was based only on device usage. Buying "TV" as well as other media is now a major profit center for the entire agency business---more so than the "creative" function according to reports. Why rock that boat by denying themselves access to the data that the sellers use to place value on their GRPs? But even if the agencies did opt  out, I would expect the sellers to simply absorb the added 15%  cost and build this  amount into their CPM demands---so advertisers who remain aloof would end up paying for the rating service whether they knew it or not.

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