Foxes and Henhouses

Nary a sound was heard, nor mention made, nor ink spilled earlier this week when a surprising relationship was announced that could fundamentally change the way online media is planned, placed, bought and sold.

On Monday, January 14, an announcement was quietly made about a partnership between Arnold MPG and Yahoo! According to the announcement, Arnold MPG has made an up-front commitment to purchase media and promotional marketing programs across the myriad of Yahoo! properties. It is unclear if any specific campaigns are under way for specific Arnold clients, but it seems that Arnold has committed to Yahoo! that they will achieve, as an agency, a certain level of spend with Yahoo! over a given period of time across all of their clients.

Both parties involved gushed remarks about one another and indicated that this is an agreement that will break new ground and move the industry onward and upwards.

According to Wenda Harris Millard, Yahoo!'s chief advertising sales officer, "Arnold MPG's upfront commitment to Yahoo! to develop marketing programs for their clients is a groundbreaking development in the online marketing industry. This type of commitment is necessary to support the continued growth and maturity of this marketplace."



President of Arnold MPG voiced similar sentiments in the press release. "Entering a partnership that is the first of its kind in the interactive media industry is an exciting endeavor and working with an established partner like Yahoo is valuable to our agency and our clients."

So, what's the big deal, you might ask?

Though it is a regular part of the annual mating ritual of agencies and broadcast and cable networks, aptly occurring in the spring and summer, it is not at all common online. In an ephemeral environment like the digital marketing space, committing to inventory too far in advance is fraught with difficulties: fluid start dates, revision of creative, areas of sites changing their architecture, fluctuation of costs… You get the point.

But that isn't what the most interesting thing is about this arrangement. The real news here is that the upfront commitment was made by an agency with a media vendor. In the broadcast network space, when agencies enter upfront commitments there are specific budgets allocated by client for specific inventory that is requested based on media plans that call for placements on certain programs research finds will deliver on well-developed marketing objectives. If I buy upfront broadcast inventory, it is for a particular client who has agreed to plans that have been worked out to deliver on communications goals necessary for achieving that client's business and marketing objectives. As the agency, I work out the plans and logistics, negotiate pricing and placements, but it is the client who is buying the inventory and everyone knows who that client is and what they are trying to accomplish.

This deal with Arnold MPG and Yahoo! sounds more like Arnold MPG agreeing to a certain amount of inventory and spending, and then reselling it to their clients post facto. I have to ask if Arnold MPG, upon completing research and planning for their specific clients, found that Yahoo! was, indeed, the best place to run their clients' messages, or will they simply foist this inventory onto their clients in order to meet their obligations to Yahoo!

Traditional media buying companies have tried to do similar things in the past, buying tonnage from a network and then reselling it to clients as those clients' plans and buys were developed. But this is not done anymore (or, at least it's not supposed to be done). A client commits to a plan and a buy, and then the inventory is purchased according to guidelines resultant from that plan.

This kind of upfront media arrangement has the potential for compromising the integrity of the agency's planning and buying objectivity. Will Arnold MPG recommend Yahoo! inventory for clients because it is the right thing to do, or because they have to? Does Yahoo! hold aside premium inventory out of the hands of other advertisers wanting to enter the market now in the hopes that Arnold MPG will want that inventory? And what happens if Arnold doesn't want that inventory now? Does Yahoo! then release it, and if so, will it be released as distressed inventory like it would be in traditional media?

Though everything about this deal may show itself to be as kosher as a Hasidic kitchen, the prospective appearances of impropriety are problematic and, ultimately, not a good thing for the industry. There are already too many questions in this techno-heavy medium about the man behind the curtain, pulling the levers and running the smoke machine. This raises even more questions and may distract from the answering of more important questions detrimental to the development of this industry.

Yes, the industry would like, and needs, to see increases in spending from advertisers in order to remain viable, but gimmicks like this, in my view, are not the best way to go. If we really want to see more money move into the space, then the medium needs to do more to demonstrate its value. The medium is doing that now more successfully than it has since its birth. Let's focus more on research and standards and less on chicanery.

I know I have an awful lot of questions about this arrangement between Arnold and Yahoo! and have voiced some of them here. I can only imagine the questions Arnold clients must have.

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