Commentary
How Can We Counter 'Black Box' Trading?
- by Dave Morgan , Featured Contributor, July 20, 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.
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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.
This post was previously published in an earlier edition of Media Insider.
Dave, about half of all ad spend is devoted primarily to branding and very little of this involves "black box" trading. The reason being that most branding dollars--about 75% of them ---still go the traditional media, mainly TV. The other half is where the "blaxk box" comes in. A huge part of this is search/DR---often done by the sales promotion arms of branding marketers--- which operates very differntly from branding. Typcally the search advertiser goes for maximum cost efficiency and pays only for clickthroughs not for impressions. If the requred number are generated, no matter how many impressions are required---bad as well as good ones---it doesn't seem to matter. So when we are told that marketers are not getting as much back from their ad spend as before, this is more likely a function of a slow growth economy, disrupted a few years ago by Covid, but not, necessarily, by black box media trading.