September 16, 2019
Financial transparency is a recurrent issue across the advertising landscape, and a common topic at the dozens of industry conferences each year – a theme often raised by P&G CMO Marc Pritchard. It is a particular focus in the programmatic ecosystem – one of the reasons AD/FIN was founded. But is transparency really the issue? What does transparency actually do for your business? If you have it, what do you do with it?
A recent eMarketer Report revealed that nearly one-third of US advertiser spending on programmatic goes to ‘tech tax’. The study estimated that about $11.65B goes to fees while $24B gets to publishers. This is a lower percentage than we saw in our Programmatic study with the ANA in 2017. Sounds like things are trending in the right direction for brands… lower fees mean more working media and better results right? Not necessarily. The point isn’t what the rates are, whether they are increasing or decreasing, or what the total $ volume of the fees is for a brand.
What matters is what’s performing best for the goals of the spend. That’s it.
Consider this: if you want to buy a car that gets at least 30 MPG and goes 0-60 in less than 5 seconds, you would likely need to spend at least $60,000. Many cars get 30 MPG for less than half that. Plenty of cars go faster for triple that price. But what you need is specific and you will need to find the best combination of performance and price. When you drive away in that car, you should get the mileage and speed you need and the dealer invoice should show you paid the best market rate for it. If you do your research and analyze the data, you just may get a car that beats all your requirements for far less than you think.
Back to transparency: Brands should absolutely expect transparency from their agencies and vendors, as any buyer should for goods or services they purchase. You should get an itemized receipt for what you paid and what you received. But it’s not enough to just know what the fees are. If you know the fees are fully compliant with your contract, but the campaigns they drive don’t perform to KPIs, what’s the point?
What you need is full visibility and control of the entire process. The most optimal path to price/performance may mean using some vendors with higher fees. Transparency is irrelevant if you don’t achieve the right results.
AD/FIN gives brands, agencies and media consultants full visibility and control of paid media transactions and performance. Learn More.
-Matt Deloca, CRO
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