A viewed ad is a viewed ad, no matter where you are in the world - on that much, we can agree. So why are digital ads traded differently all across the globe?
International inconsistencies in the practices of ad agencies and technology platforms are allowing certain providers to hide costs from clients. In the ad fraud hubbub, it’s an angle rarely spoken about, but in the current climate, it is, I believe, the next chapter in the transparency debate. Let me explain.
Twenty years ago, the standard media buying practice was to charge for media bought - let’s say, a £1,000 bill - with something like a 10% service fee on top. For an advertiser, comprehending a total £1,100 bill was straightforward.
Today, in digital, it is more common for agencies and tech operators to hide costs and, as the Association of National Advertisers’ (ANA) explosive report has made clear, to operate an opaque system of rebates in which brands’ money gets secretly compensated back to agencies.
The irony is, while digital audience measurement is a global standard, the extent of these bad practices differs around the world.
When I worked in mobile advertising, one of our competitors offered clients in some markets a 45% cash rebate back to agencies for promoting their tech platform, meaning, for that £1,000 spent by a brand, £450 was actually funnelled back to the agency; almost half of spend deemed to be for media was gobbled.
But this landgrab has different dialects. While France has introduced an anti-corruption Sapin law requiring that both client and agency get a copy of the same invoice. That might work locally but the reality is that French agencies that are part of global organisations and, therefore, like other global organisations, can use practices acceptable in other markets to get their money back. In southern Europe, there tends to be a heavier reliance on volume rebates and discounts.
In the US, there is less emphasis on media arbitrage but some shady practices nevertheless, like agencies accepting equity in return for volume commitments. The UK is a more agency-led and heavy-traded culture.
All of this variance is prompting agencies to play pass the parcel, exploiting traditions in specific countries to funnel deals through specific favourable markets, optimising deals in their favour by cloaking them in a shroud of opacity when it suits.
Clients, as they have driven towards global agency relationships, have been responsible for driving media margins down despite the growing complexity of the media market. Too often, we hear of marketing teams at loggerheads with procurement teams - the cost vs service argument - so it is no surprise perhaps that agencies and tech partners have developed complex trading relationships that benefit them.
Digital should have represented an opportunity to fix all this - in theory, there is no more accountable medium. But the plethora of intermediary ad-tech vendors waving their platforms under clients’ noses have fallen into line.
Desperate to gain international traction to satisfy investors and gobble brands’ bucks, they always adapt to the same local trading customs and practices that are, themselves, under scrutiny. If you are a smaller player, especially, without an agency deal, you don’t get a look-in. And all this is in addition to them being guilty of hiding their own margins and spending practices from clients.
This wouldn’t have happened in television. When I worked in TV ad sales, agencies were compelled to prove their value by getting a better price than their rival for clients. In digital, we’ve lost all that; intermediaries are re-sellers, arbitrageurs or take on another role, depending on the day of the week, finding savings where they can - but failing to pass them on.
There is a solution. It means instituting transparent costing at the global level, ensuring that every client knows the purpose, destination and outcome of every penny spent. This likely means imposing a cost-plus model that makes clear the agency’s buying fee, a tech partner’s service fee and any charges from data partners. At the end of the day, impression prices must be super clear. Then clients could begin making effective decisions.
“A more transparent world”
You may think re-aligning the global advertising industry with total transparent practice is a gargantuan task. But the wind is already blowing in this direction.
With advertising chiefs of P&G and Unilever declaring they want an end to industry practices that are “murky at best and fraudulent at worst”, the whole value chain - agencies and platforms alike - will have to march to the drumbeat of the biggest spenders on the planet. Until then, all clients who want a more transparent world, should not wait; they should begin taking their own steps.
A year ago in the UK, ISBA, representing more than 450 top advertisers, began offering a new template contract, in which clients should secure vital details on basics like click fraud, viewability and brand safety commitments - but also on auditing rights and data ownership.
Brands should embrace this opportunity to ask harder questions of their next agencies and platforms at renewal time. But some smaller agencies like the7stars and John Ayling & Associates are already setting the pace in bringing to market the transparent practices clients should demand.
It is no coincidence that the latter specialises in serving the charity sector, a client group that can ill afford either to squander money or to be seen in the wrong context - something all advertisers should rail against.
The big question is, when will the big guns follow suit? The simple truth is, they may have to. No matter where they are in the world, there must be nowhere to hide.