Several recent reports have suggested a large chunk of working media dollars are being lost in the supply chain. In this op-ed, Yahoo managing director, AUSEA, John McNerney, calls for the industry to open the kimono and let marketers see where their money is going and why.
There have been a few headlines recently suggesting the conversation about media supply chains is about to heat up again, which I believe is a really good thing. Last year, the US marketer body ANA’s report suggested only 35% of working media money actually reaches the end user, with hidden fees and poor quality and unviewable inventory accounting for a large chunk of this.
In straightened economic times, it’s no surprise we’re having an increasing number of conversations with partners about these issues – after all, the pressure is greater than ever before to show you’re spending money well and creating a return for the business.
There are also a couple of other cyclical reasons this is bubbling up.
Media spending is shifting quickly to more programmatic and digital channels. This change has sparked a legitimate conversation about how media is being purchased and its true value.
Emerging technology and increasing audience targeting sophistication created by machine learning and generative AI tools is definitely changing the way advertisers are able to buy and target ads. However, too many are still locked into old ways of doing things for many and various reasons.
Why is this important? Well, firstly, the more working budget that gets spent on the actual media placements, the better it is for your brand and partners because the more eyeballs you’ll get. But the end publishers also need to continue to get a healthy share of this money. Their struggles are well documented, and it is important we have these independent platforms exist outside of the walled gardens.
It is undoubtedly a complicated ecosystem at the moment, with a lot of claims and counterclaims. But the main question you can start by asking is quite simple: ‘How are these businesses making money?’
First and foremost, every business in the supply chain deserves to make money if it has a legitimate use case for its technology and is adding real value. However, what concerns me is that the way some of this money is being made at the moment is not as clear and hands above the table as most people would like.
The time of being able to bury your head in the sand on this is definitely ending. So you need to start being proactive and asking some of these thorny questions in order to understand and explain where those budgets are going and how much-working media money is actually making it to the end advertising platform.
Let’s start with fees. There are two models here—platforms and DSPs that disclose them upfront and those that don’t. It can be tempting to go with those that don’t talk about their cut; it can seem cheaper, but you need to understand how they are making their money. If it’s being taken in the back end, the question becomes whether that means your ad dollars are always being directed to the most effective channels.
Mat Baxter recently raised the issue of group volume deals at an industry forum, asking whether it’s time to move away from large upfront volume commitments. This could potentially mean too much money being put towards channels like linear TV, which may no longer be the most effective for their needs because agencies are committed to a certain spend level.
The same applies in programmatic. If your vendors are incentivised to spend money with certain third parties in order to make their margins, then the chances are that working capital will not be being directed as effectively as it should be.
It’s definitely time the industry smartened up its act. Suppose marketers are expected to be increasingly accountable for their ROI on ad spend. In that case, they deserve to know exactly where the money they put into the ecosystem is being spent and how that is advancing their business.
Digital and programmatic buying are complex worlds, but sometimes, people with something to hide make them overly difficult. Advertisers are crying out for partners they can really trust without having to ‘look the other way’. Cracking open the black box and being transparent is something the whole open web ecosystem should embrace, especially if they are confident of the value they add along the supply chain.
It is currently a potential area of advantage for the walled gardens, providing a ‘one-stop shop’ of a fully controlled supply chain—meaning they can show the return on every dollar spent on their platforms. If the open web is going to compete, we need to be prepared to have similar abilities, which means showing our hand upfront.
Moving forward, demand for transparency will dominate the market. Major brands will exclusively collaborate with DSPs and partners which provide clear insights into their supply chain, performance, and costs. Vendors must adapt or risk losing investments and, crucially, the long-term trust and confidence of their brand partners.
The good news for suppliers is it’s a pot that is only going to grow, and there will always be the need for innovation in the way we find and advertise to audiences. But if we try to keep it all under wraps, it may not end well.
