By Robin Davies, country manager (UK), Mediaplex
The recent IAB/PricewaterhouseCoopers figures showed, digital display is once again bigger than TV and it is set to grow even more significant as a proportion of advertising spend.
But how much do you and your marketing team know about how your brand’s online display budget is being traded? Do you have enough information to judge whether it is being managed in a way that extracts the maximum value?
You can be forgiven if you’re not, hand on heart, one hundred per cent sure on this issue. The digital display advertising technology sector or I should say sectors, has become incredibly complex. Unless you are a specialist in digital advertising technology, the digital display landscape or eco-system can seem fiendishly complex. There something like two hundred or so different specialist companies spread across around twenty different niche sectors jostling for their slice of client’s budgets and that’s even before you get to the publishers on which display campaigns finally appear.
In recent years this eco-system has become even more complex as the ownership of different elements of the display ad trading chain has converged. Where else in the media industry can you find agencies that own publishing networks and trading desks and where ad networks are becoming in many ways a bit like agencies, developing strategies via multiple routes rather than simply selling their own inventory. The lines of responsibility have become truly blurred.
Within the last year two significant concerns about this tangle have begun to bubble over within the advertising technology community. They’re not the usual micro issues that digital specialists concern themselves with. They are significant issues which are starting to concern marketers who have never delved too deeply into the mechanics of the discipline before.
The first is whether media agency groups’ strategy of launching of trading desks, for example WPP’s Xaxis and Publicis’ Vivaki, which sit within the same corporate umbrella companies as agency brands, isn’t creating a conflict of interests.
This issue questions both whether agencies’ strategic advice is entirely neutral and whether clients aren’t paying twice for the same service. It has provoked some truly heated debates in the US where concerns were first raised at events such as OMMA Adnets and articles in specialist US media such as Digiday. Much of the debate however, boils down to the simple issue of transparency and understanding, but it also begs the question whether the digital eco-system is caught in a process where diversity and choice is being eroded to a point where sometime in the future only dumbed-down solutions are available.
The second issue however should prompt marketers to examine their digital trading arrangements more closely. It revolves around the value of your brands’ audience data and how that data is being mixed together with a range of other client data and whether individual clients are achieving the value that they could do using generic solutions supplied as part of an agency deal.
By aggregating audience data from various clients and putting that pooled data, through analysis and combined trades agencies can extract additional value from digital budgets.
The process of arbitrage is nothing new and is an effective way to achieve value for clients. Advertisers have always been happy for media agencies to aggregate client budgets in order to extract maximum value from media deals. But the use of arbitrage between media budgets and the value of online inventory using shared client data is a new form of the practice and raises questions about how much clients understand about the value of their audience data.
Here’s why marketers should be interested. Client audience data enables those trading a client’s digital budget to assess the value of different areas of digital media for individual clients against the generic price achieved and return a proportion of the value achieved.
The more data brought into the equation, the better or more valuable that information becomes and the more value a buyer can extract.
So for example one part of the internet might have a low generic value based on general audience figures, but cross-referenced with client audience data it could be found that certain customers really value that corner of the web and its value to a brand might be substantially higher. The trader buys at the generic price, but with the data they can squeeze much more value out of the space.
But what if that data is shared between say one big client with loads of information and several smaller ones? The large client is sharing the value of its information.
In many ways data has become a currency that can deliver huge media cost savings if it is optimised properly. It is large clients contributing a huge volume of audience data that have most to gain or lose.
So what can marketers do to ensure their arrangements are competitive?
- The first step is to check your contracts with respect to data ownership (who has the data rights - the advertiser, the agency holding company or the technology provider?
- Advertisers should ask their agency to maintain a private instance of their data to ensure that no other agencies or advertisers can identify their customers or site visitors. If the agency can do this then the next question to ask is whether the advertiser can still benefit from the agency audience buying platform?
- It is also worth considering, if your brand procures technology from your agency and that technology is Google Doubleclick, what rights does Google have to your data and ask the same question if you have a direct deal with Google Doubleclick.
Media agencies have built their businesses on expert strategic advice born of independent thinking as well as trading expertise and clout. The value they add is not in question. However, the advertising technology industry has grown at such a pace that new systems and scenarios have developed, perhaps without every stakeholder understanding the implications.
Time will tell whether these issues become as hotly debated in the UK as they have in the States. In the meantime, it’s worth looking under your digital bonnet to check the engine is maximising cost-effectiveness for your brand.
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