The briefest of scandals was alluded to recently when the sizeable changing of the guard at Ikon happened.
I have a lot of respect for the team that left but at the same time, I do not buy that their departure was because they are all knights in shining armour coming to the rescue of the industry, armed with the sword of transparency.
There is a naivety about this suggestion because of its focus on DSPs and the need to expose them for massive margins being generated at the expense of good, honest, conventional media.
Seven or eight years ago I worked on a pitch and during the second stage, the pitch consultant sent back a spreadsheet for all remaining agencies to complete.
When the sheet was opened, he had been kind enough to leave a workbook with every competing agency fee and their spot by spot media prices.
One agency's TV costs were so absurdly cheap that a little homework proved that they were taking bonus airtime from one client and selling it to another at about 20% of the rate the client should expect to pay.
I called the client and explained this to them. Their answer was 'I get what you are suggesting here but frankly if I get my TV spots for less, I really don't care where they came from or how'.
If you leave aside the issues around the first client paying for the second client's airtime, there are parallels here within the retail landscape.
Consumers bleating about buying Australian but give them the same quality at a cheaper price and they will buy it online. When it gets to the pointy end, if there is a saving which can be justified, most will take the cheaper option over any moral stance.
It may be unfortunate, but only relative to the way things have worked historically. It's change and a reality that retail is adjusting to cope with.
So not only is the DSP transparency/exposure exclusive a little late but it is also a little misdirected when looking at being open with a client about where money will be made by media agencies.
Since data-driven trading desks have arisen, my own experience is that buying media via a DSP ticks the 'honesty' box better than conventional media buys.
No client can have a media budget invested via a DSP unless they have singed a completely separate contract. This details how the media agency, operating as a principle, will make a margin. Granted that margin may not be transparent, but the improved price the client buys their inventory for is very clear.
The client then decides if they accept the agency will make an undisclosed margin but they will be getting a media buy for 25% of the usual cost.
Marketers are not daft. They import or even produce products where they operate as principles for part of all of the end delivery. But they don't disclose the margins they make to their customers. It's a pretty straightforward 'yes' or 'no' decision.
If there is an issue to be raised, it is about the clash of evolving media exchange technologies and the currencies we use to trade.
Transparency around what goes into the DSP and the subsequent value of the media buy is an issue. Trading desks can only operate upon the data that is available to direct a trade.
For a client whose business has clear acquisition metrics this is easy – you know when something has worked as someone interacts directly with your business (clicks, fills in a form, asks for information, etc), so that guides the technology spending your money.
If you don't and are reliant on the data that exists around website traffic, that is not the best information to direct a buy, as much of the traffic is not real. This is also why the larger number of DSP clients fall into the former acquisition category. However, the imminent arrival of radio and TV automation will accelerate the solution.
Technology-driven trading desks are a reality and will quickly expand across all media types. They will create the space for better quality thinking and the ability to use data to quickly facilitate decisions around when and where a message lands and for how much.
The faster we develop audience and engagement data that we can trust, the faster this will evolve.
A client recently said that media agencies remind him of his wife – she buys a pair of shoes and claims she saved $150, but he wants to know why she had to spend $200 in the first place.
For the media agency right now, there is little point in bothering to work out how the client spends less. If your model is commission-based, why on earth would you suggest less budget? You'll just make less money and for more work.
With trading desks operating properly and the right data exchanging hands, what works, for how long and for how much will be far easier to identify. And the value of the agency as an advisor will be clearer and more tangible.
In the meantime, if you really want to be a saviour, go and tell a client how much they should spend to deliver what they need. Not how much secret margin you think they got screwed for after the fact.
Chances are the right answer to the former point is a lot bigger.
David Gaines is managing partner at Edentify. This article was originally published in the May 10 2013 issue of B&T Magazine
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