Darren Woolley: Three Ways To Pay For Programmatic (But Only One That Delivers Value)
In this guest post, Darren Woolley (pictured below), CEO at TrinityP3 Marketing Management Consultants, looks at programmatic trading and examines the best route for agencies…
There is much written about programmatic media buying and the remuneration models being deployed. The K2 Report on Media Transparency and Rebates commissioned by the ANA, highlighted the two most popular models being the “disclosed” and the “non-disclosed models”.
But there is a third more effective remuneration model, which is the performance media model.
Many marketers have told me that in most cases the adoption of programmatic media buying has been at their media agency’s insistence and therefore they often find themselves using the programmatic trading desk that is owned by the holding company that owns their media agency.
Often they are also unaware that they have a number of options in regard to remuneration models for paying for these services, with the trading desk proposing a particular model.
From our experience the preference of the agency appears to be the non-disclosed model, or sometimes the choice between the disclosed and non-disclosed. But I have not personally heard of a programmatic trading desk recommending a performance-based model.
Let’s look at each of these options to see if we can determine why.
Two most discussed models
It is indicative of the preference of the two models that they are not only referred to in the K2 report, but also that in most of the discussions had with media agency leaders the only models they discuss are the disclosed and non-disclosed model.
It’s as if it’s the start, middle and end of the remuneration discussion.
One media agency CEO was explaining that all of their clients who were using their programmatic desk were given the two choices for how they would pay the programmatic trading desk.
On one hand they were offered the disclosed model with, in his words, complete transparency on costs and an agreed agency commission. In this case it was 30 per cent.
On the other hand there was the non-disclosed model were the advertiser would be guaranteed a price for the media that was less than they were paying now, but there was no opportunity for the advertiser to audit the buying.
He gleefully shared that to date his clients had largely chosen the non-disclosed model. I shared this story at the ANA Advertising Financial Management Conference in May this year. But let’s consider the issues associated with each of these models.
Disclosed model
The transparency that is offered by the disclosed model looks attractive to many marketers wanting insight into what they are paying for, but it can be quite superficial, depending on how it is arranged.
The ability to audit the media agency in many situations is irrelevant if the trading desk is a separate corporate entity. It usually is and this means the audit provisions with the media agency are not enforceable with the trading desk.
In fact, we have been privy to many of the agreements between the media agency and their holding company trading desk and in almost every case there is a clause that excludes the audit provision.
What this means is that if you undertake an audit of the media agency, you will be able to determine if your media agency is taking the right level of commission, but what you cannot determine is if the price they are paying the trading desk is the amount they paid for the media.
Effectively this means that while it is called the disclosed model, only one step in the transaction is actually transparent. And there can be up to five of six parties involved in the transaction. Perhaps it should be called the almost disclosed model?
Non-disclosed model
At least with the non-disclosed model the name reflects the actual circumstances of the deal. As famously said by the chairman of one media agency group: “We are transparent in the fact that we are not transparent”.
The reason the agencies give for this approach is that it allows them to use the spend power across multiple clients to negotiate better deals and therefore they are unable to allow an audit as it would require providing access to other clients’ spend information.
Some cynically believe that the reason for the non-disclosure and banning of audits is that it would reveal any arbitrage. Arbitrage is where the holding company buys inventory in bulk from the publisher and on-sells it to clients of the media agency they own through the trading desk at a significant margin.
In regards to the guarantee that the price paid will be less than what they are paying at the moment, this can be hard to monitor, unless you assume that all media is a commodity.
But the fact is that while there is a huge amount of digital media inventory, there is still premium inventory and trashy inventory. The issue is knowing if your lower price is because they are buying the same quality of media or simply unloading the dross onto your media buy.
Performance model
The question that often comes up, is what is the purpose of the media buy? If it is to generate leads or drive conversion then why not pay for the results, rather than just the media cost?
It is possible.
There are a number of programmatic trading desks that are able to buy your digital media on a performance basis.
Of course this requires you to have a very clear objective, sound strategy and a definable target audience, along with a a financial view of what is the value of success.
But that should be an entry point for anyone investing in digital media. After all, one of the great things about digital is the ability to target specific audiences and to optimise the performance of the media buy in real time.
Performance media means that you are able to invest your media spend and all of the issues regarding transparency, viewability and click fraud become irrelevant because you are paying on the results of the campaign.
Yet unless you raise it with your media agency and their trading desk it is unlikely they will offer it. But if you are willing to make your media investment accountable then it is a better option than the two the agencies are pushing.
Which is the right model for you?
The first point is you have options. You have the ability to choose the programmatic trading desk that is right for you and not simply take the one your media agency recommends.
Secondly, you have options in how you pay for your media. Beyond the disclosed and non-disclosed model, the other option is to pay for your media based on the results or the performance of the media buy.
Ultimately the choice is yours. But it is better to make the right choice for your needs than simply following the recommendations of your media agency.
This article originally appeared on B&T’s sister business site www.which-50.com
Please login with linkedin to comment
ExclusiveLatest News
Sydney Comedy Festival: Taking The City & Social Media By Storm
Sydney Comedy Festival 2024 is live and ready to rumble, showing the best of international and homegrown talent at a host of venues around town. As usual, it’s hot on the heels of its big sister, the giant that is the Melbourne International Comedy Festival, picking up some acts as they continue on their own […]
Global Marketers Descend For AANA’s RESET For Growth
The Australian Association of National Advertisers (AANA) has announced the final epic lineup of local and global marketing powerhouses for RESET for Growth 2024. Lead image: Josh Faulks, chief executive officer, AANA Back in 2000, a woman with no business experience opened her first juice bar in Adelaide. The idea was brilliantly simple: make healthy […]
Is Meta’s New AI Chatbot Too Left-Wing?
Meta's chatbot accused of being left-wing after being caught wearing a Che Guevara T-shirt & listening to Billy Bragg.
TV Ratings (23/04/2024): Why Did No One Tell Angela That Farmer Wants A Wife Is Set On A Farm?
As wonderful as this headline is, let's face it, we all know an 'Angela', don't we?
PubMatic Unveils New AI Partnership To Turn Social Posts Into Ads For Any Digital Channel
Here's some nifty tech for turning social posts into ads. Assuming said posts aren't one-star character assassinations.
Intuit Mailchimp Makes A Splash With Its First Australian Brand Campaign
Ever laugh along at a gag you didn't get so as not to appear dumb? Get ready for more feigning with this new work.
GumGum’s Rob Hall: Advertisers Can No Longer “Rely On Binary Descriptions” Of Consumers
If anyone's got their finger on adtech's pulse, it's Rob Hall. He also avoids using the good paper in the office printer
Mastercard Nabs Florencia Aimo From Marriott International
Marriott International's Florencia Aimo jumps from the hotel business to the exploitative credit card one.
Bastion Agency Appoints Cheuk Chiang As New ANZ CEO
Cheuk Chiang takes the reins over at Bastion Agency. But not the rains down in Africa.
Spotlight On Sponsors: Major Sponsorship Wins After A Disappointing Week In Sport
B&T continuing our deep dive into local sport sponsorships & that's despite not a single offer of a free ticket as yet.
Macca’s Marketing Director, Samantha McLeod On Big Mac Chant: “What Was Once Old Is Now Cool Again”
Macca's using the power of nostalgia in latest Big Mac campaign. Well, only for those who've ever eaten one sober.
World Premiere Of Midnight Oil: The Hardest Line To Open Sydney Film Festival 2024
Oil's biopic to open Sydney Film Festival. Here's hoping Molly Meldrum will take his pants down at the premiere.
Entries Are Now Open For The 2024 Brandies, IntelligenceBank’s Annual Brand Marketing Awards
The Brandies are, of course, a prestigious marketing gong and not the mystery tipple favoured by nannas everywhere.
The Fred Hollows Foundation Appoints Ardent For PR
Yes, we all like to have a joke at PR's expense. But sometimes it does important work, like this.
AI, eCommerce & Marketing Specialists Are In Increased Demand By Businesses, New Data From Fiverr Shows
Has your philosophy & anthropology degree left you with nothing but a huge HECS debt? Here's what you should've studied.
Perth’s First 3D Anamorphic Billboard Arrives Courtesy Of oOh!media
Do you love a buzzword? Now you can add anamorphic to the list as it relates to billboards, not a colleague's ears.
MasterChef Australia & Crown Resorts Launch Unique Dining Experience With ALUMNI
A pop-up restaurant staffed by MasterChef contestants! That's fine dining prices for first-year apprentice chef cuisine!
Amanda Laing Announces Resignation From Foxtel Group
Foxtel's chief commercial & content officer heads for the exits. Read nice things the bosses said about her right here.
The Lost Letters From Our Diggers: News Corp Unveils ANZAC Day Special
It's nice when brands respectfully acknowledge ANZAC Day.
Howatson+Company Acquires Akkomplice
Large indie acquires a slightly smaller indie. Much like a shark eating a tuna, just with less thrashing and blood.
Google Delays Third-Party Cookie Deprecation Again
In good news for the sale of picture library biscuit photos, Google continues to tease over the end of cookies.
Education A Low Priority For Aussies More Concerned With Cost Of Living Forethought Study Reveals
Study finds Aussies cutting back on education due to cost of living. Booze & Uber Eats sales remain largely unaffected.
“I’m Still The Same Person That I Was”: Rikki Stern Says “Fucc It” To Cancer Stereotypes
B&T always happy to promote the anti-cancer cause. Even brands that massively overdo it with the hot pink.
The Unapproved Climate Certification Allegedly Causing Mass Greenwashing
Are you left flummoxed in the canned tuna & free range eggs aisle? Just wait till this green certification gets up.
TV Ratings (22/04/2024): Fans Mock “Over The Top” Reaction To New MasterChef Judges
MasterChef returns for its 2024 season. B&T stands by putting peppercorns in Gravox & no one will be any the wiser.
Dentsu Restructure: Muddle, Harvey & Johnston Take Leadership Baton As Bass & Yurisich Exit
A large broom has swept through Dentsu's local ops this morning, taking with it some big names & the air con's cobwebs.
Industry Shares Trends Shaping The Industry This International Creators Day
B&T's asking adland creators to reveal their top trends. And it's not good news for your Jenny Kee cardigan collection.
Mable Extends HOYTS Sensory Screenings Partnership
Mable has extended its HOYTS sensory screening partnership. Vigorously defends its two-star Oppenheimer review.
Orphan Launches ‘They Need Our Help. We Need Yours’ For Children’s Cancer Institute
Anything to do with childhood cancers has B&T's 110% support. That said, we do ignore the red meat & alcohol warnings.
Smile Team Orthodontics & Keep Left Collaborate On Smile-Inducing Campaign
As parents would attest, given the cost of orthodontics you'd expect this campaign to be a lavish production indeed.
Opinion: How Video Calls Neglect Learning Diversity
Need an excuse to duck out of a video call this arvo? Show this to your boss.
DoubleVerify Achieves First-Of-Its-Kind Responsible AI Certification From TrustArc
DoubleVerify receives responsible AI certification. However, not its robotic vacuum that's been seen menacing the cat.
Smile For A Good Cause: The Social Media Campaign Giving Back To The Community
Are you known as the office Austin Powers? More for you teeth than shagability? Get snappy new fangs with this news.
Elon Musk Mocks Albo After ESafety Wins Court Injunction Against X
Albo's 2024 from hell continues - Rabbitohs in crisis, down in the polls and now feuding with world's richest man.
Real Estate Developer In Hot Water Over “Sexually Exploitative” OOH Campaign
Real estate agents again tops in the 'least trusted profession' polls, nudging used car salesmen & ad creatives.
Epsilon’s Shane Hanby: Post-Cookie Era Relies On “Teamwork” Between Brands, Marketers & Tech
This pro predicts more "teamwork" in a post-cookie era. Which spells bad news for the uncooperative or plain stubborn.