Enth Degree CEO, Graham Webster unpacks the hidden waste in media buying and questioned whether advertisers are getting genuine value from the impressions they pay for.
At the Marketing Association of Australia’s RESET conference, former Mastercard chief marketing officer Raja Rajamannar reportedly “slammed advertising”, claiming that “98 per cent of ads are a waste of money.”
This is an extraordinary number, obviously designed to provoke. It got the attention of delegates, and the subsequent B&T headline got mine. Congratulations to the editor: the clickbait worked.
Find out more: ‘98% Of Ads Are A Waste Of Money’: Raja Rajamannar Says Marketing Needs A Reset, Slams YouTube ‘Blackmail’ & Dumb Money
But while 98 per cent might be hyperbole, there is an uncomfortable truth behind the exaggeration.
There is an enormous amount of waste in media buying. And some of it is entirely avoidable.
Rajamannar singled out YouTube and the industry’s willingness to accept five seconds of exposure as a meaningful advertising outcome, regardless of the intended length of the communication.
“Somebody has come up with this viewability matrix, and we, like idiots, are accepting those and paying their money. Kudos to YouTube. If any Google people are there, I applaud you. You know how to extract money.”
If a communication has been developed to tell a story over 15 seconds, why should five seconds constitute an acceptable outcome? Why should advertisers place the same value on an impression where a consumer actively rejects the message after five seconds as they do on meaningful exposure?
Yet buyers continue to accept metrics and trading parameters largely established by media owners themselves.
And YouTube is far from alone.
Television’s changing economics
One of the clearest examples of avoidable waste is in a review of broadcast television buying.
Over the past decade, linear free-to-air audiences have declined significantly as viewing has fragmented across BVOD, SVOD and other video platforms. One casualty has been television’s once extraordinary ability to build mass reach quickly.
There was a time when a buyer could readily construct a campaign delivering weekly 1+ reach above 75 per cent. Buying optimisers interrogated elemental audience data to select combinations of programs that minimised duplication and maximised incremental reach.
The buyer bought audiences. Not kilograms of impressions.
Today, despite broadcast television still commanding more than 23 per cent of Australian advertising expenditure, much of it is no longer purchased with anything approaching the above level of scrutiny.
In too many instances, an agency negotiates a schedule at a predetermined CPM and effectively leaves the network to determine where most of the spots go.
The result can be a potpourri of programming that achieves the contracted audience volume and average cost but is remarkably inefficient in achieving the advertiser’s actual communication objectives.
When cheap television becomes expensive television
We recently reviewed a campaign in which an agency had booked multiple spots in a program titled I Cut Off His Penis — The Truth Behind the Headlines.
This main-channel, peak-time program delivered a TARP of approximately 0.2 against an older-skewing P35–64 demographic. The resulting CPM was extraordinarily high.
Then there is the small matter of whether an advertiser actually wants its brand appearing in that environment.
A more considered buying process would almost certainly have filtered it out.
It is an extreme example, but it demonstrates what can happen when the primary measures of buying success become total audience delivered and average CPM achieved with scant regard to how and where.
A schedule can meet its negotiated CPM target and still represent poor value for the advertiser.
An obsession with achieving a low average CPM can actually encourage waste, because undesirable or low-value inventory can be bundled alongside genuinely valuable programming.
The spreadsheet looks good. The outcome may not.
Ironically, while digital media has developed sophisticated tools for brand safety, placement verification and frequency management, parts of television buying appear to have travelled in the opposite direction.
In some respects, television buying is beginning to resemble the early days of online advertising — lots of inventory, lots of impressions, but insufficient scrutiny of exactly where those impressions are appearing and what they are contributing.
Reach has been replaced by repetition
There is another, potentially much larger, source of waste.
As television audiences fragment, achieving incremental reach becomes progressively more difficult. Yet schedules can still contain hundreds, sometimes thousands, of spots.
What are those additional spots actually achieving?
Too often, they simply add another exposure against the heaviest television viewers; people who may already have seen the campaign more than enough times.
At some point, frequency ceases to provide additional value. Eventually it becomes waste.
A schedule can deliver its contracted audience, achieve its CPM and meet its budget while simultaneously producing excessive frequency among a relatively small proportion of the target audience.
That isn’t optimisation. It is simply buying more of the same people.
Every dollar generating an unnecessary 10th, 15th or 20th exposure is a dollar that could potentially have been used to reach somebody new.
Buyers need to start buying again
As media owners increasingly determine the rules of engagement, i.e. viewability definitions, trading currencies, inventory allocation and placement, we should ask why buyers have become so willing to allow sellers to determine what constitutes acceptable buying practice.
Media buying should involve more than negotiating a competitive price and checking that the contracted audience was delivered.
Agencies need to reclaim responsibility for where, when and how advertisers’ money is spent.
That means managing frequency, measuring incremental reach, scrutinising program placement, establishing brand-safety parameters, rejecting inventory that contributes little to campaign objectives and challenging media-owner metrics rather than automatically accepting them.
Most importantly, agencies need to become comfortable saying no.
No to the additional 100’s of spots that add negligible reach.
No to programming inappropriate for the brand.
No to inventory included primarily because the network needs to sell it.
And no to measurement conventions that conveniently turn marginal exposure into a billable advertising impression.
Follow the incentives
There is, however, an elephant in the room.
The growth of Principal Media and other inventory-based trading models raises legitimate questions about whether the interests of agencies, media owners and advertisers are always fully aligned.
When an agency has a financial interest in particular inventory being purchased, the distinction between buying media for the advertiser and selling media to the advertiser becomes considerably less clear.
It is difficult to eliminate waste if parts of the industry have a commercial incentive to help media owners monetise inventory that an advertiser might otherwise reject.
Transparency therefore becomes critical.
Advertisers should know not only what they are buying and what it costs, but why that inventory was recommended and whether anyone involved has an additional financial interest in the transaction.
The 98 per cent question
Which brings us back to Rajamannar’s provocative 98 per cent.
No, I don’t believe 98 per cent of advertising is a waste of money.
But perhaps the percentage matters less than the principle.
Advertisers should be asking how much of their media investment genuinely contributes to incremental reach, communication and business outcomes and how much simply satisfies the mechanics of a media deal.
We cannot turn the clock back to television’s halcyon days. Fragmentation is permanent.
But one old-fashioned principle is worth bringing back.
Media buyers need to buy media.
They need to scrutinise placement, manage frequency, protect brand environments, challenge questionable metrics and reject inventory that does not sufficiently contribute to the advertiser’s objectives.
Because eliminating even 5 per cent of unnecessary media expenditure could be worth considerably more than negotiating another fraction off the CPM.
The biggest opportunity in media may no longer be buying it cheaper.
It may simply be wasting less of it.
