“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Jay Friedman, chief operating officer at Goodway Group.
Stop me if you’ve heard this one: Guy tells his doctor that his brother thinks he's a chicken. The doctor says, "Why don't you turn him in?" The man answers, "Because I need the eggs."
That joke, which Woody Allen used to explain romantic love in “Annie Hall,” also sums up the plight of CMOs these days.
Stay with me.
On the surface, it looks like the ad tech industry is taking steps toward transparency. For instance, Sizmek recently said it would provide marketers with an itemized list of fees. Though demand-side platforms (DSPs) such as The Trade Desk and MediaMath have done this for years, it's a start.
Media-buying firm Assembly also has inked a deal with AdFin to let marketers see how much their ad inventory costs and ensure Assembly didn’t mark it up for a profit. Similarly, Adobe’s Marketing Cloud will now reveal all fees taken from partner AppNexus in programmatic buys.
There are other plans on the horizon that can help marketers follow the money. For example, IAB’s Ads.cert initiative takes Ads.txt to the next level by authenticating impressions to specific publications. MRC’s new standards [PDF], while fairly complex, also gives marketers a better sense of what they’re getting.
But even with these initiatives, we still need two things to happen for the industry to move forward: (1) Marketers must accept that programmatic is not cheap, and (2) we need an amnesty day, during which we agree that by providing full transparency going forward, we will not use it to punish the past.
At some point, we meet the love of our life and accept that he or she has a past. Can marketers do the same with their agency? Until then, we're all living in denial.
That’s why this is a CMO problem. While ad tech firms take steps to offer more transparency, marketers must admit that they’re hooked on some of the lingering false promises of ad tech. In particular, they're addicted to cheap CPMs, CPAs and agency fees, last-click attribution, scale and occasional transparency.
Cheap CPMs and CPAs
We all love cheap ads. But CPMs are artificially diminished by fraud and misrepresentation. Without universal amnesty, CMOs can’t tell their CEOs and boards they’ve been buying bot traffic, ads on unqualified sites and other types of bad ads this whole time. Nor can they tell the board that the cost of media is going up rather significantly.
Also because of cheap CPMs and fraud, marketers must accept their true cost per activity on viewed ads is meaningfully higher than thought. We’re not talking about 10% increases here that, without amnesty, won’t be allowed. This is especially true for marketers who don’t sell their final product online, such as automakers or consumer packaged goods brands, and will have a harder time connecting ad exposure to conversions.
Cheap agency fees
Programmatic direct requires a lot of human labor. Agencies must be paid fairly to get great work. But paying agencies has become a procurement job. CMOs and procurement heads can’t tell their CEOs they they’ve been buying wrong this whole time or that costs are going to double. To cut costs, CMOs are bringing programmatic in-house, while they will realize that agencies brought a level of expertise and technical acumen to the transaction that helped get better deals.
Marketers have known for years that last-click is a wildly inaccurate metric for ad success. A 2017 study from the Atlas Institute, for instance, found that 90% of customers who converted were reached by ads other than the last ad they’d seen.
Multitouch attribution, while complex, provides a more realistic view of all of the ad exposures that contributed to a conversion. Even better, randomized control trials – the approach Facebook prefers – can tell you if an ad exposure worked.
Marketers have bought a bill of goods. They're not getting the scale that they believed they would. In some cases, a close examination reveals that it is physically impossible to reach the amount of people they thought they were reaching. Marketers who think they’re buying 50 million impressions against in-market auto-intenders in Milwaukee for a seven-day event, for example, clearly aren’t doing the math. We’ll need amnesty to get past this.
It will take a lot of effort to get all ad tech vendors to provide transparency for a single impression. In theory, Ads.cert could do this.
But Ads.cert has a better chance of remaining a theory than becoming reality given the highly technical nature of building individual impression certification into the ecosystem. It’s a process that will require years of committees and testing while necessitating a level of cooperation that, I believe, is beyond what the industry has ever achieved in its history since most standards were created when there were relatively few players and the product being standardized was in its infancy.
Plus, let’s say a marketer pays $.05 for ad serving. What costs are involved in that? Only engineering and servers. But is that transparent? Of course not. So why do marketers demand transparency on regular labor but not engineering labor, or on media but not servers?
The solution for this issue is for marketers to work hand in hand with agencies and ad tech firms to improve transparency and, marketer by marketer, set an amnesty date from which we look forward and not backward. Using this approach will benefit everyone, but we will all need to be honest and hold each other accountable. We must also realize that we don’t need the eggs after all.