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 Kence Anderson, CEO and founder at Apptimyze.
There's a dirty little secret in ad tech: All sorts of fees and charges are hidden in the cost of your media.
Various players in the ecosystem — from agencies to tech startups, and even more established platforms — provide services like campaign setup, creative production and data analysis that are difficult to bill and charge for. The players recoup these costs by bundling them into the cost of the media they sell or by piggybacking a percentage of media onto the total media cost.
Here’s an example from the world of display providers. For them, setting up a campaign for a brand client is a complex process that includes building the creative, setting up the campaign in their system, trafficking, monitoring and optimizing. All these things are really difficult to charge for on a line-item basis, but providers must complete these tasks in order to deliver their secret sauce.
As a coping mechanism, vendors bundle these services into the cost of media. They can sell the media themselves, like Rocket Fuel, Chango or Criteo; otherwise, providers tend to recoup their costs by charging a percentage of the media in the form of a cost per mile or cost per click. This makes it easier for the brand to digest everything the provider is doing for them. They know they have to pay for media, that it’s expensive and that along with it they will get a lot of cool functionality and measurable results.
My Theory Of Evolution
These challenges will drive either an evolution or a revolution that will free up this gold mine of intelligence from behind the wall. Here's what I think this evolution may look like:
- New business models will compensate vendors for their services while providing full transparency and data intelligence. This could happen via the “consumerization” of platforms, where adoption of highly usable, well-designed products by end users drives management buy-in (think Dropbox), or via subscription or Software-as-a-Service billing. In this scenario, everyone wins: The brand pays the ad tech company for some great capabilities, and loses the wall of media because the platform streams intelligence and collects feedback from the marketer via a slick user interface or application programming interface. Now insights are available for campaigns across channels, and they go beyond analytics to become levers that control every aspect of marketing performance.
- Vendors will provide media-agnostic intelligence across multiple ad channels. Once they’re not selling media, why can’t they provide insights for a search campaign at the same time as they do for display and social? Media vendors are compelled to constrain their insights to the media channels in which they sell. But marketers want a 360-degree view of what creative and content resonates with their audiences, regardless of the digital media channel. Media agnostic cross-channel intelligence will amplify the core competencies of both brands and agencies.
- The value of ad tech platforms will rise in organizations. As long as data insights remain hidden behind the media wall, the value of the platform remains tactical and not strategic. In the current model, analysts, ad operations and campaign management staff are the primary users of ad tech platforms. But as the new model frees up access to more and better customer intelligence across channels, the value of the platform — and the insights it conveys — will rise. Under the new model you will have people like an agency’s director of analytics, strategic account planners, brand VPs of marketing and CMOs eager to access and apply the consumer insights.
The percentage of media model will always have its place, but all parties in our industry will need to find a solution that provides interactive actionable intelligence and control to brands over their campaigns. I’m counting on ad tech providers to lead the way.