Not all programatic is created equal

The AANA met in Sydney last week to discuss media transparency. This meeting followed a tumultuous start to the year for digital media, which has included P&G Chief Brand Officer Mark Pritchard’s landmark keynote regarding digital media transparency and recent widespread press coverage of brand safety concerns regarding YouTube and Google inventory. 

At the AANA meeting, Nick Manning of auditing firm Ebiquity turned the heat up on Programmatic Media, questioning its value to advertisers and highlighting its starring role in the debate around media transparency. 

In his keynote Manning stated: 

  1. Programmatic investment isn’t working 
  2. Only 20c of $1 spent in programmatic media makes it to the consumer 
  3. Greater transparency is required between Advertiser and Agency. 

1. Programmatic media isn't working

It was the biggest statement of the day: "Programmatic advertising simply isn’t working". In the same breath, Manning continued: “It can happen and we do see it, but mostly it doesn’t”. Despite his immediate contradictions, Manning’s main takeaway was that return on investment simply does not exist. 

The primary flaw of this statement is that programmatic media, much like broader digital or even print media, can have multiple interpretations and definitions (Newspapers, Magazines, DPS, Strips, etc). The statement is made with too little context or supporting evidence, which undermines what is inherently a highly intelligent and accountable method of media investment. 

Programmatic media investment can, and does drive value for advertisers. From prospecting campaigns targeting 3rd party audience segments, to highly targeted and personalised retargeting efforts utilising 1st party customer data, programmatic technology gives advertisers opportunities to make highly intelligent and sophisticated decisions to drive outcomes for their businesses. The type and amount of value very much depends on the strategy behind the investment and the approach taken by the people on the tools. 

Could it work harder for advertisers industry wide? Yes. Can we continue to be more creative with its deployment? Of course. Have there been practices undertaken by some which have undermined its value since its inception? Absolutely. However, to say that it does not work, is simply incorrect. 

2. Only 20c of every $1 hits the consumer

Nick Manning Programmatic Chart

A chart was provided which claimed to outline “the true cost of programmatic”. This perhaps best sums up the generalist and sensationalist nature of this keynote. This graph depicts the 'clips of the ticket' taken between advertiser and consumer when dollars are invested programmatically. 

What's important to note here is that not all programmatic agencies and/or their offerings are equal - far from it. 

An Agency Trading Desk model is fundamentally different to an integrated Performance/Programmatic team model. References to 'Agency of Record' fees taken in addition to programmatic fees, and 'Agency Trade Desk' margins taken can only be applied to situations where programmatic investment is applied in that fashion. 

Certainly there are costs taken from every dollar invested; however these technology costs (both demand and supply) vary widely based on volume and provider. While they can add up to a significant portion of the investment in media, the question that needs asking is whether each and every cost adds value to the investment? If the answer is yes, leave it in. If you can achieve the desired outcome without it, then you have your answer! 

3. Greater transparency is needed between agencies and advertisers

The final topic covered the nature of contracts between agencies and advertisers in the programmatic space. 

Advertisers had earlier been quoted by Sunita Gloster, CEO of the AANA, in relation to the lack of understanding they had regarding the nature of their contracts. This was reinforced in the keynote with reference made to 'opt-in' deals which leave advertisers with little to no recourse in terms of auditing or investigating the costs outlined above. 

This has been a hotly debated topic for years and for the seasoned digital investors there was nothing new here. The fact remains that 'opt-in' style contracts are ever present. They are agreed upon due to the value proposition the provider can offer, generally based on scale and proprietary data/audience intelligence. They do put the Agency Trading Desks in a position to control the margin made out of any programmatic investment. 

Whether such contracts have a place in a relationship between advertiser and agency is a question every advertiser must answer for themselves having fully understood the reasoning behind it. One has to question why it is necessary if all parties are committed to a fair and reasonable commercial relationship. 

Where Ikon fit into all of this?

The future of digital and broader media investment is programmatic. This method of investment provides advertisers with opportunities they simply couldn't obtain without it. Ikon has and will continue to lean into this opportunity with a programmatic offering designed for clients, not for the agency. 

We operate on a transparent and integrated model which sits programmatic traders alongside client teams. We establish market leading measurement frameworks to understand the value driven for our advertisers. We are transparent on media/tech/data costs which are passed on to our clients. We provide commercial models which do not favour investment in programmatic over any other digital channel. This allows us to focus on investment strategies that best serve our clients, which has always been the Ikon way.