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By Nick Manning
The pandemic created extraordinary changes in business life and reset ways of working. Nick Manning discusses how procurement professionals are having to deal with new challenges to meet stakeholder expectations.
No Set Rule
“There is now infinite supply across all media channels and knowing what to buy is no longer straightforward, especially in digital media. There are no robust or reliable independent sources of ad appearance or exposure, and campaigns often appear on many thousands of websites”
ProcureCon was very buzzy this year as delegates enjoyed the opportunity to gather again with plenty to discuss.
The pandemic created extraordinary changes in business life and reset ways of working. Procurement professionals are having to deal with new challenges, including the Environmental, Social and Governance requirements that meet stakeholder expectations.
However, the urgent can often obscure other important matters and managing Media is one of those.
Many advertisers are spending less time thinking about Media at a time when they should be refreshing their approach to it. Often they consider it ‘under control’ using old methods that have been overtaken by the dramatic changes in the media market.
The time to reappraise how Media is controlled and managed is now.
Media is often one of the biggest expenses for a business but it still gets less consideration and scrutiny than other disciplines and is rarely discussed at Board level.
It is also more complex now than ever before, changes daily and is probably unique in that corporations could literally be buying nothing without knowing it.
There is surely no other business discipline where so little attention is paid to what is actually being purchased.
Many elephant traps exist in the market and are often very well-hidden. Contractual robustness that is taken for granted elsewhere simply doesn’t exist and suppliers are making extraordinary amounts of money in hidden ways, especially in adtech.
Procurement teams often think their media agency contract covers the whole supply-chain but this is rarely the case.
Digital Ad Fraud is rampant and the ‘white hat’ players who purport to detect it cannot keep up with the fraudsters, especially in Connected TV.
Media cost is no longer a reliable proxy for performance, if it ever was. Have you ever wondered how media agencies can always improve media buying rates in a pitch by significant margins? Media pricing commitments have become an exercise in spreadsheet manipulation.
Cost reductions have replaced effectiveness as the yardstick for success, leading to a loss of true business performance.
Meanwhile ‘media transparency’ is too often the stated goal but is only a means to an end and advertisers’ attempts to achieve transparency have been thwarted by the supply-side players, including media agencies.
Refreshing the approach to Media no longer means ‘hold a pitch’, ‘get media costs down’, ‘conduct an audit’ or ‘negotiate a new contract’. In fact it’s pretty much the reverse of those tried, trusted but vastly over-used staples of the Procurement function.
The monumental changes in the media eco-system call for a revised Procurement approach that revolves around what is being bought, first and foremost, not the cost of its purchase or its supply-chain.
Procurement departments should recognise that the age-old media currencies that underpinned audience delivery are no longer as valid, and often don’t exist.
The advertising industry has not been able to replace the reliable metrics of an era when media inventory was finite and measurable. There used to be cross-industry consensus on how audience is measured (eg GRPS per demograph) but these do not exist in online media.
There is now infinite supply across all media channels and knowing what to buy is no longer straightforward, especially in digital media. There are no robust or reliable independent sources of ad appearance or exposure, and campaigns often appear on many thousands of websites.
The advertising industry made ‘impressions’ the default currency for trading, but this does not begin to cover actual audience performance. As impressions became the norm, it was in the interests of publishers, adtech players and media agencies to get paid per-impression, and this has led to an explosion of ad fraud, with billions of dollars wasted on synthetic traffic that can be bought at rock-bottom prices, giving the illusion of efficiency.
Data is plentiful but analytics can be misleading with so little uniformity and no industry systems. The demise of third-party cookies will lead to even more obscurity.
So, what should a new approach to Media look like?
Here is the 5 point plan:
Procurement in Media traditionally focusses on who is buying it and at what price, but this approach looks through the wrong end of the telescope.
You should ensure that the commercial partners throughout your supply-chain provide you with reliable and accurate data on the actual audience that you have bought, with associated evidence of the genuine levels of viewability, fraud and exposure. Only pay for real audiences at an agreed evidence-backed level of quality.
Many advertisers rely too much on self-reporting by platforms, adtech partners or agencies.
You should employ independent evaluation services of audience delivery and performance wherever possible and select partners who are not potentially compromised by their publisher revenues, where it is in their interests to minimise invalid impressions.
Comparing self-reporting versus independent verification will allow you to examine the veracity of supply-chain reporting for the purposes of accurate payments.
Media costs are meaningless unless associated with audience delivery.
Ensure your media agency partners are paying the right rate for the quality of audience delivered. Good quality inventory costs more; invalid traffic is cheap for a reason. Set targets based on improvement in cost-efficiency of audience delivery, not impressions, and gain access to the auction data to ensure that your rates are not marked up.
Ask your media agencies to advise on the right KPIs to set but validate independently.
Wastage in online advertising is often substantial, especially when paying several players on a per-impression basis.
You should evaluate your adtech supply-chain and only employ partners who add real value at a cost that delivers a multiple, based on their role in delivering the right audience at the right cost.
You should have direct contracts with them and not rely on third parties to manage them. Aim to avoid paying per-impression but reward on a fixed basis against KPIs that reflect cost-effective audience delivery.
Many advertisers still use old audit standards to assess buying performance.
Do not expect any longer to be able to benchmark your buying rates against market norms. They don’t exist in online media and they are increasingly meaningless in offline. Track your media pricing trends independently against accurate and reliable data and set targets for improvement, rewarding your commercial partners accordingly. Task your independent measurement partners with setting improvement targets based on hard tracking data, and reward your commercial partners for better results, measured objectively.
The traditional methods of managing media can still have a role to play. Pitching, contract reviews and audits are still useful downstream tools but should be led by a new approach that is results-led.
The importance of buying the right ad quality underpins the current study by the US Association of National Advertisers (ANA) into the programmatic market. While it will examine the adtech supply-chain, it will also look at the ways that ad quality affects effectiveness and cost.
Advertisers should participate in this study and others that aim to identify where value is created, especially in audience delivery in a market where there is so little verification.
In an ideal world all of the above would apply to actual business performance rather than audience delivery, but most advertisers would struggle to achieve this on a multi-territory basis. This 5-point plan can be applied on any combination of markets and brands.
The most important action to take now is to invert the process from being cost-led to being audience-led, with cost metrics reset accordingly. This begins to address the lack of industry currencies and can be customised to any metrics that you need within your business.
And it’s all do-able, starting today.