Programmatic buying, as dodgy as a $7 note

Mark Ritson
By Mark Ritson | 6 July 2017

We’ve always had media bias on the agency side. Long before two students met and created a world beating search engine or a young Harvard undergraduate started putting pictures of his classmates on the world wide web, agencies almost always took sides. PR agencies thought that public relations was essential to any brand’s success. Direct agencies were ready to show any potential client that the ROI from a piece of direct mail could outperform even the greatest TV ad. And so it went.

So we really should not be surprised or particularly worried that the large slew of digital marketers and the various firms that they started would make such big, bold claims about the power of search marketing or social media. Just like their media-specific predecessors from earlier ages in marketing they were naturally and entirely understandably biased towards the tools in their own toolbox.

But what has changed, and possibly changed forever, is the way that clients approach digital marketing. Sure, back in pre-digital days big clients always had their favourite approaches. Some clients liked to go heavy with TV, others would always push full page newspaper ads. But most, if not all of them, were strategy first, media neutral clients. They genuinely spent time on a decent creative brief and then committed even more time to consider with their agency which media would and would not carry the nascent creative message.

Mark Ritson is speaking at the Media + Marketing Summit in Melbourne on 2 August. Tickets are on sale now

A thick red line

That’s what has really changed over the last 10 years. A large proportion of clients went mental for digital and, by definition, decided “traditional” media were either dead or dying and not worthy of their dollar. Of course, I say “digital” and “traditional” as if they mean something. Clearly both terms are nonsensical. With half of Australians reading their newspapers digitally, and almost half of the outdoor advertising they experience now digitally served, and DAB rapidly becoming the norm for many radio stations it’s pretty hard to see a thick red line between what is and isn’t “traditional” anymore. And with YouTube ever present on most TV sets and Amazon launching that most traditional of tactics the “bookshop” across America it’s also becoming tricky to truly identify a purely “digital” approach too.

What we can be certain of is that whatever you want to call advertising on Facebook and Google’s various platforms, it’s proving so popular with clients there appears to be no stopping it. Where once marketers were trained to be cynical and neutral about the claims of any and all media publishers, most are now entirely committed to a “digital first” approach irrespective of what their own strategy, media data and good business sense might tell them. Complexity and peer pressure combined with an overriding sense that they have not got a clue what is going on have led them to become glass-full marketers even when the aforementioned vessel is clearly three quarters empty.

Mark Ritson is speaking at the Media + Marketing Summit in Melbourne on 2 August. Tickets are on sale now

The dirty, stinking value chain

But if you want proof that your average Australian client has gone mental for digital you only have to look at buying media programmatically. The rise and rise of digital media has resulted in a choice that once consisted of less than a dozen channel options ​transformed into a complex decision between thousands of options. Whatever we think of programmatic buying, and I think along with a big bunch of very senior marketers that it’s as dodgy as a $7 note, we cannot live without an automated buying system anymore. It is literally impossible.

But while the system is inevitable, it does not have to be so murky and fraudulent. We have now seen several examinations of programmatic reveal that if a client spends $100 on programmatic advertising only around $25 worth will actually reach the consumer. The other $75 will disappear in the greedy orgy of ticket punching and commission charging that adtech firms conduct as your hard-earned cash fights its way through the dirty, stinking value chain of programmatic.

One might expect clients to bridle as this proportion has become apparent. But that would pre-suppose a marketer who cares about how their money is spent and understands the system through which it is invested. The big insight from the blockbusting media transparency report from the ANA last year was not the endemic degree to which darkness had engulfed media buying, it was the ignorant and naïve reaction of big brand clients who literally had no idea any of this was going on.

That 25% ratio is a familiar one with digital media. It’s been a similar story in recent months when media agencies have begun to get a longer peek over Facebook’s walled gardens and actually estimate what proportion of their digital video ads are actually viewable. The general consensus appears to be that 20% to 30% of the ads being paid for are passing the industry standard of presenting at least 50% of their pixels, to a human, for at least two seconds. The good news about Facebook is that, unlike its bot infested rivals, it retains almost exclusively human audiences. The fact that I have to even write that last statement is something of a wonder but it is pertinent. The problem for Facebook, however, appears to be stopping those nimble fingers on those small smartphone screens from flicking, scrolling and swiping their way past the paid message of their advertisers.

Mark Ritson is speaking at the Media + Marketing Summit in Melbourne on 2 August. Tickets are on sale now

Once again we might expect an advertiser to get just a little perturbed at the idea that she is paying for 10 ads on Facebook and, if the estimates are to be believed, only getting two past the threshold by which it can be deemed viewable. But Facebook can rely on a client that either has no clue about any of this or, even if they do pay attention, one who is so enamored with digital that they can be fobbed off with pretty much any excuse. You can bet as we speak there are a raft of studies being commissioned to demonstrate that you don’t need two seconds to build brand equity – oh no! A second will suffice. Hey, I can show you data that half a second actually works better than three seconds.

I joke. But not much.

The reality of media in 2017 is that you have made your decision irrespective of the data and nothing will dissuade you from that approach. The great marketing professor Christine Moorman runs an annual survey of CMOs in America and always find the same, strange result. She shows that the majority of them are unhappy with the return on investment they are getting with social media but when asked, in the next question, the majority are planning to spend even more of it in the year ahead. The World Federation of Advertisers presented something similar this year. When they talked to the top 50 marketers in the world most communicated their unhappiness with digital media metrics, ROI and transparency. But when asked about their 2018 plans almost all were doubling down on digital video.

There are very big advantages in search advertising that are unparalleled in the history of marketing. Until Amazon gets Alexa working properly and the whole idea of a “search engine” fades into the laughter of our grown-up children, Google have new rivers of gold to mine. Similarly, YouTube offers some compelling opportunities for younger demographics and excellent value for money. Facebook simply cannot be beaten for the granularity of its segmentation or the accuracy of its targeting. It will always depend on the target audience, the position and the strategic objectives but it would be hard to conceive of a well-executed campaign that did not contain a considerable degree of these and other digital options.

But too often these media are over-represented or invested in without considering the competition from other alternatives and what they can do for the same dollar. It’s very hard to question the efficacy of digital media or consider “traditional” channels if you have the “D word” in your title. I continue to defy anyone to explain why a “digital first” approach is anything other than tactical suicide of the most egregious kind.

Mark Ritson is speaking at the Media + Marketing Summit in Melbourne on 2 August. Tickets are on sale now

Clearly this is a pattern that will not reverse itself. The only interesting question is how far and how long it will go on for. Most estimates mark 2017 as the year that Australia passed the threshold in which more money was spent on “digital” media over “traditional” media. Again, it’s a pointless dichotomy, but the question of exactly how much of total Australian media dollars will eventually flow to the digital duopoly of Google and Facebook is a very pertinent one.

With issues of brand safety, tax avoidance, anti-competition and fake news all becoming ever more important, it’s clear that neither Facebook nor Google will find the next decade of growth as easy or as enjoyable as the last one. But among all their many upcoming travails the one thing they can rely on is an easy ride and a warm welcome from marketers.

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