The Great Advertising Disruptor: Honesty

September 21, 2018

Last month at the MediaPost Brand Marketers Summit in Lake Tahoe, I went way out on a limb and spent the entirety of my 40-minute presentation telling those in attendance everything they needed to do to never need my agency. (Oh. Did I mention that I spend $30,000 to sponsor this event? Pretty bright guy, this Swede is.) (Full video here.)

But I had some things to say about the state of the industry and the state of agencies in particular that made this move both informative and thus much less risky. You see, I understand marketing leaders’ temptation to take digital media in-house. I too would be tempted. Agencies, especially the largest of the large, have treated digital media like their own offshore bank accounts in the Caymans for far too long. Unaccountable. Overly complicated. Plus, “‘no one” understands current advertising economies. And, you know, the traditional business is tough.

Oh, yeah? Business is tough, you say? Try running an agency that’s sold digital for the past 23 years. I’ve never had any money. Certainly none to hide. I’ve had to be accountable for every last penny. Why? Financial scarcity. For decades, every digital dollar was an experiment, held to account because they were new and unproven. So we went to the ends of the Earth to prove that digital worked. Got questions about attribution? You got it. How far you wanna go? All the way? Sure thing. Let’s do it.

But now real money is flowing, and like all industries that find themselves on the receiving end of growth, the unscrupulous tend to show up late and get drunk at the rail. And I’m not going to lie. It’s really easy to find ways to make money. We’ve essentially moved from a really simple way of buying media (agreeing to a set amount of [enormously sketchy] impressions coupled with a price that runs for a period of time and tethered by a document) to a much more measurable yet far more complicated model (buying audiences on a pay-as-you-go model, driven by machine learning rather than on impressions). The essential elements of the new way of buying media are much better. Much more financially flexible and incredibly targeted, so that they’re following actual performance. Unfortunately, the new way of buying and managing digital media has evolved faster than most agencies’ P&Ls. As a result, brands are experiencing some real shenanigans when it comes to transparency.

So a great many brands are saying “to hell with this” and bringing media in-house. Or attempting to. Again, I don’t blame them for trying. But let’s be real about a few things and level set about what’s going on:

Agency Financial Problems Aren’t Yours
The lack of transparency in digital media happens because agencies have lost financial control over their old P&Ls. Their cost models are heavily invested in media channels that are no longer de rigueur. This is not anyone’s fault. People have simply moved to new, emerging channels like YouTube, Facebook, and Hulu. These new channels don’t have the same margins as traditional channels like television. OK. So what? Why is that a brand’s problem? Brands aren’t obligated to support an agency’s business model. Many agencies have found the complexity of the digital pricing schemes to be perfect places to hide money.

But since this is my article and I can write what I want to, I’m here to tell you that this scheming isn’t true for all agencies. In the spirit of transparency, I’m here to tell you that I got into the media business quite late because I didn’t trust it. But then I found a herd of technical unicorns, hired them, and decided that disruption in the industry could happen simply by being honest. How fucked-up is that? That’s literally all I did. I hired super smart people who understood technology, then required them to be honest, and priced it all as a management fee rather than something baked into the media fees. That’s it. That’s the sauce.

The CPM Model Is Like Your Rental Car Bill
One could say it’s super f’n messy, in fact. What is a cost-per-thousand (CPM)? It starts with a base rate. Then there are myriad ad tech partners who are layered in to add value to that CPM, like verification software, verification of the verification software, ad serving, audience segmentation, and so on. Pretty soon that $10/CPM is a $15/CPM. That’s a 50% premium. I’m not arguing that these fees aren’t legit. A good media planner should explain in as much detail as possible why those add-ons truly do add value. Most importantly, an agency should tell you exactly what those fees are for, even if you don’t ask. That’s transparency. Unfortunately, we hear waaaaaaay too often from clients who have come to us that they had no idea what was in their invoices and no one offered to tell them.

Back-Room Deals
This one kills me. In olden times (2015?), publishers, ad tech CO’s, and agencies put together sweet little back-room deals that basically said, “If you spend so much with us, we’ll give you a rebate.” Those rebates were essentially off-balance sheet and rarely ended up on client invoices. The agency literally didn’t have to do anything other than spend client money to make some side action. The ANA and other advocates for advertisers have put their foot down and said, “To hell with this,” but it’s still happening.

My other favorite is when agencies say that they can negotiate special placement or super-special, gold-plated audiences from within the programmatic trading desks. This isn’t a thing, OK? There’s a unique kind of arrangement called a Private Marketplace (PMP) deal. But there’s nothing exclusive about them. Anyone can put together a PMP program. So don’t equate “private” with exclusive or even special. They’re just regular good business.

Incredibly Low Bars
I just got off a call this evening with a colleague of mine who herself had just gotten off a call with a new client. In that call, the client told her, “As soon as the campaign launched, everything blew up!” She asked the client what he meant. “Oh, I mean it blew up in a good way! We’ve been looking at our traffic sources, and it appears to be all real people, not bots.” Wow. How about that bar? I’m super glad the campaign is effective, but slap me upside the dome that our benchmark was against bot traffic. That’s the cumulative effect of years of bad media being run by marginally poor ad tech providers all too eager to play in deeply grey areas of so-called performance. I can’t put this any clearer: we’re talking about real people here, living real lives, and there are great technologies that avoid all the bad crap out there. It’s true that machines are increasingly running the great ad campaigns of this early 21st century, but that doesn’t mean that robots are the currency. The inputs are real people. The outputs are ad units. Ad fraud is certainly a real problem, but know that there’s an entire segment of the ad tech field using incredible tech and AI to sniff out the bad players and keeping them out of inventory.

So, Eklund. Did you blow 30 grand on that speech?

Thankfully, no. In fact, I’m spending most of this month and the next beginning new client relationships as a result. I find it astonishing how much people prey on the changes happening in digital to the detriment of the advertising industry as a whole. Clients deserve to know exactly what’s going on, even if they have their own businesses to run. It shouldn’t be up to them to police the industry.

The good news is that bad tech is being weeded out and the agencies that have supported them are being hauled off to advertising jail. Folks like the ANA and others have all the right in the world to call bluffs. We’re not just talking about a few bad apples. There are orchards in need of some clearcutting.

For brands, it’s OK to ask a lot of questions (if your agency isn’t already telling you). Ask your agency how all of this works. Ask them to see what goes into their CPMs. Ask for sources of your audience segments. Ask them who’s getting paid. I mean, it’s your money.

We’re right in the middle of the cleansing of the advertising industry, and on the other side is a marketplace that will make the old ways look unrecognizable. We currently have these new fangled things called “cars” sharing downtown streets with horses. And there are still plenty of people hoping to God that no one will want a car. But I read that book, and it didn’t end well for them. So let’s just get on the right side of history, keep our noses clean, and be incredibly honest with one another.