In recent years, marketers have made it clear that they need greater transparency in their digital advertising. Concerns about ad fraud and viewability, measurement and a more data-centric mindset have all contributed to the new assertiveness among marketers. A study from the World Federation of Advertisers (WFA) found that 90 percent of advertisers are reviewing contracts and demanding greater accountability.
For their part, the agencies seem to be listening. In recent weeks, several have launched a host of innovative solutions, adopted new methods, or adapted old ways to help deliver what advertisers want. Here are some of the best examples.
1. Havas to “track every penny”
Global agency Havas is using innovation to help advertisers see exactly what they’re paying for. The company recently released a portal that lets clients see—in real-time—how much money they’re spending with online vendors, along with how successfully those ads are performing. Havas global managing director Dominique Delport said that tracking “literally every penny” of online ad buys will allow brands to retain more confidence surrounding their digital spend.
For marketers, this new technology goes a long way in building trust within the ad ecosystem and offering advertisers the transparency they need. Savvy agencies like Havas will benefit by taking similar steps to deliver more clarity through technology and innovation.
2. Unbundling costs and disclosing fees
Historically, marketers have allowed agencies to operate autonomously for their ad buys, granting them considerable independence. As that process has moved from human-based deal-making to more sophisticated and automated decision-making, advertisers are asking for more clarity within the buying process. Of particular concern are the sometimes murky underlying costs of agency support, and for marked-up media inventory.
In response, many agencies are unbundling their costs and taking steps to break down and fully disclose their fees. Omnicom, WPP and Dentsu Aegis have gone public about new approaches designed to deliver greater clarity and accountability, even at the risk of depressing the agencies’ own earnings.
3. Switching back to commissions
Advertisers are also changing the way they compensate agencies. And while many still pay fees based on labor, some are now switching back to a traditional commission-based method in which agencies receive a portion of their total ad spend. In addition to being more transparent, the commission-based model can benefit agency partners by giving them the opportunity to receive bonuses or other incentives if they meet any specific performance-related goals. This move is clearly a win-win for all involved.
A new study by the Association of National Advertisers (ANA) reports that traditional media commission payment methods have climbed to 12 percent (from three percent in 2010) and are used primarily for media services—and notably for programmatic media buying—that involve both labor and technology costs. The “comeback” of the commission model may continue because it makes payments more seamless than labor-based fees. And agencies are leading the shift.
Transparency and accountability concerns won’t go away, so we can expect smart agencies to continue to find ways to accommodate their clients and, in doing so, improve and grow our industry.
Tim Mahlman is head of programmatic ad tech platforms at Oath.