Is Ad Buying Corrupt?

By Brian Morrissey • August 11, 2011 •

Favors in Ad Buying: Every industry has its own mores. In the ad world, the sales process is marked by a fair amount of favors from the sell side to the buy side. Media buyers are notoriously young — a staple of many of our conferences is to bemoan the “25-year-old media buyer” — and often not paid that great. But there are freebies galore on offer from publishers and ad sellers eager to get their budgets. Trips to games are the norm. “Lunch and learn” sessions, replete with a nice spread and an xBox or two, have gone of for years. Ad Age’s Bob Garfield gets up in arms about a fairly crass email from a Dentsu staffer baldly shaking down publishers for U.S. Open tickets. It’s hard to get that excited about this kind of stuff. It’s small bore and in the end hardly one of the bigger problems facing the ad world. Practices have been notably cleaned up from the days when media agencies recieved payments directly from ad sellers based on how much client money they spent. These rebates are forbidden in the U.S. now, although they’re still par for the course in some foreign markets. I asked one veteran buyer, in the market for more than a decade, for his reaction to the “sleaze” Garfield wrote about. “Blow me over with a feather on this one,” he said. There’s far worse mini-graft out there. Customized sneakers and jeans, even entire shopping trips under the guise of “tangible meetings” are all happening. Will any of this change? I wouldn’t hold your breath.

Missing the Boat on the iPad: Former lead NYTimes.com designer Khoi Vinh is starting a new iPad venture. He thinks many are missing the true power of the device when focusing squarely on what it means for legacy media like magazines. “If you judged the iPad purely by what most journalists write about it, you’d think that its most interesting characteristic is its potential as a new delivery channel for electronic books, magazines and newspapers. Of course it’s true that the iPad is terrific in this regard. It’s my feeling though that the race to capitalize on this one opportunity — creating a great tablet reading experience — is oversubscribed. There’s a lot more that the iPad can do, and we’re only just starting to uncover these other strengths.”

Paywall Logic: The current vogue among newspaper publishers for paywalls is in part their own failure to find a workable economic model and in part the failure of the ad industry when it comes to content. The first story is well known. But the second one is still evolving. The fact is, the way the ad system currently works, it is biased against those that aggregate audiences the old fashioned way, by hiring people to create content. The commoditization of ad inventory hasn’t stopped. Exchanges, despite what proponents say about a rising tide lifint all boats, haven’t budged remnant ad rates. Dallas Morning News publisher Jim Moroney captures this in a Q&A that’s filled with his own frustration with critics of paywalls. “The doomsayers cry out, ‘But your page views will drop!’ Our response: How valuable are pages that you’re selling at 70 cents per thousand? I’m not worried about the loss of page views that are sold at remnant rates.” More publishers are going to come around to this way of thinking if the ad system continues to evolve in the same way.

Twitter’s Ad Math Problem: It’s no secret among ad buyers that Twitter doesn’t really have a large-scale ad product yet. For all the progress it has made on the ad front, it hasn’t solved any of its big problems. The fact remains is it’s hard for an advertiser to spend $500,000 in paid media on Twitter. Agencies are more likely to suggest plowing the money into “earned media” campaigns with just a bit of paid media. Twitter’s most successful ad product, Promoted Trends, is limited to once a day. John Battelle takes a look at the math problem Twitter faces on this front, with 200 million tweets and 50 million URLs streamed a day. That’s a great signal, but one that’s devilishly hard to turn into a valuable one, at scale, for advertisers.

LinkedIn Goes Opt Out on Social Ads: It looks like LinkedIn is following Facebook’s footsteps. The use of social data in advertising is still a sensitive subject. Some people are creeped out by their photos and names appearing in ads. LinkedIn is plowing ahead with a social ad plan, choosing the opt-out route for it. This is probably the right call. Nobody is going to affirm they want their photos used in these ads. Giving people clear choice to stop it would seem the right compromise. Let’s see if LinkedIn users are as passionate as Facebook’s.

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