‘Why is this entire conversation based on mistrust?’: Insights from the Digiday Programmatic Marketing Summit

By Natasha Malik • June 5, 2019 •

Event Briefings are exclusively available to Digiday+ members. As an event attendee, we’re giving you complimentary access. To read all previous event briefings, subscribe to Digiday+.

On the Digiday Challenge Board, a half dozen marketers posted some form of challenge around transparency. But when it comes to programmatic advertising, the solutions — even the nature of the issue — remain unclear. There are newer opportunities for advertisers and agencies to pry open programmatic’s black box. However, those opportunities can be seized up by the various cogs across the programmatic supply chain as well as the amount of education and information required to be aware of those opportunities and how to take advantage of them. Brand and agency execs gathered at the Digiday Programmatic Marketing Summit in Austin, Texas, last week to discuss the challenges they face and the opportunities they have found in trying to take control of the programmatic supply chain.

What we learned:
Programmatic’s transparency issue is often a people problem
The programmatic supply chain is not as much of a black box as it once was. But it’s still fairly opaque. However much of the opacity is the result of a lack of communication among advertisers, agencies, ad tech vendors and publishers. During a heated working group session that centered on taking control of the programmatic supply chain, publishers in attendance called for more transparency into who are the advertisers buying their inventory programmatically. Brand and agency execs responded that they want to provide that information but are constrained by the DSPs that would need to pass that information but may be averse to doing so. “If I say to all eight DSPs that I work with that they have to pass that data, they may respect me or they may not,” said one agency exec.

Everyone across the programmatic supply chain seems to want more transparency and is waiting on everyone else to provide it.
More collaboration and communication across the buy and sell sides could pressure intermediaries to remove information bottlenecks.

Bottom line: The programmatic supply chain is like a game of telephone, and companies need to make sure they’re talking to everyone that is on the line.

Programmatic control hinges on data access and analysis
Data is at the heart of ad buyers’ efforts to take control of the programmatic supply chain, an undertaking given the umbrella term “supply path optimization.” If an advertiser or agency is able to monitor its bidding history and win rates, that can shed a light on how much various ad tech intermediaries are contributing to a campaign and to what extent they have earned their respective share of the proverbial ad tech tax. Similarly, if an advertiser or agency is able to access log-level data, they can perform advanced analytics to evaluate a campaign’s impact and decide how their money may be better spent the next time around. However accessing and assessing that information can be a challenge. DSPs can charge an additional fee for log-level data, and not all agencies have the resources to process that data.

To shed a light on the programmatic supply chain, advertisers and agencies need ground-level information, like log-level data.
Accessing that data can be costly, and the data is only as good as the resources available to analyze it and apply the insights to buying strategies.

Bottom line: Ad buyers’ efforts to control the programmatic supply chain are only as effective as the data they can access and analyze.

Programmatic know-how is hard to come by
Among the biggest challenges facing advertisers and agencies is keeping pace with programmatic advertising’s rate of change. Clients often rely on agencies to stay up to speed on new trends and their implications, such as the recent shift to first-price auctions and the continued crumbling of the third-party cookie. However gaining insight is an uphill battle. For example, salespeople at platforms and vendors are often unable to provide the information needed to adequately understand how their products work. This issue can be especially challenging for advertisers that have taken programmatic buying in-house because they may only work on a single ad tech stack and not be aware of outside developments. There is no easy fix for any of this. Ultimately it’s on advertisers and agencies to educate themselves as best they can, said Rahil Berani, vp of programmatic at Digitas.

Advertisers and agencies are struggling to stay informed of new trends in programmatic and to assess their implications.
There is no perfect solution; education must be a constant effort.

Bottom line: Programmatic advertising is changing too quickly to have comprehensive sources of information on new trends, so advertisers and agencies must do their best to cobble together their own insights.

The in-housing trend is about control — of costs and data
When brands take programmatic buying in-house, the move is often considered to be a matter of saving money. That’s one consideration, but it’s not the only one, nor even the primary one. Going in-house can be more costly for advertisers because they lose the negotiating power of agencies that are buying in bulk and must put programmatic experts on their own payrolls. However, the trade-off is that the advertiser is able to assert more control over where its money is going by gaining firsthand control over the data that informs and is generated by its campaigns. That data can help the advertiser to identify areas where it can cut costs in order to save money to offset any price increases.

Bringing programmatic buying in-house affords advertisers more control of their costs, but it can lead to higher costs because agencies can typically negotiate lower prices than individual brands.
Data ownership is the real upside for marketers who want firsthand control over the information underpinning their programmatic investments.

Bottom line: Even if taking programmatic buying in-house leads to higher prices than agencies are able to negotiate, taking ownership of the underlying data can more than make up the difference.

Agencies are forced to adapt as clients assume more control
As the in-housing trend indicates, clients are taking the reins of their programmatic buys. Even marketers that are not assuming full buying control are directly involving themselves in deals with demand-side platforms that would have otherwise been managed by their agencies. As a result, agencies’ roles are shifting. While there are an increasing number of tools available for advertisers to manage their own programmatic campaigns, knowing which tools to use and how best to use them can be a more precious resource that marketers may lean on agencies to provide. “We’re not the ones pulling the levers, but we are still the ones advising,” said Steve Carbone, chief digital officer for North America at MediaCom.

Clients are less reliant on agencies to place their programmatic buys because buying tools are increasingly easier to use.
Agencies need to reassert themselves as consultants, advising clients on how to develop and refine their programmatic buying strategies.

Bottom line: If advertisers don’t need agencies to place their programmatic buys, agencies need to prove their value by helping clients to decide what to buy and how.

Speaker highlights:
Bayer’s Paul Gelb detailed how the marketer has taken programmatic buying in-house. His key points:

Bayer focused on hiring experienced ad tech talent that were already knowledgeable about the platforms they would be using.
With one exception, Bayer was able to negotiate better prices with every vendor that it works with compared to what the brand paid when it had an agency.
Within six weeks of stripping out its media agency, Bayer saved at least $10 million.

PMG’s Steve So broke down how the agency has experimented with consolidating its programmatic supply sources. His key points:

In a test with one of its largest clients, PMG cut the number of ad exchanges it worked with from 22 exchanges to four.
Despite the reduction, PMG did not lose scale or conversions but actually saw better performance.
Conversions increased by 9% while the campaign’s cost-per-acquisition dropped by 8%.
The test showed that exchange consolidation can help advertisers to be more efficient with their budgets.

Visible’s Curt Hokanson gave an overview of the emerging programmatic audio advertising market. His key points:

Ad targeting options for programmatic audio advertising are still being developed but continue to improve.
Dynamically inserted host-read ads can be tracked at the impression level through Google’s DoubleClick Campaign Manager with an ability to target listeners by geography and demographics.
Companies like Barometric are able to attribute podcast ads’ impact across platforms; however, match rates can be low, often in the 40% to 60% range, which limits such measurement.
Because podcasting remains a nascent advertising market, advertisers have an opportunity to influence how podcast advertising evolves.

Overheard:
“The question that I have is, if I put a CPM out there, is that truly being represented throughout the supply chain?”

“What’s happening with the first-price auction and bid shading — there’s too many unknowns.”

“I think more of the black box these days has moved to the DSP with bid shading.”

“You’re settling for mediocrity [by using a single DSP]. You’re settling for one platform at the expense of choosing the best technology because one technology is not going to do all the things. That solves for it but it’s at the tradeoff of putting together a bespoke solution.”

“It is really hard to provide a significant amount of value in an agency today in a programmatic biddable medium,” said Paul Gelb, head of programmatic and social at Bayer.

“[Agencies] can get rates that are incredibly low compared to what we’d get. It would be much more expensive than what we’re paying today. Are the fees we’d be paying above what a large media buying agencies would pay greater than the saving we’d see [in-house]? Right now the answer is no [to in-housing].”

“We’re really pushing focus on the communication because it’s one of those things where, when you have an agency, everyone is playing telephone,” said Claudia Beale, digital media supervisor at SafeAuto.

“Most conversations I have with clients is [clients asking for an explanation of the programmatic landscape]. When you start breaking down the pieces and what do you actually need to run your business, they realize how much you actually need to create that stack,” said Oleg Korenfeld, global chief platforms officer at Wavemaker.

“When you clean up the supply chain, you’re stripping out a lot of the middlemen that are making money and [that consolidation] means savings,” said Steve Carbone, chief digital officer for North America at MediaCom.

“Publishers have no fucking power at all. It’s really about the agencies or the in-house clients to demand true transparency.”

“The challenge with whose responsibility it is is that the market is too fucking big. Unless you are a large tech provider, you can’t control it. That’s why I defer to whoever is spending the money gets to control these [transparency] decisions.”

“The power doesn’t sit with the agency or the marketer because, at the end of the day, I’m tied to a tech stack.”

“In programmatic, everything doesn’t die. It just goes under a new name.”

“Why is this entire conversation based on mistrust?”

https://digiday.com/?p=336726