Addressing complexity is a complex issue

Background note: For people not familiar with the matter, The Association of National Advertisers published a report on June 7th. The report explored the issue of commercial transparency between media services companies like ours and advertisers in the USA. That report is likely to be followed by the issuance of suggested guidelines for the industry. This piece is not a rebuttal of that report but, we believe, a valuable addition for consideration for ANA Members and their advisers.

The changing media environment has raised client expectations of agency technology capability to a level that is unrecognizable from a decade ago. Yet (perhaps unsurprisingly) nowhere in the ANA US Transparency Report, nor likely in the upcoming guidelines, is a positive reference made to either the increasing complexity of the US media market or the investments in technology, data and human expertise made by media services companies and their parent companies in response. 

The report acknowledges the pricing pressures imposed on agencies by clients and their procurement offices. However, it omits acknowledgement that in spite of such pressure media services companies play an important role in supporting clients through a time of technology enabled radical change in consumer behavior and media consumption. 

This includes the development of the highest possible standards of verification, viewability, anti-fraud, anti-piracy and consumer privacy measures. These have promoted integrity in the digital supply chain and protected advertiser investments and reputations. In our estimation this has saved advertisers many millions of dollars. Our contribution, and that of our peers, to this process has been entirely overlooked in the ANA report. 

In response companies like ours have made, and continue to make, real and necessary investments, in order to effectively plan and trade new markets and provide seller agnostic solutions for our clients who, as the report points out, value vendor neutrality. 

While some may find the following list self serving, the evidence of our actual technology investments is significant: 

• WPP’s acquisition of 24/7 Real Media in 2007
• The subsequent creation of Xaxis and its buy side DMP Turbine. The more recent acquisition by Xaxis of ActionX for cross screen targeting and mobile commerce and the creation of Light Reaction which is compensated solely on the outcomes created.
• WPP’s 2015 acquisition of Medialets and its mobile adserving and attribution capabilities that create an alternative to the walled gardens of the media technology giants.
• Our acquisition of The Exchange Lab in 2016 which via their solution Proteus offers access to almost all sources of programmatically traded digital inventory.
• Our minority investment in AppNexus; the world’s leading programmable advertising platform.
• The development of the Zipline DMP by KBMG, a sister WPP company.
• The creation of Modi Media, the U.S. leader in addressable television.

These investments enable us to apply data and technology to the purchase of inventory. The addition of data, tech and analysis transforms the nature of the underlying commodity by turning billions of impressions into relevant and valuable audiences. 

This is a new class of media asset. We offer this new asset to clients in two ways. The first way is at a high level of service pricing with as much underlying disclosure of costs at the vendor level as possible; many clients choose this. Alternatively, we offer advertisers guaranteed pricing for a given objective, bundling all costs of data, media, tech and service. This is a principal trading model.  As we have repeatedly stated this requires an opt-in, is subject to constant performance review and in no way depends on leveraging the spend of advertisers who do not opt in as we are leveraging technology and data not volume of advertiser spend. 

In either approach to working with us, the client enjoys the same GroupM standards of viewability and verification which we’ve set at bars surpassing industry norms.  We continue to win client business against traditional and new competitors with both models because we create competitive advantage for advertisers. 

It is our perspective that advertisers and their advisors should take a value-centric point of view around principal media trading models in digital and other media. These models are developed on the basis of marketplace insights into supply and demand dynamics and not the leverage of client volumes.  The ANA Report does not concede that this is possible and inaccurately suggests such models must be at the compromise of value due to clients. Media service companies accept many risks including intellectual property liability on behalf of clients. In turn it is our right to assume our own risks to the benefit of our own business especially when they only reward us if they reward the advertiser.

The ANA report seems to suggest that there is something wrong with agencies being rewarded for these investments and acceptance of risk.  

In no way do we expect advertisers to participate blindly. It is the agency’s clear responsibility to demonstrate both value and the lack of harm caused by creating that value. We hope that the Ebiquity-authored guidelines take a balanced view of this issue. Of course they should encourage vigilance; of course they should encourage clients to be satisfied that these business models are delivering value. What they should ensure is that the guidelines do not have the effect of reducing investment in ‘fit for market’ technology and ultimately disadvantaging advertisers in the name of transparency. It seems that such a balanced approach is in keeping with the stated business purpose of auditors and consultants collaborating with the ANA who are focused on helping advertisers achieve business success in changing times. That’s a great goal and one we share.

@robnorman

This piece was published on mediavillage.com on June 14th https://bit.ly/1sE5Vxr