Digital media has revolutionized the advertising industry, but standard ad buying practices have struggled to keep up with the changes.
The complexities introduced by digital to the media landscape have reshaped nearly every aspect of marketing. As brands are expected to compete in an increasingly high number of arenas, they must accept that many of the principles that undergird media buying for traditional channels like print, television, and out of home are simply no longer valid. This is especially true with respect to the relationship these companies have with agency media buyers.
In the old days, securing high-value ad space was largely a matter of effectively leveraging close relationships with top ad providers. Ad buying agencies were designed to build and maintain these kinds of relationships, and thus offered a tremendous value to companies that lacked the clout to approach ad providers directly.
These days, the industry’s overwhelming number of ad providers, formats, channels, and devices have made it necessary for ad buyers to lean heavily on media trading desks and demand-side platforms (DSPs). The importance of buyer-provider relationships to the broader endeavor of advertising has been substantially reduced as a result of these changes. And as the ANA’s Media Transparency Report reveals, the intricate web of kickbacks and markups that has flourished in an increasingly opaque digital media market has only increased companies’ suspicion of the role that agencies now play in their business model.
The Hidden Costs of Modern Media Buying
The core relationship between an advertiser and an ad publisher ought to be a simple one — unfortunately, a standard ad buying transaction involves a complex chain of intermediary parties.
Companies are often shocked to discover that an ad publisher only receives 20 cents of the $5 CPM rate they pay to their ad buying agency, but this is anything but unusual. While a company’s ad buying agency may only charge a reasonable 15-20% markup on raw media costs, the trading desk used by that agency might take its own cut, which may be as high as 30%. After that, the ad network behind the trading desk will take yet another 20%.
In short, digital media buying has evolved into such a complex ecosystem that a company’s ad buying budget is typically subject to all kinds of hidden costs. What’s more, the kickback and incentive programs crafted by the process’ numerous middlemen are so convoluted that it’s almost impossible for a company to determine the true value of the ad space it’s purchasing, let alone if the space is an ideal fit for the company’s goals.
Companies not only have to worry about minimizing the cuts taken by middlemen, but about the quality of ad impressions this frustratingly opaque process delivers as well. An agency will typically promise to deliver a certain ROI or a certain set of KPIs — for example, charging $800,000 for a million clicks. But that promise counts for little if the agency won’t allow its client to dig around in the relevant Facebook or Google AdWords accounts, preventing it from determining what the ad space it’s purchasing truly costs.
The Transparency of AI Marketing Platforms
Marketers may disagree about whether these problems are the product of greedy middlemen or a set of outdated processes and practices, but there is a consensus that advertisers are consistently getting the short end of the stick. Fortunately, cutting-edge marketing technologies like Albert™, the world’s first fully-automated artificial intelligence (AI) marketing platform, offer companies a strong alternative to traditional media buying practices. Albert only purchases media directly from the source — Facebook, Google AdWords, etc. — cutting out all middlemen and lending unparalleled transparency to the ad buying process.
Furthermore, Albert’s advanced AI capabilities enable him to manage a company’s advertising accounts more or less independently, while control of these accounts remains entirely in the company’s hands. Marketers retain the ability to log into their ad accounts and see exactly which keywords Albert is targeting, which audience segments he is focusing on, and which channels and devices are receiving the most budget. This entirely eliminates the possibility that a company’s ad spend goes towards low-quality traffic, a rampant problem with blackbox agency operations. Instead, the company’s marketing team enjoys a comprehensive, real-time view of where their ad budget is being spent.
There’s no question that the digital ad buying industry is in great need of a significant overhaul, but a platform like Albert guarantees that companies get the most out of their ad spend, regardless of the state of the industry at large.