If I go back to what I was taught at school, however, the principle remains the same; the goal of any advertiser is to show the right ad to the right person. Not only are we equipped to do this, in today's market we can now show the right ad to the right person, at the right time in the right place – so the advertisers role has been made easier – right?
Well, not quite. The issue we have in the digital technology market is that the current landscape is unsuited to do what's best for the advertiser. There are two problems. The first is common across a number of industries – supply chain complexity. Generally, after an advertiser hands over their digital budget to an agency, it is distributed across a number of third parties involved in the buying process. This includes agencies, trading desks, vendors and publishers. The advertiser pays for every layer of service and technology, with fees incurred at each level. So no matter how great any one company's innovation might be – through the use of social media measurement or mobile video ad delivery – managing them all is expensive and creates conflicting information for the advertiser.
The other problem, which is much worse for the advertiser, is that most of these companies have an incentive that goes against the original goal of the advertiser. This is not the fault of the intermediaries, but rather the way the digital ecosystem has evolved. A great example that is occurring in the UK market today is with agency trading desks that offer a great innovation – real time bidding.
Real time bidding (RTB) brings the open auction bid setup that is common in other areas of online marketing (PPC for example) to online advertising; including display advertising and video. RTB should potentially provide advertisers with a transparent way of buying, but right now it is only adding to the complexity.
Instead of providing advertisers with an end-to-end picture of how, where and when their campaigns are being served and at what cost, agency trading desks which deliver RTB are essentially functioning as a "black box" – an arm of the agency removed from the account team incentivised to gain large margins. Advertisers are pitted against each other with the systems in place working in favour of the agency, rather than the client – giving the agency no incentive to provide the best value for advertisers.
So how can we break away from this flawed model? It starts with advertisers taking a look at the big flaws at the core of their operations rather than focusing on incremental innovations in the margins. Marketers must demand transparency and accountability. Instead of working under a paradigm of blind trust, advertisers need to ask hard questions of partners such as how much are we spending, where is it going and why is it going there?
The fragmentation and complexity of the digital ad space means that technology Must be used to drive consolidation, in much the same way as it has been used to align other areas of change driven by technology – think CRM and ERP.
Marketers need to allocate resources upfront to streamlined open platforms, and explicitly to technology that reduces waste and inefficiencies, not continue to bury tech fees in media buys. Marketers should work with their CIO to create a tech-vetting process that requires incentives that align with their best interests.
Once marketers find the right mix of technology to simplify the process of digital marketing they don't need to worry about when or where their ads are served and who they are reaching. They can then focus on the truly difficult, strategic task of creating great customer relationships.
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