The Modern Digital Advertising Playbook: Where Do Your Ad Dollars Go?

Regardless of the team you were cheering on in the Super Bowl–or even if you were more interested in a certain pop star in attendance–the commercials are always worth watching. Brands spend millions for a 30-second spot, unleashing ads that are heart-warming, hilarious, thought-provoking or just plain bizarre.

With all the attention these commercials get, I got to thinking about how far digital advertising has come, especially in the past few years. It’s not as simple as creating an ad and placing it anymore–modern digital advertising is a complex ecosystem with many players: supply-side platforms (SSPs), demand-side platforms (DSPs), media buyers, and more.

Programmatic ad auctions also play a crucial role in connecting advertisers with their target audience. They have many advantages but concerns persist around ad fraud and the payouts that go to each player in the overall transaction.

Several studies have attempted to shed light on the financial complexities of how much the SSPs and DSPs take, agency fees, seat licensing, audience building fees, and more. It’s clear the process isn’t equitable and especially not transparent for all parties involved, and often times it’s the client or brand that gets the short end of the stick

A recent post from Adalytics breaks down where each advertising dollar goes. Here are five takeaways along with our relevant insights:

• Variable Vendor Fees: Adalytics notes that ad tech vendors can charge highly variable supply fees, as much as 98% of what an advertiser is paying for an ad slot. This can also change on a per impression basis, varying up to 80%. These high fees mean that less of your budget goes to the actual ads.

 

• High Agency Fees: A study by the Incorporated Society of British Advertisers (ISBA) and PwC showed that, on average, agencies take a 7% fee -- but 15% of the overall spend was unaccounted for. The truth is, many agencies won't divulge their take and as a result, studies on this topic can be flawed. In my experience, most agencies take well over 7%, with a minimum of 15% more common and payouts of as much as 40% not out of the question as they buy below wholesale for large accounts. Additionally, the ISBA/PwC study noted variances between the contracted and actual fees charged, further proving the need for transparency throughout the process.

 

• Advertisers Prioritizing Volume: Based on spending, the current ecosystem prioritizes volume over quality. It relies on probabilistic methods that don’t dig deep enough to identify and target the right decision-makers. For example, probabilistic methods will target everybody in a household or organization using a shared device, which generally works for B2C campaigns. But for B2B this translates into campaigns that target wide -- by titles and function – resulting in your ads reaching a higher number of irrelevant contacts. The increased ad volume ends up giving the SSPs, DSPs, and agencies the opportunity to make more money, but forces brands to pay out more than is necessary.

 

• Deterministic Methods Improve Ad Targeting Accuracy: The advertising industry needs transparency around whether ads are reaching the right individuals, which is why OMI stands behind deterministic methodologies. Using our proprietary data, we apply deterministic data to our clients’ digital B2B omni-channel campaigns. A huge benefit to proprietary data is the ability to target all the way down to the individual decision-maker level based on device attributes.

 

Our approach relies on deterministic cross-device tracking, with consumer logins as a primary identifier for matching multiple devices to a single user -- instead of to a group of users that may share a device. This method tends to have higher targeting accuracy since consumer login information is unique to an individual.

 

• Fraudulent Placements: Ad fraud continues to be a concern as made-for-advertising sites and bot traffic deplete budgets by serving ads to irrelevant or nonexistent audiences. How much of your budget is wasted on these types of ads?

 

Businesses and people usually prefer to avoid change, especially if it means they won’t make as much money. That may be why many agencies aren’t fully transparent about the fees and commissions they're keeping.

 

The reality is that higher agency fees translate into less budget for actually serving ads. And that’s what we want to shine a spotlight on at OMI. Greater transparency opens up opportunities for brands to serve more ads and gain more exposure to potential customers. It’s also the first step in creating the change required for a digital advertising ecosystem that is equitable for all parties involved.

 

Reach out to our team to discuss how you can leverage our expertise along with deterministic data to ensure your ads are reaching the right audiences.