Global digital advertising is now a $200 billion industry, but while advertisers are spending more than ever before in digital, it has found that many advertisers lack the transparency and control needed to make the most of their digital investments. With digital continuing to grow in importance for advertisers globally, it is essential that advertisers overcome these challenges and find solutions that fit their agency. As the industry grows, more agencies are asking, “Where is the money going?”
But with the question of where the money is going agencies are faced with a few challenges.
Advertisers lack detailed insight on digital media budget allocation. According to an International Advertising Association and Warc study, Nearly two-thirds, or 63%, reported either no insight at all or only high-level reports from their agencies. This leaves only a third of advertisers who get full transparency into all costs (including third-party fees) associated with digital media spend.
Advertisers highly underestimate costs associated with fees and media arbitrage. For most advertisers, digital advertising today involves a complex array of partners and intermediaries, each taking a fee for their part of the process. According to information provided to K2, markups on media sold through principal transactions can range from approximately 30% to 90%. Sources also indicated that media buyers are sometimes pressured and incentivized by their Agency Holding Companies to direct client spend to this media, regardless of whether such purchases are in the clients’ best interest.
Advertisers and agencies that take control of media buying with a self-serve platform could see an increase in transparency of where media dollars are going. Advertisers should look to bring in the technology needed to create transparency and increase control while still utilizing their agency’s strengths in strategic planning, buying power and creative thinking. At the end of the day, transparency is the key to minimizing waste. Forty percent of advertisers believe that the single most effective way to manage digital media waste is to use a tool that provides transparency to their digital media spend. They should look towards their media buying teams for guidance on how to best approach working directly with advertising technology vendors who can offer the ROI and transparency to help agencies grow.