Last week I came across a global media contract from one of the world’s largest media agencies in which there was a clause that stated;
“The client will not audit the media agencies Ad serving activity”
If you read my previous article you would know we recently saved a global brand £millions by doing exactly that, auditing their media agency’s Ad serving activity. Ironically, it’s the same agency that has put this clause in their client/agency contract. At least they’re being transparent about the fact that they don’t want to be transparent!
Ad serving is one of easiest areas in which your media agency can make millions off your digital budget.
The complexity of the process; multiple vendors, platforms and tasks involved, mean that agencies can very easily make margins on all of those activities.
Here’s how they do it.
You give your media agency a digital brief. They will charge you for the strategy and account service hours to develop a plan for how to achieve your KPI’s – that’s fair enough.
They will then charge you for a Data Management Platform (DMP), this will be one that they have a global deal with and get a significant discount on, but they will charge you the rate card – this is the first place they make money.
Depending on how you have the process set up, they will then charge you for trafficking, the hours it takes to receive the creative, upload it in a DMP and then add all the relevant tags (usually in another tagging platform or within the DMP) – this is the second place they make money, they’ll be charging you for the tagging platform and making a margin, and then charging you for the hours to manage that platform, usually a lot more than it actually takes.
They will then load all that information into a Demand Side Platform (DSP) which is what does the Real Time Bidding (RTB) for your campaign across all the publishers you want to advertise with – this is the third place they make money; a DSP buys your display ads using RTB which means your agency can manage the DSP to ensure that your Cost Per Millions (CPM) is a LOT cheaper than what they have quoted you for – in some cases as much as 80% cheaper!
Finally, they will provide you with a campaign analysis – and this is the final place they make money; they might be charging you for the analytics platform and making a margin there, but they’re also charging you for the hours to create the report, which is in most cases generated automatically and all they’re actually doing is re-formatting it.
Agencies have over-complicated Ad-Serving Operations for years so that they can keep client’s confused enough to not fully understand exactly how it all works and where they are making all their extra margin and profit.
It’s nothing short of highway robbery.
A lot of client’s are getting smarter, and demanding agencies use their (clients) DMP’s and DSP’s but agencies can still negotiate kickbacks on those services and over-charge you for their hours to manage them.
How can you stop it?
The only way to truly stop your agency from robbing you for your Ad serving is to take the entire operation in-house. It’s not as scary as you might think. The process is actually becoming more and more automated and there are platforms today (that your agencies are using) that do most of the heavy lifting for you.
But if you’re not sure you can do that, then the other option for you is to run an audit. Don’t let them audit themselves, get independent experts to do it for you. We’ve saved client’s £millions on their digital advertising budgets by doing exactly that.
Whatever you do – don’t sign a contract that stops you from being able to audit your agency’s Ad serving Operations!
If you'd like some independent expert advice on your digital media contracts, or technology get in touch...