A study from the World Federation of Advertisers (WFA) — a trade body that represents brands such as P&G, L’Oréal, and Emirates — found that nearly 90% of the advertisers it polled are reviewing their programmatic advertising contracts and demanding more control and transparency.
The WFA interviewed 59 of its members, who represent global ad spend of more than $70 billion. Around 16% of their budgets are spent on programmatic advertising, up from 10% in 2014.
Transparency in the programmatic advertising market has become a hot topic in recent years, given concerns around bots, ad fraud, and suppliers taking a “principle position,” where they sell back media they have bought directly from publishers at a marked-up rate. Marketers are looking for reassurances that they are getting the right value for their advertising spend and that their programmatic suppliers are not taking too big a cut of their budgets that could be better spent elsewhere.
“We call it media transformation, where we’re seeing our members in those media roles refreshing a lot of what they do. Part of that is about transparency and part of that is about technology,” said Matt Green, the WFA’s global lead for research.
But while many clients are reviewing their programmatic spending, Green explained the WFA was seeing many clients continue to use agency trading desks. The study found 29% of respondents were satisfied with the level of transparency offered by their agency trading desk, up from 21% in 2014.
According to the report, use of private marketplaces, where advertisers have a one-to-one relationship with a publisher, was on the rise. 67% of the WFA members said they were investing more into invite-only exchanges.
The survey also found that in-house trading desks were used by one in five of the WFA members, something that was only being conducted at the fringes of the WFA members two years ago.
P&G, a member of the WFA, is one of the big names to have brought programmatic buying in-house. L’Oreal, another member of the advertising organisation, was reported by AdAge to be investigating building its own trading desk.
A number of large technology companies are also moving into the media buying space and providing software that enables advertisers to manage their own media buying without having to go through a middle man.
In 2016, German enterprise software company SAP launched the media buying platform Exchange Media, which says on its website that it enables “full transparency and simplified processes that increase overall efficiency by facilitating a unique direct real-time interoperation between advertiser and publisher.” Adobe’s Marketing Cloud solution also enables programmatic buying which it touts as a “truly transparent system.”
IBM has been using its artificial intelligence engine Watson to more effectively target consumers and plan its own marketing campaigns. Ari Sheinkin, VP of marketing analytics for IBM, told Business Insider that Watson helped it reduce its cost per click by 71% compared to its previous buying methods.
“Traditionally agencies use some mix of human intuition and experience with algorithms and programs. The limitation of that really has to do with the volume and velocity of data that’s involved,” Sheinkin explained.
Sheinkin said that after having used Watson exclusively for IBM’s media campaigns the company is now presenting the product to potential clients. Having come out of the testing stage, IBM is now working on collaborations between its iX digital agency division and using Watson for programmatic media buying.
The WFA’s findings come around six months after the Association of National Advertisers revealed in a high-profile report that kickback schemes and other non-transparent practices were “pervasive” in the US media-buying market, which included the programmatic landscape.
While the report didn’t name any agencies, the industry’s largest agency groups and agency trade body The 4A’s denounced its methodology and findings, arguing that the anonymous nature of the findings had the potential to smear the perception of the entire industry — including those not involved in such practices.
The report has led to many big-name brands auditing their media agencies and firming up their contracts. Business Insider revealed earlier this month that some US agencies are paying out settlements to clients to avoid being fully audited by them.
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