It’s common practice in today’s ad world for planners to divvy up media dollars among a number of similar providers in order to test performance. Since most providers have the full array of media capabilities in their toolbox, this may seem like an easy digital advertising strategy to compare multiple partners at once, apples to apples.
While some reps may feel like it’s their duty to their client to compare providers, this actually can have some drawbacks. If you’re using a multi-vendor digital advertising strategy, you might be missing out on some significant benefits, which we recently explored in a Q&A session with our COO Jay Friedman:
1. How did this practice of parsing out media dollars among multiple vendors come about? What do you think is the driver of why media planners do this?
In the early-mid 2000s there were so many ad networks and ad tech companies launching, each gathering tens of millions of dollars in venture capital money, that agencies had (justifiable) difficulty sorting through who did what and who was better. This was the first time the media sale had to be trusted without being able to be verified. What I mean by this is that sales reps would tell agencies that “the algorithm does this and that,” but the buyer couldn’t verify it. The buyer could always verify print circulation or TV ratings, but this was unverifiable, especially in the early days. Because there was no way to tell who was best, this “bake-off” situation was born and agencies defaulted to comparing ad tech vendors based on performance.
2. How should planners handle buys that are only accessible through specialty providers — i.e., the very newest/niche native, video or mobile products that advertisers want to test out?
Agencies can’t ignore these, but they shouldn’t test them just because they’re new either. Three things agencies should remember: First, just because it’s new doesn’t mean it’s good. It has to align with the target audience. Second, it should align with the target better than where the agency is already spending. Third, there will always be ten times more opportunities that are actually worth buying than there is budget. The very best opportunities that do the very best at achieving marketing goals should get the money since buying everything that clears the threshold is beyond any advertiser’s budget.
3. What does an agency lose by parsing out budget among multiple vendors?
1) Frequency control.
2) Any one vendor getting the optimization benefits of having all of the data from which to build better intelligence. More data ALWAYS equals a better ability to optimize.
3) Confidentiality and trade secrets. Parsing out budgets among multiple vendors is like blowing a dandelion in the wind. All of the performance intelligence about your brand — what media works, what audiences work, their seasonality — gets seen by multiple vendors. These vendors have turnover like anyone else, but the impact on your business is multiplied when you’ve spread knowledge around. Their employees go to other places and have no reason not to share this knowledge with your competitors!
4. What are some of the non-media challenges you’ve encountered when an advertiser works with multiple vendors?
Billing reconciliation can become challenging and actually costly to an agency. Additionally, using five vendors requires five sets of ad tags, five sets of reporting (even if you have an ad server you should pay attention to each vendor’s own reporting), five IOs and five invoices.
5. There are some obvious practical advantages that consolidating and choosing one digital advertising strategy and programmatic partner would have for an advertiser — a single point of contact for all media buys, standardized reporting and reduced administrative costs. Are there any less obvious benefits that advertisers should consider?
As mentioned above, it consolidates optimization learning into one place. This speeds up optimization and helps an advertiser get better performance faster. Managing frequency is also valuable. Finally, there is the ability to influence your vendor’s product planning and roadmap. If you’re spending $100k/month with five different vendors, you’ll not likely get heard by any of those vendors regarding products you’d like to see built. If you’re spending a half a million per month with one vendor, your voice will be heard loud and clear!
6. Why do you believe some advertisers aren’t cutting down on the number of programmatic vendors they work with?
FOMO (fear of missing out) is #1. So many companies with so many fancy logos — what if I pick the wrong one? But I’d worry more about picking too many than picking the wrong one. I also think there is a lack of understanding by advertisers around what challenges come with spreading out the budget. Finally, I think advertisers think if they never commit they’ll never get burned. Kind of like, “If I always date multiple people and never marry anyone, I can’t get too hurt!” Well, correct, but as anyone who’s been in love will tell you, it’s better to have loved and lost than never to have loved at all!
7. There is a risk in putting all your eggs in one basket. How can agencies be sure they are choosing the right digital advertising strategy and programmatic partner?
There’s the chance you can choose the wrong partner. I think that’s OK. I think it’s better to choose a slightly less-than-perfect partner and commit than it is to spread spending around for all of the reasons above.
Are you ready to cut to the chase and get to what really matters in selecting a digital advertising strategy and a programmatic partner? Before you send out that RFP, start by asking your top prospects these five questions.
Good luck in your selection process and contact us today if you want to find out what makes Goodway different.
Jay Friedman is the President at Goodway Group and has been involved with programmatic media since the first ad exchange was launched. You’ll find Jay writing about the stats, economics, and “behind the scenes” elements of digital media, often finding a way to work in references to FC Barcelona for effect.