Five signs your media agency is delivering fake performance

Optimise Media's Chris Barron lifts the lid on the realities of 'performance advertising', and how the phrase has been hijacked by media agencies and programmatic ad tech companies.

Performance media is a phrase that is bandied about loosely and almost indiscriminately by digital agencies and marketers, often to the detriment of the advertisers it was designed to serve.

By definition (and according to IAB Australia’s glossary) performance advertising is where advertisers pay based on a set of agreed upon performance criteria, such as a percentage of revenue driven or on the volume of sales leads delivered e.g. cost per action or cost per lead etc.

In recent years, the term “performance” has been hijacked by media agencies and programmatic ad tech companies to refer to any digital activity where performance is tracked and measured.

No guaranteed clicks, leads or sales. It does not need to meet any client performance criteria, as long as it is measurable and intended to deliver performance goals.

Cleverly, this self-serving loosening of the definition of performance allows agencies and ad techs to ensure they meet their own objectives (i.e. spending money and retaining margin), but unfortunately not those of their clients (i.e. delivering new customers cost-effectively).

Low expectations are set amongst clients without the guarantee of performance-based objectives being met, despite delivering what they refer to as “performance” activity.

The way this often plays out is that a client will identify their cost per action (CPA) or cost per lead (CPL) target cost, and the agency will undertake a “best endeavours” approach to work towards that outcome, without any guarantee of hitting it.

This might mean that a client invests significant budget into programmatic spend for up to six months and still not be anywhere near the CPA target cost. As long as the CPA outcome is reported and monitored, even if several times higher the client’s target, that is still considered by the agency to be “performance” activity, which it simply is not.

Some agencies and marketers will chalk up modest improvements on CPA over time as a victory, despite being nowhere near the client’s goal CPA. If cleverly positioned from the outset, the client may even be brainwashed into joining the celebrations.

At a time when performance-based outcomes are becoming the standard for advertisers, and rightly so, we should be demanding more transparency, more accountability and ultimately a commitment to achieving performance objectives from the “experts”, being agencies and ad techs.

So you may ask, why would an agency not offer real performance media outcomes to their clients? Well, there’s a couple of reasons…

Firstly, if an agency is locked into CPA outcomes, they must work a lot harder to spend client budget in identifying opportunities that will meet CPA targets. This is time consuming and labor-intensive, as agency personnel may need to negotiate hard with individual publishers to deliver inventory on a real performance basis. Trading desks, which have become the booking mode of choice for media agencies, do not offer inventory on this basis.

Secondly, not guaranteeing CPA outcomes allows agencies to “test and learn” for a considerable amount of time (and budget) without any undertakings on the results – so budgets can be spent freely and agency commissions and service-level agreements achieved with minimal effort and minimal risk of leaving budget unspent (i.e. agency commission not collected).

Thirdly, loose “performance” strategy allows agencies to book inventory that is easy, automated or offered through “preferred suppliers” who may or may not provide undisclosed rebates or retained margins to agencies. None of which is in the interest of delivering clients performance-based outcomes.

All of that said, there are some agencies who get performance, understand its true value and do it well for their clients. But if you’re not lucky enough to be represented by one of the good ones, here are five signs your agency is delivering fake performance:

1. Your agency talks a lot about “performance” but only ever buy for you on a CPM or CPC basis

2. When questioned about a lack of real performance-based activity on a guaranteed CPA basis, lack of “incrementality” is cited, despite no evidence of incrementality in other components of the digital plan

3. Complex attribution models which spuriously award conversion attribution to display/social/video channels, despite low demonstrable click-through/engagement, viewability or evidence of these activities driving actual sales

4. A focus in reporting on “blended CPAs” and “overall CPAs” from digital strategy rather than a granular view on CPA by specific activities. Ask your agency to report on what viewable impressions, clicks and conversions are actually being driven by each activity along with justification of weighting based on the performance of each

5. Failure to split out internal traffic CPA outcomes (i.e. retargeted/existing/branded search) from incremental sources (if they’ve already visited your website, or searched for your brand, you might well have acquired them anyway!)

Chris Barron is Optimise Media’s managing director, Australia & New Zealand.


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