Paying for programmatic: ‘clients need to pay for outcomes, not time’

In a session at yesterday’s Programmatic Summit in Melbourne, hosted by Ashton Media and IAB Australia, a panel discussed the work agencies do for clients, and how programmatic work is remunerated.

The session, entitled “How are agencies accommodating what clients want?”, moderated by Ryvalmedia’s general manager, Marcus Betschel, also featured Sarah Melrose, managing partner at Admatic, Lee Foster, head of digital and data at Nunn Media and Benton Goodbrand, Resolution Digital’s Melbourne general manager.

L-R: Betschel, Melrose, Foster, and Goodbrand

During the panel discussion, the trio fielded questions from Betschel, and argued that the revenue models are no longer reflective of the effort that goes into programmatic advertising now, compared to what may have been more simple five years ago.

Melrose argued the model needs to change to recognise the effort that goes into programmatic, while Goodbrand noted that “the commercial models that we have, don’t always fundamentally address the realities of the programmatic world”.

Nunn Media’s Foster put forward the opinion that in order for it to be accurately reflected, there would require a “cultural shift” including clients beginning to shift how clients pay for outcomes, rather than just time spent, this being non-restrictive to programmatic.

“When you talk about a commission structure, when you talk about a FT structure, you’re paying for units of time, you’re not paying for outcomes. So for me, that is certainly where I think, not even programmatic, but for social, search, the offline conversation, needs to begin to move to.”

When asked what the main hurdles are in this transition, Foster said: “I’ll probably get a slap on the wrist for this, but I’d say procurement divisions are probably your number one hurdle. But again I am sort of preaching to the converted there. Without knocking those guys in procurement too much, we need to start the conversation about fundamentally thinking about what agencies are doing for their clients [..] all of our tools are geared towards outcomes, but clients are still choosing to pay us in units of time.”

Melrose also agreed that being remunerated on outcomes would need to go “all the way down the chain”, extending to tech partners and beyond.

Goodbrand agreed an outcomes-based model “does make a lot of sense”, however said there are many factors involved that are sometimes out of the trader’s control and would require a “full-spectrum shift” in order to be achieved.

Betschel asked the panel whether change could be possible without clients being full educated about programmatic itself.

“The education piece is massive,” said Goodbrand. “I think client and even agency partners understanding more and more about it is instrumental for us to do our jobs better. And from a client perspective, the level of trust that is gained by being open around where their money is going, then shifts the dial to us doing better jobs across the board, because they’re not challenging us “are you spending the money appropriately”, it’s like ‘are you spending the money to get the outcomes? And do the right job, and does it make sense to pay more in certain instances?'”


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