Why Mark Ritson is wrong about ‘dodgy’ programmatic buying
Willie Pang argues that programmatic is not a dodgy $7 bill, as Mark Ritson would have you believe: it’s Apple Pay.
Over the weekend, I read Professor Ritson’s opinion piece on the flaws of programmatic. His depiction of the “channel” as being a dodgy $7 bill was, in my humble opinion, a step too far in demonising what is perhaps the most important technology shift in the media industry. Yes, Mark’s sensationalism makes for a captivating fiction read but to me, it’s a little bit of the blind leading the blind.
By sitting idly and politely, it strikes me that the digital leaders (people and organisations) in the industry are hoping that detractors like Dr Ritson will simply “lose interest” or that the industry will roll on and their arguments will simply become irrelevant.
Willie Pang tackles ‘dodgy’ programmatic buying
The truth is that there is genuine confusion amongst marketers and it’s into this knowledge vacuum that the grenades are being lobbed and amplified. In an attempt to demystify it so that everyone can arrive at their own evaluations from the same set of understanding, let’s start with this:
I don’t think Ritson is saying programmatic as technology is bad. I think he is saying the use of programmatic by some bad actors, including agencies, has been bad.
Perhaps you could tell everyone, honestly and transparently, what percentage of the dollar you buy media programmatically actually ends up with the publisher?
“Perhaps you could tell everyone, honestly and transparently, what percentage of the dollar you buy media programmatically actually ends up with the publisher?”
I keep coming back to the question of why does this matter? If, as we are often told, that clients should be paying for outcomes, then it really shouldn’t matter who gets what to reach the outcome (assuming of course there is no fraudulent activity). Do clients using affiliate marketing worry how much said affiliates spend on paid search or building email databases? No, and, arguably, neither should marketers using other channels.
Obviously publishers care massively how much of a media budget they receive, and we should all be concerned about how publishers can build sustainable futures*, but why exactly should a client give one second’s thought to whether the budget went to a tech provider or the content publisher, so long as the job gets done at the ROI they require?
*Probably by getting out of the advertising business and creating products consumers want to pay for.
Marketers should care because they could be getting more media, more exposure and a higher return from their money. Brands want to reach the consumer, not line the pockets of all the middle men.
I cannot believe how naive this remark is.
However, if the agency clearly details the costs and the client agrees to it – no argument. The focus should be on how lazy or silly the client is.
But if the agency is making an obscene mark up on arbitrage then that is plain wrong and clearly highlights what is wrong with this industry in Australia
Paying for outcomes is shaky ground. Just because you have report saying something worked doesn’t mean it did. Look at the retargeting vendors as proof.
So should client not care of real MEDIA buying cost from MEDIA agency?!??
You want to charge for targeting enabled by programmatic and adtech? Then either contractually agree the rate or be transparent.
We get it. You media agencies and networks have been getting handsome revenue and growth out of this. Poor middle management / foot soldiers at trading desks are wondering WTF they got themselves into. So they either GTFO, or defend the status quo.
But hang on, we thought media agencies were all about challenging status quo. So just WTF IS YOUR ISSUE with folks like Ritson challenging your status quo??
You know what the actual issue is? Media group / agencies has yet to find the business model for growth target that is sustainable in short-term, and iterative enough for longer term. All the high margin in programmatic did was pause the bleeding. This is all self-inflicted. Taking a step back at this stage is unavoidable but management aren’t willing to accept this hard fact so mid/juniors bare all the consequences to keep the insane paychecks of agency c-suites.
Media agencies and networks aren’t too big to fail. Publicis consolidation, MEC/Maxus merger, writings are on the wall.
So innovate or die knowing nobody’s gonna miss you.
and WPP stock double down graded yesterday…
“It took me 16 seconds to type this paragraph”
Ha…a tad rich coming from MediaCom. Let’s have a serious chat about arbitrage and transparency. Simple questions
A. Does Mediacom mark up any tech costs?
B. Does Mediacom pre-buy media and on-sell to clients at a different price?
C. Does Mediacom/Group M get rebates from Facebook and Google that are not passed back or declared to clients?
A) No
B) Not Mediacom, but answer is Yes, if you consider GroupM Inventory as that is sold to Mediacom clients. GroupM buys up front, at its own risk, at a discount, to then try and onsell to GroupM clients. All this is disclosed to clients who have a choice to opt-in to this model.. or not. Some clients dont like it and do not participate. About 80-90% of clients opt-in and receive the real and quantifiable benefit of lower cost inventory.
C) No. I cant say for sure as its only hearsay, but I hear other agency groups take rebates from Facebook in particular, but GroupM/Mediacom do not.
On point B) above…
I was a client of a Group M agency for over four years. Not once was a conversation ever had with the transparency you describe. In fact, the more digging we did, the more opaqueness we discovered.
Rebates are as common as a cold. Many businesses wouldn’t write any revenue if they didn’t give back a rebate. Just because you call it something else doesn’t mean at the core it isn’t a rebate
Correct. Many many ways to extract value from a media vendor without calling it a rebate.
Excellent if rather nebulous push back. Just one correction;
“Dr Ritson’s somewhat outlandish example of 25 cents in the dollar”
…is neither outlandish nor mine.
Its the figure quoted by the world’s single biggest marketer Marc Pritchard from P&G who cited it last month at Cannes as a measure of all “all of the stop-offs in the middle and fraud” that make programmatic “murky and fraudulent”.
https://www.marketingweek.com/2017/06/20/pg-marc-pritchard-clean-up-digital/
His point is that when you take the World Federation of Advertisers recent report on Programmatic (link below Willie) and their estimate that only 40% of the client’s spend makes it to media, and then factor in the bad bots endemic within programmatic buying and you get to….25%
https://www.wfanet.org/app/uploads/2017/04/programmatic.pdf
So Willie should not really be having a go at me for my “outlandish numbers” but rather Marc Pritchard the CBO at P&G.
Given this is Willie’s single largest client at Mediacom I am sure he will keen to correct Marc’s mistakes ASAP.
With respect Mark, we need a real discussion and real numbers to have a meaningful conversation on the issues at hand. The report referred to above contains an estimate of 40%. And from that it has been extrapolated to include another estimate of bad bot leakage of 15% to get to a final estimate of 25%.
You may not have made the claim (correction noted) but I’m with Willie on this… using estimates on estimates to arrive at a final estimate, as a basis to make such a strong claim that 75% of spend is gobbled up my intermediaries in the process – is totally outlandish, and should be called out for what it is – a guess!
P&G are still a client of Mediacom, so I’m guessing they’ve corrected their view already.. just not in the public domain. After all, you’re not suggesting that Marc Pritchard would complain about this and then not do anything about it, are you?
Its not the only 40% working capital estimate out there. Have a look at Equity’s May report on Programmatic and they estimate it around that range.
Have a look at the infamous Guardian self-buying experiment from last year when the CCO bought his own inventory on programmatic and got 30%.
I don’t make this shit up you know. And Marc Pritchard is trying his best to sort this out, as you may have noticed, but he currently rates his progress of be 40% to 50%. And that’s P&G the biggest muscle in client town. Imagine the shaft that smaller Australian clients manned by well-meaning marketers who cant find their arse with either hand are getting inside the black box of turds and spiders that is……programmatic.
I’ve done some sums, factoring in tech fees, the likes of IAS, Nielsen, FX fluctuations, SSP fees, etc and i can’t see how the end client is only seeing $0.25 in the dollar.
I am backing out anywhere from $0.50-0.80 allowing for small clients having terrible rates and large clients having best in market.
Of course, factoring in fat agency/TD ‘service fees’ could be the culprit.
Don’t blame programmatic, blame the application of it. Agencies and TD’s have seen this as an opportunity to take the pi$$.
You’re not far off. You get to 40c (or 30p if you follow the notorious Guardian self buying experiment) but then have to acknowledge that this may be working capital but some of it is being blown in non viewable ads either because of duration or bot penetration of both. That’s how Pritchard got to his 25% number.
Hey Mark, thanks for the reply.
Interesting that the value equation is factoring in non viewable impressions and bots, not arguing for or against that at this point.
However if I did add then into any value calculation and used a publisher like Snapchat or Facebook I could say this;
Facebook has 5% viewability, therefore I have 95% wastage and only have $0.05 of working media in my dollar.
Factor in my fees for Nielsen and Moat then I have even less working media. Add in service charges from an agency and it is even bleaker.
Am I right?
Is the above a scary reality?
I think you just strengthened Ritson’s case!
Another day and another attack on a Ritson article that conveniently ignores Ritsons arguments – Transparency, arbitrage agency being the buyer and seller……..
Ritson strikes again! ^^^
Programmatic is rubbish. I speak as someone spending over $5m a year on various digital channels.
I have no transparency where the money is going. I can live with that – if 75% is being clipped, as long as the data is there I can live with that. As long as the data is solid, right?
Oh but the data. I then get a flurry of BS in the data. Long talks about attribution and who clicks and doesn’t click etc. Some of which may be quite valid. But, I can live with bad data if the sales are there.
Oh but the sales. I look at the sales. I don’t see the needle moved.
You have to give me *something*. Transparency. Good data. Good sales. But I get none of them from programmatic. Google give me all 3. Facebook is so so on the data but the other 2 are decent.
I raise these objections and their only response is to sell me re-marketing. Their targeting is so poor or ineffective all they want to do is use my data (which I’m already exploiting quite happily). And even then, in my trials, it performs poorly. On people who have shown an interest in my product!
I’m honestly boggled how programmatic stays afloat. Who is spending all this money to prop them up?
Hello Mr $5M a year on various digital channels,
Google give you data, sales and transparency. Thats good.
You also wonder how programmatic stays afloat?
You probably spend a lot of your $5M programmatically.
Via AdWords, via DBM, buying across AdX etc.
Programmatic is such a dirty word now, it basically means rubbish black box solution, arbitraged CPM’s, non-brand safe, low quality digital media.
As i said to Ritson, the blame should be shifted to the application of programmatic tools.
Trust me, you can find trash across Google AdX as well as YouTube via programmatic buying.
Just as you can find quality across the same Google kit, the same applies for any ‘programmatic’ tech like a DSP.
Another Mark, if you aren’t getting transparency then YOU are doing something wrong with your $5M.
Lets hope its your personal $5M and not your clients (if you are agency) because you should be asking transparency questions from all of your partners immediately vs whinging about it.
Sounds like you have some work to do, why would you spend $5m with no transparency? Maybe put that on the list today to address with yourself.
So say for example we accept that some of the money we spend gets to be seen by our clients as advertising served up programmatically.
Isn’t the most important thing still whether they then bought our stuff? Rather than argue about process, help me understand why anyone in the middle of browsing would care two monkeys about unwanted advertising that just gets in the way?
The only thing I get / surprised by this is that team mumbo let willie trackback to adnews.
First and foremost, thank you so much for taking the time to read the article. It’s an important debate and one that we, as an industry of professionals (Mark, I value your position on professionalisation of the craft), owe it to ourselves to have an open, honest and transparent conversation.
Rather than turn this into a string of nebulous argument, leave it with me to arrange a forum (perhaps with support from Mumbrella) for discussion. I’m thinking a debate and conversation night somewhere fun and lively. Ultimately we, as marketers, have a responsibility to figure this out for the CEO’s, Boards and investors that we work for and with.
Watch this space.
Yar barking mad.
Love your spin but we professionals see through spins better than the consumer, no?
An open forum does nothing if it cannot facilitate transparent and frank conversations.
Now let’s see the potential attendees
Media agency folks – gagged or trained to say things in certain ways, with vested interest or career consequences.
Publishers / ad-tech folks – either snakeoil sales or/and has relationships to keep and sales pipelines to work on.
3rd party measurement / indistry body – spineless and full of fluff. Actionless.
Mark and co – strong, unwavering view with specific demand
Mumbo and co – looking for a headline
Now if that ain’t a nebulous forum I don’t know what it is.
Why not?
I dont want to see a debate it – it’s not year 12 debating class. I want to know what the truth of the matter is. And that starts with transparency – Mr Mediacom that starts with you.
i believe my work here is done.
The problem here is assuming that media buyer/planners are well aware of and concerned about fraud to the point that they spend a great amount of time making sure that they buy fraud free. The reality is that they are underpaid, overworked, and have completely ignored online ad fraud because it’s easy to buy and they can show huge (but fake) numbers to their directors who enable them and clueless CMO clients. I see it constantly. Mom and pop clients don’t have a clue about ad fraud or effectiveness because “social marketing is free,” and large clients ignore the facts when presented.
‘Programmatic’ is a method of buying advertising based on faith.
Faith that
1. the audience targeting is correct
2. the ad will be seen by a human
3. the ad will appear in an appropriate environment
4. the cost will be fair
If you’re a person of facts and science it’s hard not be sceptical about the efficacy of buying advertising this way.
Where the hell do you get your information from?
Right now, i can buy across every major AU publisher programmaticly. Think Yahoo, Nine, Ten, SBS. Even the likes of espn, spotify etc
I can overlay audience data and verify that with Nielsen, Comscore or Atlas.
IAS, Moat etc will tell me if it is human.
They will tell me about the brand safety levels of the pages.
The cost will be based on what advertisers are prepared to pay based on perceived value.
Once you have the data, analyse it.
Make changes, take publishers out, increase investment to the good ones meeting your objectives.
Rinse and repeat.
Blind faith is for suckers.
Take control of the situation.
Ricky bobby, you should change your alias to Bobby Axelrod
Answer the questions mate.
You merkin.
Every tool you mentioned in your process stack works on probabilities. Multiply those probabilities together and you end up with something that approximates guessing. Programmatic could work if all deals were predicated on CPA and, if there was a reliable approach to attribution. Until then brands are advised to work directly with publishers for reach/awareness.
Ehh?
Approximates guesswork?
So my Atlas or Nielsen audience verification on a publisher direct buy is guesswork?
Whose doing the guessing? The publisher targeting somebody they think is my target audience?
Moat verifying viewability is guesswork?
Is it different in ‘programmatic’ vs direct to publisher?
No it’s not.
And if it is somehow different, and your results are shit, then change your buy up based on the shit ness.
At least then you’ll know you’re getting your 25cents worth….
Paul, let me be candid. MediaCom is 100% transparent with its clients. Tech costs, data costs and media costs are details on a line item basis. If this isn’t sufficiently clear, please ping me direct via LI and I’ll help explain.
Are they the media costs that go to the publisher or your published rate card? Showing your rate card might be transparent but it still doesn’t give your clients the true or transparent picture of media costs. I don’t think it is enough to hide behind – Mediacom is transparent. The discussion here is to disclose the margin from your programmatic arm.
Mediacom cannot say with a straight face that they do not make a profit on the ad tech they use.
Listing costs out on a schedule is one thing, but that does not make them transparent. If Mediacom get an adserving rate of 1 from a tech partner, but the client pays 1.1 that is is not transparency.
Mediacoms answer will be, “but the rate card is 1.5, we are saving the client money because of our buying power”. Maybe, but that is not transparency.
And we thought Mayweather vs Mcgregor was going to be exciting! The gloves are out.
“Mr or Mrs Marketer, if you really are spending $3 on technology for only $1 of media placements, please call me, I’ll help you to find out why”
Marketers are probably unaware of how much of their spend is taken up by technology as they are probably unaware of the exact ecpm the publisher is receiving after all the tickets are clipped…(its not very much!!)
If they were aware of who takes exactly what they could make a sensible decision on whether each party involved is worth their clip.
In the programmatic world there are more and more parties involved and all must make money to exist. All such parties will try and convince people that they are crucial to the whole process, but the facts are only 2 parties are crucial. 1) The Client as they have the Money 2) The Publisher as they have the Audience.
As a publisher we have run successful campaigns for clients without Media agencies, clients without a creative agency (we can build creative) clients who don’t have a DMP, clients who don’t use MOAT or IAS (we do, they rely on our figures and we are honest), clients who are not plugged into SSP’s etc etc… the campaigns have worked… We have NEVER run a successful campaign without a clients money (apart from Pro-Bono ones cos we are nice sometimes).
Similarly, I’d doubt that a client has ever run a successful digital campaign without a publisher…..
So…If the Client and the Publisher are the two most important parties in the process then they should be the ones benefitting from the delivery system that, in Willie’s own words, will be responsible for the delivery of all media placements within 3-5 years.
Are clients better results from their digital media directly because of programmatic buying? I am not sure…I cannot speak for them but is seems like there is a lot of confusion and not many clients on here shouting up in defence of programmatic.
Are publishers getting better results from programmatic buying – Emphatically NO, unless you are a site with huge volumes and stack the site with multiple ad units… Sub $3 cpms on Open Exchange do not make for a great business model…The lack of value placed on context, dwell time, clutter in an algorithmic world makes it almost impossible for a genuine content publisher to achieve the CPM’s they could from a direct sell.
So, the two most important parties in the process are not entirely happy…Who is? Media Agencies as espoused by Willie… Tech companies seem to be doing well out of the process too – They are the ones hiring Yachts at Cannes – Or more significantly either floating / getting bought for billions.
Det Lester Freaman said in the Wire “You follow the drugs, you get drug addicts and drug dealers, you follow the money you don’t where the f*ck its going to take you”
In this particular case, you follow the money and you know EXACTLY where it takes you.
The TV ratings for 25M Australians are gathered by a panel of circa 5,000 people. In the US the panel is roughly the same for 350M people. Can’t wait to see transparency headlines for TV soon, it’s only been live 60 odd years and will also soon be purchased programatically…….#guesswork
Mediacom / Group M stared Xaxis with one thing in mind…MARGIN and plenty of it. It isn’t programatic that’s broken is the business model.
Programatic exchanges and desks are simply another cog in the extraction machine. It’s the ‘value bank’ on steroids and everyone is in on it. It’s laughable to think that a client spending in Aus on Google or Facebook etc. doesn’t result in a rebate being paid to a Group M related entity / holding company elsewhere in the world..follow the money people !
The reality is most of the worker drones in agencies have no idea about the rebate deals that are done at a senior level.
It agencies and publishers can be rather creative in hiding rebates….aside from writing a cheque there is the classic training and education fund, research budget or the new favorite where the publisher agrees to buy services from agency in the guise of thought leadership.
(edited by Mumbrella for legal reasons) are notorious for this, but they are not alone.
Good read from Willie – someone I respect deeply.
However Mark Ritson
…ooops – user error.
What I was saying is I fall on Mark Ritson’s side of the fence. Alas Willie your approach is not even close to our experience at CarAdvice as a vertical specialist publisher. I wish I could say otherwise however I see it everyday in our business and have caught agencies redhanded – against specific instructions from the client CMO – moving spend into the agencies wholly owned trading desks where higher media margins are guaranteed. This is not a witch hunt but a fact and show me a local publisher producing premium content that is exactly rolling in profit from their publishing efforts and you begin to understand that programmatic has started on the wrong foot and Brand Programmatic needs more thought leadership than just citing tech and cost reductions.
I have never had one discussion in 15 years around programmatic that does not start with price. Not once. Zero conversations around delivering a better contextual result – which programmatic absolutely does not even come close to offering the same sort of deep consumers connections that specialist publishers with their specialist sales teams can deliver. Publishing is expensive and programmatic as it has far too often been done in Australia simply sees media margins shift from the publishers to the media agencies. I’ll respect programmatic when it respects and values my content: until then I see it as a dumbing down of the brilliance of great contextual medial placements and great creative deserves more human interactions at a buying level, not less.
We will not have a local publishing industry based on anything else other than UGC and clickbait re-hashes written by $45K p.a intern journos if anyone thinks that $3, $10 or even $20 cpm’s is what great content is worth.