Do advertisers benefit from full transparency on their media costs?

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“Inventory buying” is now widely practiced by advertising agencies, but without providing any clarity on the real costs involved. Customers end up suffering.
Image credit: AFP

Until digital dominated advertising, trading in media was straightforward. Broadcasters and publishers provided spaces or niches where brands could advertise – on TV, radio, movies, in print and outdoors.

Agencies have purchased spaces or niches for their clients, targeting audience segments most relevant to their clients’ products or services. The agencies played the role of “principal” for the trade. They re-billed the net media costs to their clients, plus any agreed commission. Media costs were transparent.

New media

Things are very different now. The established model was first used for digital media, but this is not the only way digital is marketed today. Digital publishers can offer unlimited media space, as websites and digital platforms are not limited by the number of pages in a newspaper or magazine, nor by the time allotted for TV or online ads. the radio.

As the digital media space knows no bounds, agencies have started buying media stocks themselves – wholesale – and reselling them to their clients. In the world of inventory media – also known as proprietary media – agencies act as both “agent” and “principal”. This creates inevitable conflicts of interest as agencies act in their own interests – and those of their clients.

Agencies often insist that advertisers purchase inventory media with strict no-audit clauses. It doesn’t tell how much they paid for the space and therefore how much margin they are making on the deal. This is a challenge, as inventory media can include a “bargain basement” or empty space – space that publishers could not sell – as well as free media given to agencies as part of the campaign. ‘wholesale purchases.

It’s this lack of transparency inherent in the inventory media business that means advertisers have no idea how much it costs, what it’s worth or, in fact, whether the agencies are reselling the space they’ve got. been offered.

A price to pay?

The agency’s argument is that no-audit clauses in media inventory agreements are a fair trade in gaining access to “high-value” media. They claim that because they buy the stock before reselling it, they take all the risk and therefore should be allowed to resell it at whatever price they choose. And yet, creating a market with a fundamental lack of transparency built in should always make blind partners wonder, “Yes, but what have you got to hide? “

Often, agencies say that using inventory media allows them to achieve real cost savings for clients, but these may depend on sub-optimal media plans, cobbled together with a long tail of inappropriate or non-inappropriate media. relevant. Advertisers should take into account that if publishers or sellers could not sell the inventory themselves, but instead had to sell it through a wholesaler, then the media may not have been so desirable anyway. Even in a clearance sale, salespeople and agencies will both take margins, cutting the client’s budget to the bone, slice by slice, and in a non-transparent way.

Inventory media

All major agencies and holding companies have their own divisions for purchasing inventory media or third parties. Most have operations with different names for each type of media, as inventory media is now prevalent in all categories. Advertisers need to seriously question this practice, as TV, radio, print and display inventory is limited, unlike the digital media space.

So, with non-digital inventory media, agencies either buy less desirable media at slash prices or get in the desirable media chain. In the long run, that’s not good for media owners or advertisers.

Inventory media adds another level of opacity to media business at a time when transparency has never been so important. Major social media platforms self-certify performance and broadcast to the public, seated behind walled gardens. This approach is now extended to agencies acting as intermediaries in the management of influencers and bloggers.

This casts a shadow over modern media and marketing, which means less transparency for a larger portion of brands’ total marketing spend.

Transparency has been a media priority for the past five years, and during that time many advertisers have invested time and energy to tackle the problem. Ensuring that transparency is built into contracts with their partner agencies is an effective way to achieve this.

The same goes for the terms used by agencies and suppliers to describe the different categories of media. Media inventory is an area where urgent action is needed.


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