Are you paying the right price for your programmatic media?
‘Right’ is subjective, but we’re realists – advertisers, agencies and vendors want a system that works for all and is sustainable.
Chief marketing officers and marketers are recognising that pricing transparency in programmatic advertising is a big challenge. To date, it has caused friction between programmatic vendors, publishers and buyers.
Following on from our first article in this series ‘Programmatic and the question of price transparency’, these questions offer a starter for advertisers who want to understand the costs of media, which should lead to productive and trusting relationships.
#1 How transparent is your price structure?
For most advertisers, this is the key question, so you may as well be direct. It is entirely understandable that you want the ability to view CPM-based fees and media agency fees in clear, separate formats.
#2 Do you declare your margin? How do you use you margin?
All providers charge a margin for their services. It is interesting to know how this margin is going to be declared to you on the invoice. Without this information, it will be hard for you to form a clear picture of ad effectiveness and performance.
Understanding how margin is used is also a good indicator of how progressive your agency or vendor might be/wants to be. Reinvestment in R&D, technology and/or infrastructure are the ‘top’ answer, along with people.
This leads to the question, what is a reasonable margin? It’s tough, but if you’re agency is willing to declare their margin that’s positive. If you think it looks ‘high’, but they re-invest it and, importantly, you see great results then the question becomes moot.
High margin is not necessarily bad if it is being reinvested to improve performance and you are seeing results.
#3 Do you have publisher/vendor agreements in place?
You’re asking two questions here; 1) will you benefit from any agreement efficiencies (will they be passed on?) and 2) will your campaign be planned objectively? Unfortunately agreements can come at the cost of an objective decision-making process, reflecting ‘rebate’ over the advertiser’s all-important key performance indicators.
#4 What tech in you stack is proprietary and what do you use a third party for?
Whilst some vendors use their own hardware and software, many will opt for third party solutions. This may mean that a second margin is payable on top of the vendor’s own margin. It is important to understand this situation in order to maintain an accurate picture of your outcome.
#5 Do you trade with or supply media to other tech providers?
Both of the above are common practice and can help to fulfil media buys but to some extent, they both mean that your data and the control over your advertising enters a subcontracting relationship over which you have no control. It is important to understand when and where these subcontracting relationships occur.