How to spot the pitfalls in the murky world of online media buying
Buying online media can be a shady business. Recently, I was asked for an overview of the potential pitfalls. I thought this would be useful to share:
Chain buying
This is the biggest issue in media buying: suppliers buy off each other and charge margin at each step in the chain. Some suppliers add value with their services, such as optimisation algorithms, or scale economies, which can be worth the extra cost. Although with some charging 40-60 per cent, I struggle to believe that it’s worth it.
Where the scam really begins is when agencies put their own networks on the media plan. They then charge agency margin and network margin. It’s easy to hide their own networks in a plan under different names, so make sure you do your homework or get someone who’s in the know to check the plan. They will say it’s their own buying desk, but really they are often just white-labeling another company's trading deck and using that as a smoke screen to charge clients extra margin.
Transparency
To see through chain buying, you should make sure contracts allow you to see who is involved through to the publisher, wherever possible – ie how much is actually going to the website or app? It’s ok for companies to charge margin, but you should be aware of what that margin is and how they are adding value.
Incentivised traffic
Avoid it. It’s nearly always poor quality as you’ve twisted the consumer’s arm to get them there.
Network buys
Some sites try to include 'network' buys. For instance, you might think you are buying on the Daily Mail, but really you are just buying exchange inventory targeting Daily Mail users. They then charge margin on top, claiming the value is in the audience targeting – exposing your ad to Daily Mail users while they are on the network. This might be ok, but you should be aware of the difference between companies selling on their own properties vs. arbitraging other inventory.
Managed services
Some networks and ad companies provide “managed services”. You may be paying a big agency to manage your media, but in reality a smaller media publisher who provides managed services will be doing the work, which you are paying for again in the media. Some of this is ok, too much is not.
Agencies should offer complete transparency, informing clients of any margin they make. Clients should know what they are paying for and be able to see the extra value any services add. It pays to be suspicious, ask questions and do your homework.
Simon Mansell is CEO of TBG. You can find him on Twitter @simonmansell