The Future of Trading: Essence head of media Mark Syal on knowing the price and value of advertising

Knowing the price and value of advertising

We all know there’s value in paying more for something that will last, like a designer watch. And there are times when it’s simply not worth paying a premium. And yet, when it comes to advertising, brands often accept the opposite when buying media.

Price vs value

This argument has been going around in circles in the traditional media world for some time now. Should brands focus on price optimisation within an agency deal that trades media outside of the planning process? Or should the focus be on a tailored and bespoke media approach that responds to the brief?

The right course of action depends on your brand, your audience and your business requirements. But with digital media, there are many other factors to consider what determines the true value of advertising.

During 2014, digital media ad spend in the UK is forecasted to exceed all other channels’ media spend (if you include paid search). With Digital, we can incur all sorts of premiums to reduce wastage, and increase targeting and cost per thousands.

There has been constant deflation within digital display media for the last 15 years. The low costs would appear to show that digital media value has reached a peak. But many ads are served into positions that are not visible, or not suitable for brands to appear in. Opting to pay a premium to avoid this is clearly a sensible course of action.

There is increasingly sophisticated technology at our disposal to deliver targeted, effective advertising. We can deliver ads to those that give us permission. We can ensure that people can see our ads as they scroll through a page. We can target or exclude specific demographics with amazing accuracy.

A call for transparency

The world of supply and demand in digital is far from crystal clear. There’s a danger in this new world of real-time bidding and buying advertising through media exchanges to lose visibility of where we advertise when we focus on who we advertise to, and how much it costs. That's a real risk to brands’ reputations and the relationships with their customers. They may save a penny, but should never value price more than ad context and brand safety.

Arbitrage adds to this lack of clarity. Markups are now applied at different stages in the supply chain before advertisers pay a final inflated price. Some agencies have become both buyer and reseller of inventory. This crosses a line of responsibility and neutrality that was previously sacred. All these things obscure value and raise the importance of price.

What’s the value of advertising?

With ever smarter technology we can make advertising more valuable to both the brand and the consumer. Brands can get their ads in front of people they want to reach with products and messages. Consumers could commonly receive ads that are interesting, entertaining, and useful to them.

How do we do this? We stay in touch with the latest in digital planning development. We maintain the traditional link between trading and planning functions. We trade at an agency level to help the delivery of the right plans for our clients’ needs. And above all we prize transparency. We give it to our clients and we demand it from our suppliers.

The Drum has revealed the nominations for the Digital Trading Awards. Find out more at digitaltradingawards.com