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Brainlabs lifts the lid on why your programmatic media agency is (probably) ripping you off

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By Michael Feeley, Founder and chief exec

September 8, 2016 | 5 min read

In June of this year, a shocking report from the ANA Media Transparency Initiative drew back the curtain on the commonplace practice of undisclosed media rebates among media buying agencies. A hangover from the early days of traditional media buying, where sidedeals and sweeteners between media buyers and publishers were commonplace – usually at the expense of the advertisers – the practice is now rife among those purchasing online display ads for clients.

Grace Kaye, head of programmatic at data-led digital marketing agency Brainlabs, says: “The ANA report is pretty damning. The majority of media agencies are basically taking kick-backs from media providers or getting specific service agreements based on securing particular deals for media owners. They might be getting cash rebates or free media, but never telling their clients. In some cases, the mark-ups involved are between 30 per cent and 90 per cent of the real cost of the media space being secured.

“It’s been something that media agencies have done since the beginning of time. In programmatic, it’s even easier with the ‘magic mark-up’ button – a setting which sits within DSPs that allows the agency to change their mark-up with a couple of clicks without the advertiser knowing. Client pushing you hard on fees? Up the mark-up. Need higher margins? Up the mark-up.

“That is compounded by the fact that many advertisers have somehow got themselves into a situation where they don’t own their own first-party data, allowing media agencies to hold clients to ransom if they ever try to leave. It’s been an industry norm that you don’t share that kind of information.”

Kaye finds the muted industry reaction to date to the ANA findings extremely telling. “There’s been very little response from the industry for one very good reason: most of them are guilty of the practices highlighted in the report. The ANA found that a lack of transparency was rife across every type of agency – large, small, independent or holding companies were all found to be operating below board, and in multiple media modes too. It’s like the wild west out there.

“For example, if we get a new client who has been working with another programmatic agency for a while, in the vast majority of instances, they simply won’t hand over the data we need. Why? Because they can’t reveal the mark-ups that they’ve been charging their former client. If we had the historical data, we could pull a report and find out in seconds.”

Changing times

In the early years of programmatic media buying, when very few senior corporate marketing managers had much experience of online display, it was easy for unscrupulous agencies to pull the wool over their clients’ eyes. However, Kaye believes that things are changing rapidly.

“There’s been a real shift in client attitudes over the last year. Previously, it was a case of us saying to clients, ‘you really need to own your own data, you need to create an attribution model, you need to have someone in-house looking at everything holistically’. These days, clients are coming to us with a much clearer idea of what they need and simply ask us to help them do it.

“There’s a growing realisation among corporate marketers that they need to own their own data and they need full transparency around their programmatic spending. They’re beginning to ask the right questions upfront, rather than many months into their agency arrangement.”

Brainlabs was founded in 2012 by former Googler Daniel Gilbert when he realised that most of the agencies he was dealing with lacked the technical and mathematical expertise required to run successful paid media campaigns. Four years later, the award-winning agency now employs a team of 80 scientists, strategists and marketers, and works with clients including Domino’s, Secret Escapes, JD Sports and Unicef.

Kaye says: “We’re specialists in what we call mathematical marketing, running campaigns on search, social and display networks. Full transparency has been built into our business model from the outset. We’re not interested in hiding behind a ‘complex eco-system’. We’re more interested in training clients in what we do so they can understand the value we deliver.

“We have no magic mark-up button. When you buy media from us you buy media. What’s more, we make sure our clients own their own data. That’s our way of saying to clients that if they find someone as good as us at this stuff, they’re free to go. We’re confident enough to know that, unless the industry decides to clean up its act, we’re offering a genuine alternative to what’s out there.”

If you would like to find out more about The Drum Network and how it can help support you and your growing agency, visit thedrum.com/network

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Brainlabs was founded in 2012 by former Googler Daniel Gilbert. After training some of the UK's top agencies, he realised they weren't very good. They lacked the...

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