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Media buying’s ‘race to the bottom’ on price may be over, finds study

“A race to the bottom is not a winning strategy in today’s fragmented market”

There has been a “dramatic shift” in their priorities of media buyers, from focusing on cheapest ad space to quality and effective targeting as Google’s third-party cookie plans and incoming privacy regulation alter the business landscape.

That is according to the 2021 ID Comms Global Trading Survey, which in December polled 162 media, marketing and procurement professionals who manage $20bn of global ad spend between them. We take a look at the study.

So, what’s changed?

  • There was a dramatic shift in favor of quality buys over commodity buys. 92% of respondents agreed advertisers that treat media as a quality buy rather than a commodity buy are at an advantage. That’s up 20% in two years.

  • Procurement stakeholders and marketing respondents saw huge agreement bumps. Clients, which ultimately foot the bill, had more trepidation. Only 64% agreed.

  • 84% of respondents agree or strongly agree that media auditing was critical to buying good media. That number remained stable, although 23% more were in the ’strongly agree’ pool than in 2018. Convictions have grown but 16% remain unconvinced. The biggest shift was from advertisers. Those strongly agreeing shifted from 31% to 67% in two years. Agencies remained skeptical. Only 29% strongly agree.

  • ROI and business results were the most important signals of a successful transaction, ranking ahead of better targeting and financial transparency. Lowering prices fell to the bottom of the list.

  • Of the advertisers that want to inhouse, almost half (48%) blamed talent issues as their biggest challenge, way ahead of a lack of quality data (20%). In 2018, there were few concerns about access to quality data.

And why has it changed?

  • Mark Andrews, digital consultant at ID Comms, said: “The rapidly changing landscape on data and third-party cookies is causing many advertisers to look closely at the data they use to target and measure advertising.”

  • He said those trading on third-party cookies will face “significant challenges” when the data and approaches “disappear”.

  • The study also shared anonymized quotations from pollers. On price, one advertiser said: “A race to the bottom is not a winning strategy in today’s fragmented market. That just means less reach and more frequency to the same audience.”

  • Another said that pricing guarantees dictate many of the decisions. It is hamstringing decision making. ”Relentless client prioritization on lowest pricing is detrimental to the client’s strategic interests.” Another acknowledges that trading still dictates planning.

  • One said that agencies are “keen to buy on platforms that are less labor-intensive“ and that “some of the relationships with DSPs and data providers are a little too cosy and self-serving”.

  • Day-to-day transparency is an unrealistic expectation, said the final pollster. They believe that monthly-to-quarterly audits will suffice.

This is part of The Drum’s Future of Media briefing. You can subscribe to it here if you’d like it your inbox once a week.

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