Transparency is a buzzword in today’s digital marketing landscape, but with very good reason. Only when both brands and agencies fully understand campaigns can we work together to make sure they deliver optimal bottom line growth.
Transparency covers a multiple of nuances but can be boiled down to two main factors – agency revenue and campaign visibility. For this post we are focussing on agency revenue, however further posts as part of my ‘Media Explained’ series are on the way.
Agency revenue
This has been one of the hottest topics in the industry for many years now and still continues to be, so what are the key facts:
- Most suppliers that digital media buying agencies work with offer a rebate back to the agency. This means that agencies may be making more money out of the media buying than brands are aware of. However, the industry is seeing a change here, as more and more agencies are now working transparently.
- Within an agency’s own buying platforms (e.g. DV360) there is additional opportunity to add a higher margin, and as such agencies tend to make more money using these platforms than from buying through a supplier.
However:
- An agencies DSP is a very complex platform and takes considerably more managing than a supply-side buy so a higher revenue is often required to facilitate the management time.
- Agencies do not always declare the full revenue made against media buys because clients are often unwilling to pay the equivalent management fee. This may be partially because agencies do not fully explain the scope of the tasks required in setting-up and managing a campaign.
What you can do as a brand…
- The first step to working transparently is understanding the situation. Ask the agency if they are receiving rebates or adding additional margin to their campaigns.
- Spend the time to understand the processes and management required to run campaigns.
- Weigh up the pros and cons of the agency working with suppliers via their own DSP. Suppliers can take the heavy lifting from the agency, but a portion of control is lost.
- Agree a transparent fee that works for both parties. Ideally one that can be flexed across Paid Media – PPC, Paid Social and programmatic so that hours can be flexed as needed.
- Consider fixed fees with a floor (minimum) amount per month, rather than a ‘percentage of spend’ model, as work does not increase proportionally with media spend. This means that the agency is not incentivised to encourage brands to spend more.
- Regularly review fees ongoing to make sure that the agreement remains advantageous for both parties.
Whilst agencies are becoming more transparent in their ways of working, there’s a still a long way to go before we achieve full transparency, and before trust is fully re-established between agencies and brands. At connective3 data transparency is fundamental to our way of working, to ensure that we create a mutually beneficial partnership between ourselves and our clients.
