Today’s column is written by Joe Hirsch, CEO and co-founder at Yellowhammer Media Group.
Brands are probably not surprised by the recent ANA report documenting the common agency practice of favoring their own in-house creative production firms over third parties.
Some agencies go through pains to disguise their self-interest, but if brands had really cared, they would have insisted on more transparent bidding practices or taken a larger role in the decision process.
Now that the Justice Department has signaled that preferred bidding is illegal, brands might start to care more about at least one element of agency transparency and stop throwing good money after bad. After all, agencies developed black-box in-house trading desks, partner kickbacks and fraudulent media buying from a lack of oversight from brands.
Commercial production is one of the last areas of advertising to be affected by digital advertising, but that change is coming. As digital video encroaches on the commercial production industry, and as video becomes a bigger part of media in general, additional elements to consider make too costly for brands to turn the other cheek.
Already, digital video commercials use a variety of new formats, from five-second clips to vertical mobile-phone-friendly framing. Over time, more of that video will include smart elements such as targeted imagery, and more commercials will be fully interactive, allowing someone to simply click on a sweater being advertised to buy it.
As the technical elements of creating digital video ads become more mainstream, it will be easier to discern the capabilities of various production shops. In the future, it’s unlikely that each shop will offer the same dynamic capabilities or have the same targeting or interactive methodologies. Production shops may need to shoot footage to be compatible with specific post-production technology companies or integrate with certain APIs. These differences should determine who is selected to make the creative, not agency profit.
Tellingly, one agency leader admitted that agencies will be looking for new ways to use dynamic video technology to preserve the revenue they get from their current “time and materials” TV-production outfit. To avoid this agency-friendly scenario, brands should require fully transparent RFP processes that include pricing and indications of any preferred relationships. After the fact, a detailed bill of sale should show exactly how much the agency profited from the process.
Video production is just one element of the brand-agency relationship that should have more transparency. More is at stake with video, where CPMs are higher and quality inventory is scarce, yet video ad fraud is twice as high as display ad fraud, according to a recent report. P&G is well known for its hands-on practices, and even it recently saw virtually no change in outcome by removing $100 million in bad media from its digital ad spending.
Transparency should be the foundation of every decision brands make about video, but in digital it takes a back seat to scale and low prices. Agencies often win client business with a promise of a discount, and they put millions of media dollars through underpaid, undertrained media-buying teams. These teams often don’t have the time, expertise or incentive to tackle fraud or ensure quality.
Fraud is hurting everyone in the display media ecosystem, and it would be a terrible thing if the TV media ecosystem were next as it, too, goes digital. If brands continue to allow agencies to live by bad incentives and black-box practices, they’re contributing to fraud in video rather than helping to safeguard video against future trouble.