CFOs Ought to Know
April 30, 2020
In the digital ad business, CMOs take all the heat when things go awry. Yet it’s the CFOs that get robbed blind every day and never seem to do anything about it. That’s because most don’t know enough to know how badly they are getting swindled.
And at this time of pandemic-induced economic upheaval, when every client is rightfully questioning the efficacy of every dollar, it’s hard to imagine that CFOs can let this negligence go on.
Let me explain.
As the ad business faces continual disruption, there’s no doubt that chief marketing officers are under a ton of pressure. Perhaps the worst thing that can happen to them is the dreaded screenshot nightmare. You know, the one where their brand is publicly embarrassed by being next to some kind of terrorism video or hate speech. The unfortunate ‘brand safety’ mishap that everybody sees.
Which is why we’ve seen brands react swiftly, decisively and bluntly. Pull all of their spending on a platform until the problem is fixed! And of course, pay a vendor or two to block our ads from all controversy whatsoever.
Today’s block of the day is COVID-19. Every news outlet is covering and a lot of brands are blocking ads from any mention of the pandemic. The thing is, nearly every article on the internet mentions the coronavirus in some fashion.
Whether or not keeping your brand from all virus stories is the right move is debatable, but paying for ads that don’t run is clearly not good business. If a marketer is using a pre-bid technology to keep ads away from COVID-based keywords, they are most likely paying for those ads that never run. You’d think that CFOs would want to get aligned with marketing and legal to audit that keyword list and better understand the rationale behind blocking (as some might be necessary) and billing.
Because, if CFOs are looking for things to cut, maybe they may want to start with paying for ads that never happen.
From our estimates, there is an average of 10 percent waste in programmatic campaigns, caused by impression discrepancies between the DSP and the ad-server (auction gets won vs. ad actually get delivered), where the buyer is billed on DSP numbers.
The reason this remains so prevalent stems from an inherent flaw in the programmatic ad system that few CFOs are tuned into. Broadly speaking, when ads are bought and sold via software, often the billable event — what you pay for — doesn’t necessarily correlate with a human-ad interaction. For example:
- Some brands pay whenever an ad is served (whether a person sees an ad or not doesn’t matter here).
- Some demand-side platforms bill advertisers for every bid they win (regardless of where the ads run or if people are present).
- Most ad tech companies bill based on auctions won, or downloads or other proxy numbers. They don’t bill based on only brand-safe ads, or only ads served to human traffic.
You get the point. Your brand safety tools or ad fraud protection may discount 10% of a campaign's ad impressions. But thanks to your current billing processes, you end up paying for all of them.
That’s a CFO fail, not a CMO one. Yet most don't even know what to ask.
For starters, marketers need to pose the question, “Are we able to get receipts from purchased media?” You want your team, the agency, platform, and vendor to be able to provide the details. Methodologies for detecting fraud vary from vendor to vendor, and platforms disclose what they want to disclose, as do your agencies. None of these parties is particularly incentivized to disclose that some of your money spent was a total waste.
While just having the receipts won't solve ad fraud, it allows you to get closer to the truth and start to understand the magnitude of the problem. Being able to see what ads were served where, and what ads were served to humans or bots is critical.
The final question you should be asking is, “What numbers are we billed on?” This answer can vary, at the end, you need to know what numbers because you need to know who not to pay.
By understanding the billable event and having the receipts you can start to determine what was served to a human and a bot then your path to a reimbursement will be clearer. And ideally, this would lead to a faired system overall. Especially right now, when there is so much uncertainty in the market, and budgets are likely to be on the chopping block.
Until then, the finance team does not need to understand how digital marketing works and all of the nuances between tactics and vendors. What you do know and need to know is math. Questioning the irregular and inconsistent feedback in reports (or lack thereof feedback), will force scrutiny down the chain of the media buying process.
At the root, it is your team’s questions that will ultimately make your marketing dollars work better because the impact you can have with good marketing will impact the bottom line long term.
In the short term, it may even save your company from some painful layoffs.
Marc Goldberg is chief revenue officer at Method Media Intelligence.
The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.