Imagine that you are a wealthy art collector who likes to buy art at auctions, but you don’t have time to attend them yourself. You find an agent, tell them the kind of art you like and ask them to bid for you at several auctions. You’re so happy with your results that you retain a second and third agent to bid on more art for you as well. Now imagine that the three agents are arch rivals and never talk to one another. They attend the same auctions and bid against each other to buy art for you! Imagine how much extra you paid for the art you could have gotten from just one agent, or how much more art you could have gotten if you could find a way for the agents to collaborate and prevent overlap.
Obviously, I’m describing what happens when you employ too many partners to buy digital advertising for you. Most vendors are arch rivals and access the same art (i.e. target customers). They develop complex optimization strategies to get credit for obtaining the customer and cost you a lot extra in the process. Not only that, but as a result, many of your campaigns look like they aren’t performing that well because of the extra cost.
But let’s be honest: If you are like most advertisers, your agency planner can hardly erase the whole plan and just suggest that you spend all of your money with one vendor! Surely you’d be looking for a new agency if they did. What about scale and reach? What about the custom data, exclusive content and the like?
The truth is that your planner is unlikely to suggest one vendor because of their incentive structure – they’d simply make a lot less money because they get paid for managing all of those vendors for you.
This “more is more” set of behaviors leads to a typical display setup that costs advertisers much more than it earns them. In most cases, simplicity is far more effective than complexity. Here are a few reasons why:
- Buying the same audience again and again under different names (also known as “the illusion of reach”) – Most big advertisers buy with some combination of strategies: content integrations on premium sites, a few targeting campaigns, video, maybe some ad networks and RTB for reach, etc. But unless one technology is managing to a frequency across these buys, the likelihood is that a small pool of online users will see the bulk of the ads many times at an inflated cost to you. Each partner is targeting to some version of your ideal customer and often competing against your other partners for either that data or that actual impression.
- Cookie bombing – Because of the heavy competition to show your ads to your target audience, many “reach” type vendors, including DSP’s and networks, have developed technologies to serve massive amounts of third party cookies at high speed all across the web. The result is that when someone does click or convert, the vendor appears to be the accredited partner. The truth is that most conversions that these marketers chase would have occurred anyway. Their incentive is to take credit for all conversions rather than to exert their resources adding new converters to the pile.
- Complexity over clarity – Vendors know that you are taking a portfolio approach, so their only way to stand out is to be different. Would you pick a new inventory partner if their RFP response said “We target the same people as your other partners but with a slightly different approach”? Of course not! Think of how many flavors of inventory and targeting are out there: click retargeting, social media retargeting, mobile, mobile video, contextual targeting, audience targeting, etc. But in reality, all of these partners offer you access to your same group of customers. If you could only find a way for these various options to be streamlined through one methodology, you’d be able to compare, apples to apples, which methodology works. But these vendors have no ability or incentive to do this on their own.
So what does an advertiser do? As it stands, you’re paying extra for customers who would have converted anyway. You’re creating incentives for vendors to compete and drive up prices. And you’re ignoring the consumers who might take some extra nudging to convert but would ultimately grow your reach in real terms.
In most industries where small technology vendors have complicated the picture, the next logical step is to pick a few of your favorite partners and try to connect them together. This is often called a “best of breed” approach to technology implementation. Next week we’ll look at the issues with this approach in the digital advertising marketing.
