The digital marketing spend is growing putting marketers under pressure to justify huge investments. And even with a variety of measurement techniques it’s not easy to find what really works, especially taking into account transparency issues. In this article we discuss new problems related to digital media and how to cope with them.
An independent government department in the UK that promotes competition and consumer law – Competition and Markets Authority’s (CMA) – carried out an investigation of digital advertising sphere as a part of the new strategy designed to better handle quickly growing digital economy. In July 2019, they started looking into operations of online platforms, including the two biggest ones – Google and Facebook. The report voices concerns about transparency of the business, but before we go deeper in detail, let’s take a look back and see how we got to the current situation.
It all started with the 2016 ANA/K2 Intelligence report on media transparency in the U.S., which was a true wake-up call for the advertising industry. The report revealed numerous non-transparent business practices like rebates in different agencies. The fact that they failed to act in the best interests of their clients severely shook the trust in agencies. But this scandal also brought about two positive changes: more transparent media agreements and in-house agencies, that allow companies to better control some marketing operations and see where their money really goes.
But the CMA investigation uncovers an even more serious problem, namely it implies the lack of transparency in operations of online platforms themselves and in the process of media buying. Even though it will undermine advertisers’ trust in online media in general, they cannot exclude this element from their media mix, because customers are actively shifting to digital platforms and brands are trying to reach them there. It’s undeniable that Facebook and Google have become an inevitable part of our daily routine. For example, the average daily screen time for the British people is 3,25 hours, and they spend over 30% of it on the two major platforms. The worth of this sector is estimated to be $16 bln in the UK alone, and its two main players earn huge amounts of money. CMA found that in 2018 Google made about $7.5 billion on search advertising in the UK, which represents 90% of all revenues from this channel. In the same period, Facebook made over $2.5 bln on display advertising, taking 50% of all display ad revenues in the country.
The two platforms practically don’t have any real competition and can set their own conditions which users and advertisers have to accept. Users have to share more personal information than they probably would prefer to and cannot opt out of seeing personalized ads. A recent $5 bln lawsuit against Google for collecting private information during incognito browsing sessions, which are specifically used to avoid tracking, significantly damages the company’s reputation. As for advertisers, there is not enough transparency in the process of programmatic ad buying, so they actually participate in a black box process without being able to measure or check the effectiveness of the ads they buy. It is especially relevant for the market of display adverts because even such tools as Google analytics do not always provide reliable evaluation of their performance.
Even though the report covers only marketing sphere in the UK, the problem has an international scale. Some countries have already started taking measures to address it. For example, Australian government has recently decided to create a digital markets unit, and Germany is working on legislation that would cover competition in digital markets. But the real game changer for the industry is General Data Protection Regulation. GDPR severely limits the functions of multi-touch attribution, that heavily relies on granular, person-level data to measure the effectiveness of online channels. Anyway MTA is not the most reliable tool because the quality and accuracy of data used in the models cannot always be verified.
Arising challenges force companies to look for better ways to manage their marketing and be more effective and efficient. Due to problems with access to data and transparency for example, Nestle has established an in-house agency to deal with a number of marketing tasks, including data and media buying. They reduced the number of supply-side platforms by 90% after checking them for transparency. The company is also going to build first-party data capabilities and negotiate for better conditions with Google and Facebook. Another example is Adidas: they found out that their MTA techniques didn’t show the real effectiveness of advertising, moreover the focus on digital advertising was excessive and undue. That’s why the company has turned to reliable marketing mix modelling and focused on long-term brand-building activities as well. We can learn from their mistakes and also use the most reliable tool there is today.
On July 1, 2020, CMA published the final report of the study. They came to the conclusion that there is not enough competition in these markets, which has negative consequences for consumers and society as a whole. The department suggests passing legislation to establish a new pro-competition regulatory regime.
But even in the current situation of transparency crisis there is a technology that allows you to fully control your marketing activities and be absolutely sure about the efficiency of every dollar you spend.
As we have mentioned, marketing mix modelling is a great tool to measure the real impact of your marketing. AdoptoMedia offers an advanced MMM to help you understand the impact of each online and offline channel in your media mix. With us there is no black box, because our algorithms and verification tests are available to clients. Over 20 statistical tests guarantee highly accurate measurements and forecasts, and AI technologies ensure automatic ROMI models update with ingestion of new data. Our models forecast ROMI and track it in real time. With AdoptoMedia you can solve both transparency problems mentioned in the article. Media Mix Tool measures the real impact of the channels in your media mix and recommends an optimal budget allocation for future periods. Combining it with Media Plan Manager and Media Billing, you can set up a full cycle in-house agency to achieve best-in-class transparency and accountability of your marketing processes. It will be easy to create, discuss and execute media plans thanks to a special chat for all the parties and a structured media database. We will help you effectively manage marketing budget and increase ROMI by 15-30%.