You used to pay your ad agency a 15% commission back in the day. You groused about the high fees, the bad or non-existent data about campaign performance and wondered why you had to pay for those fancy Madison Ave offices that were far better than your digs in Kenosha.
But your agency generally at least had your back. There was enough margin there to run and build a business. Relationships tended to be long, and at the CEO level. Along the way, great brands and campaigns got created.
Then the bean-counters and financial wizards got involved. Short-term holders of your stock started agitating for the quick buck. Procurement showed up, and claimed that they could save money buying advertising in the same way they saved money on paper clips. And the big holdcos rose, figuring to get rich on consolidation and the dreaded “synergies.”
And we thought it went great–after all, we were only paying 3% commission now, as one of my clients thought. Of course that’s nonsense–nobody makes money on 3%. What we didn’t know is that commissions have actually gone up and, in digital advertising, there’s more hands out in between you and your customers.
How about the rake for just one supplier in the ad tech ecosystem, the DSP, being over 20%? Today’s AdExchanger article describes just four of the ways you’re being taken–most likely without your knowledge–by DSPs. One example from the article:
Before being bought by Adobe at the end of 2016, TubeMogul CEO Brett Wilson stated in the company’s final earnings call that the DSP’s take rate stood at 21.6%and it planned to integrate more “merchandising layer” fees for data and brand safety to maintain its take rate “even as tech fees may go down.”
We’ve gone from the days when our agency acted as a true agent for the apparently outrageous fee of 15% to one where our agencies can, in many cases, act as principals and cut all kinds of deals with vendors (not “partners”) hacking off 20%+ at every step of the way.
And have you looked at your creative lately? It sucks.
We’re not in a better place, folks. Everybody needs to make a profit, even our vendors. We need to work together with true agents, toss out the hucksters, ad-tax middlemen, and surveillance firms and get back to doing proper advertising. GDPR will help accelerate that in the EU. What are we going to do about it here in the U.S.?