In today’s complex advertising landscape, transparency and accountability are paramount. Brands are navigating a maze of metrics, benchmarks and partnerships, often without a clear understanding of the underlying processes and motivations.
A lack of brand-specific KPIs can lead to media wastage. But by understanding the metrics that really matter to them, brands can ensure they’re getting the most out of their advertising investments and fostering genuine, transparent relationships with their agency partners.
Brand-specific KPIs
Measurement in advertising needs stricter accountability. Agencies assessing their own performance is like grading your own homework.
Many brands aren’t receiving the frequent reports they need for optimization. And instead of brand-specific KPIs, they’re often comparing results to general benchmarks provided by agencies that combine data from all their clients.
But what matters to one brand might not matter to another. So what good are these benchmarks, really?
Brands sometimes aim to lower their cost per thousand impressions (CPM) to save money, but this can actually reduce quality. Instead of using the brand’s historical spending to determine the effective CPM (eCPM), an agency might suggest an industry benchmark. The agency might report an $8 CPM as their performance goal, while the brand’s actual eCPM, based on past spending, is $6.
Such an approach can allow agencies to be more lenient in defining success. Typically, there’s a 15%-20% difference between these industry benchmarks and brand-specific ones. Agencies might inflate benchmarks to look better to advertisers.
But when benchmarks are set for a specific brand, spending and performance metrics are more accurate and not skewed by averages from multiple advertisers.
To hold your media more accountable, consider using the following brand-specific KPIs:
- Qualified cost per thousand impressions (qCPM) – Used on awareness campaigns to get a comprehensive view of ad quality by combining CPM, viewability, on-target impressions, fraud and frequency metrics.
- Qualified cost per lead (qCPL) – Suited for conversion campaigns. Just replace CPM in the equation above with cost per lead; all other metrics remain consistent.
- Qualified cost per sale (qCPS) – Suited for sales-focused campaigns. Substitute CPM in the first example above with cost per sale; all other metrics remain consistent.
- Incremental value opportunity (IVO) – Used to compare low- and high-value impressions using CPM to identify growth and reinvestment opportunities for your brand.
Always ask partners about their methods and reasons for their decisions. When an agency gives you the KPIs for the campaign, inquire about the data and benchmarks used. If the agency can’t provide clear answers, reconsider the service’s value or the person managing your account.
Preferred partnerships
Preferred partnerships can also give advertisers much more transparency into campaign performance. These partnerships are agreements between advertisers and media vendors, or technology, where advertisers promise to spend a certain amount for benefits like discounts.
Having experience at major holding companies, I’ve seen preferred partnerships boost margins by up to 50%. However, while these partnerships guarantee business for vendors and better terms for advertisers, they don’t always prioritize the brand’s best interests.
In the late 1990s and early 2000s, ad networks were popular because they let buyers access many websites through one seller. Although ad networks aren’t as sought-after now, the tactics to maximize profit persist. Holding companies and their agencies often prioritize select digital media vendors, giving the agency preferential access to inventory or data in exchange for better deals.
Preferred partnerships pool funds from various advertisers to get inventory at a reduced cost, increasing profits. This leads to a small list of “pre-approved” partners often appearing repeatedly in media plans.
While media planners might be unaware, two rate cards exist: an external one, which can be marked up by 50%, and an internal one. Some see this disparity as a holding company advantage, but it can be viewed as unethical. With the advent of demand-side platforms (DSPs), handshake agreements of the past are being replaced, giving agencies more profit and advertisers less control.
Here are some examples of how preferred partnerships look in today’s ecosystem:
- Direct IO preferred partner list: Contracts made directly with inventory and data owners outside of the DSP, with a select group of pre-approved partners that frequently appear in media plans.
- Private marketplaces: A DSP buying tactic to secure specific inventory at a set price. Brands should approve this list before any buys are made to ensure maximum value.
- Supply-side partner (SSP) selection/use: Inventory owners use software to transfer media inventory to the DSP for purchase. To avoid hidden agency markups, brands should directly own all tech contracts, ensuring quality inventory at fair prices.
These preferred partnerships should be done in collaboration with the brand. In this model, the brand informs, and the agency executes, ensuring a harmonious blend of strategic vision and tactical expertise. This collaborative approach not only fosters transparency but also empowers brands to have a direct influence on their campaigns, ensuring alignment with their core values and objectives.
By integrating the brand’s insights with the agency’s industry knowledge, the result is a more tailored, effective and authentic campaign that resonates with the target audience. This synergy between brand direction and agency execution is the future of successful advertising partnerships.
It’s evident that the advertising industry is riddled with complexities that require brands to be vigilant and proactive. By asking the right questions to establish brand-specific KPIs, and by fostering open communication and accountability for greater transparency with agency leads, brands can navigate this intricate landscape with confidence.
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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