Consolidation has been the name of the game for most marketing, media and advertising sectors in 2016. In the case of global brands, it is a trend that has been continuing for some time now when it comes to working with multiple partners. Major brands have been shrinking their roster of ad serving companies, with the average number of partners dropping by a third in the last two years. Most companies now work with three ad serving companies compared to 4.5 in 2014.
The findings come from a 2016 survey by the World Federation of Advertisers (WFA) and Ebiquity, and is based on responses from 30 companies in 14 sectors with a total global media spend of more than USD 30 billion.
In 2014, around 16 percent of respondents worked with more than nine ad servers but the 2016 data shows that only 3 percent are working with seven or eight and just 10 percent with five or six different companies.
Due to the evolution and growth of most ad serving companies’ geographical footprint, it’s now possible for marketers to obtain near global coverage with fewer suppliers.
Additionally, the goal for many marketers is to seek more control and reduce costs, which can account for more than 10 percent of net digital media spend in some cases, depending on format, with video costing significantly more.
However, some brands do wish to work with a variety of partners where they have distinct specialisms such as video, rich media or native for example. This is another distinct change from 2014 with advertisers adding complex functionalities beyond desktop, mobile and video ad serving, which are utilized by near all respondents.
In 2016, tools to provide frequency and sequencing control, viewability and verification, programmatic integrations and Dynamic Creative Optimization are all used by at least 60 percent of respondents.
Transformation For A Digital Age
Such changes are part of a wider trend among major brand owners to transform their marketing for the digital age, making moves to bring greater knowledge of the technology landscape in-house often as part of organized ‘Media Transformation’ programmes.
The WFA and Ebiquity survey found that the most common way for advertisers to work with ad servers such as Atlas, DoubleClick, Sizmek, Adform and DCM was for the relationship or contract to be owned and operated by media agencies, an arrangement found in 70 percent of cases.
However, such arrangements can lead to a loss of control and visibility on pricing as well as challenges in data access and reporting. Nearly 30 percent of respondents now have a direct relationship with an adserver but allow the agency to operate this. A further 13 percent now own and operate the relationship themselves (figures add up to more than 100 percent because brands can use multiple models even in the same market).
The survey also found significant differences both in ad serving cost and payment models:
#1. Ad serving can be charged for in various ways but fixed CPM is most common – used by almost 40 percent of respondents, while 25 percent have a variable CPM payment model and a further 11 percent using a percentage of net media spend.
#2. Whatever the charging model, when converting the cost back to a share of media spend, there’s a clear concentration between 1 percent and 4 percent of (net) digital media spend, though some respondents are paying as much as 13-14 per cent.
This is probably determined by the blend of formats being used. Ebiquity notes that that VPAID ad serving can cost up to 8 percent of net digital media spend.
#3. Where the agency either owns and operates or simply operates the relationship, clients can also pay an additional fee, typically as a percentage of net media in the case of one in four respondents or as a CPM fee in the case of 21 percent. However, 21 percent of respondents reported that they did not pay a fee for this service.
Although most brands now use the same model of third-party ad serving globally, in some markets a custom of publisher provided numbers is followed. Brands are pushing back and asking for change on this, as it makes it harder for brands and their agencies to get data on delivered impressions and actions.
“Getting better control of, and access to, ad serving offers opportunities to improve media performance and reporting. The range in costs associated with ad serving indicates that this is also one area of media transformation where brands can seek competitive advantage,” said Matt Green, Global Media & Digital Marketing Lead at the WFA.
