Mike Shields

Local Food.

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Leave it to Mike Shields of Business Insider for taking a position and calling out marketers and agencies for the faux shock they are expressing on issues of fraud and supply chain corruption.  Not since Tom Phillips of Dstillery famously evoked HBO’s “The Wire” has culpability been served in such substantial portions.

I’m sure that many in our industry will have nits to pick with Mike – honest people can disagree.  But come on people!  At very least, the optics are terrible.  Marketers publicly crying foul, agencies and tech companies pointing fingers at one another… it’s enough to give one the vapors!

As my small contribution to the debate, I’m offering a new way to look at the issues of quality, transparency, viewabilty, etc.  Set aside all the tech speak and financial-bubble metaphors:  the discussion is really about the quality of the internet food supply.  Welcome to the concept of local food!

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Rather than continually backpedaling on issues like the percentage of viewable impressions and acceptable fraud levels, might we instead start to compete on the basis of quality – on how much we do know about the inventory we serve?  Might we now start talking about the exact source of inventory – where it was born – and exactly what hands its passed through on its way to market?  No shady rail depots or slaughterhouses.  No grain silos tainted by GMOs or banned pesticides.  I know the where all of my impressions came from and you are getting the cleanest shipment imaginable – USDA prime!

Think this is all a bit much?  Or perhaps that I’ve gotten soft in the head from living in a farm state – Vermont – all these years?  Maybe you’re right.  But consider for a minute the plight of the small publisher who’s struggling to get fair compensation for high quality inventory?  Is she really all that different from the organic farmer who’s now able to charge a premium for a purer, cleaner product?  Or think about the volume publisher or platform operating in a bottomless pool of inventory:  Isn’t he a bit like the big packaged goods company trying to drive up the price of commodity staples by appending organic, gluten-free or non-GMO to every possible product?

Maybe it’s not as simple as asking the advertiser do you know exactly how that got on your plate?  But maybe it’s not such a bad way to start the conversation.

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Feel Like a Number.

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Feel Like a NumberAdweek columnist Mike Shields served up a beautiful rant this week about the  staggeringly huge numbers that ad technology players toss around to demonstrate their scale and market impact.  13 billion ads served every day by AppNexus; the same day in which Turn is making “30 billion ad decisions.”  The Rubicon Project reaches nearly 97% of all web users while competitor PubMatic is handling somewhere between a half-billion and a billion “bids” monthly.  “But at a certain point,” Shields calls out, “these eye-popping data boasts become more akin to rap brags.”

I feel like just another / Spoke in a great big wheel
Like a tiny blade of grass / In a great big field

He’s got a point.  At best, all of this “mine is bigger than yours” talk tends to bleed any real meaning or context out of the conversation.  As Shields puts it, “…reach, impression volume and targeting numbers cease to mean anything.”

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But I think there’s an even more critical downside to the ad tech sector.  Many years ago, McDonald’s restaurants used to give tours to groups of school kids. One of the more inspired tour highlights– and mind you, this was in mid 70s – was the claim that “If you took all the burgers McDonald’s has ever served and stacked them one on top of the other, they’d reach the moon and half way back to earth!”  The signage on every McDonald’s in those days called out the latest numerical estimate of the number served…until finally they simply started saying “Billions and Billions Served.”

To workers I’m just another drone / To Ma Bell I’m just another phone
I’m just another statistic on a sheet

They don’t say any of that anymore.  The unintended consequence of McDonald’s volumetric marketing was the cheapening of the individual experience.  If you’re making that many burgers, then what’s special about the one I’m eating?  Turns out, not much.  Once the consumer hears how many online ads are carpet-bombing web browsers every day, they become even more cynical, more deaf and immune to the content of any one message.   I think the “Parade of Big Numbers” also strikes out on a B2B level.  If I’m a web publisher or an agency holding company, am I really going to pick AppNexus or Rubicon because of the sheer number of ads they touch?

To teachers I’m just another child / To IRS I’m just another file
I’m just another consensus on the street

Look, these are all terrific companies that do amazing, NASA-like things which impress me every day.  But all this talk of numbers dehumanizes marketing.  It divorces the distribution channel from the individual connections and impact that makes advertising a premium business service.  Whether it’s a meal at McDonald’s, a Latte at Starbucks or a phone call with your mom via AT&T, marketers have learned to talk to consumers about individual quality experiences.  Maybe we’d be well served not to lose that thread ourselves.

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Open the Gate.

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Looking back over the past 20 years in the Digital Marketing bubble, there have been a handful of disruptive “barbarians at the gate” moments that shake our foundations and challenge the way we think of the world.  The collapse of the tech bubble in 2000 reintroduced the ideas of gravity and final accounting.  The Wall Street Journal’s “What They Know” series changed the terms of the debate around online consumer privacy.  Now Mike Shields from Adweek has come to the gate with “Ad Wreck: VC-backed ad tech firms have arguably inflicted one big mess on digital advertising.”

Now, if you’re a CEO in the Ad Tech business, you’re probably not sending Mike a Christmas card this year.  Indeed, if you’d seen him at the gate you might have been tempted to call out the archers or dump some boiling oil from atop the castle walls.  I mean, he’s saying things like “It sounds counterintuitive that loads of cash threatens to harm an industry, but a growing chorus complains that VC dollars have, in fact, done more harm than good to online advertising.”  Ouch!

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But before you shoot the messenger, read the article.  Rather than quibbling over the details or reflexively staking your claim of exceptionalism, accept the reality of Mike’s thesis.  The article quotes Daniel Klaus of K2 Labs:  “There has been so much money wasted, and it continues to be wasted in this space. When it comes to ad tech, there are very few signs that it is really working.”   While investors like Klaus are more vocal, the meme is taking root at the publisher level as well.  “Publishers are reluctant to talk about their ad tech experiences on the record, but many privately describe having dramatically cut their lists of third-party partners.”

The weak CEO responds to these ideas with vitriol or denial.  The strong and visionary accept that there’s a sea change in marketplace attitude and adjust to that new reality.

People often ask me if I’m down on the programmatic, technology-driven side of our business.  I am not.  For the record, I’ve always believed that technology-driven process automation is a natural phenomenon in our world and will only get bigger as the years go by.  I wrote about it in 2007 and I still believe it today.  But I also just as firmly believe that (a) the ad tech marketplace must and should consolidate into the hands of very few companies and (b) that the flood of VC money has perverted the market, creating a surreal world in which “serial entrepreneurs” survive by continually taxing the dollar exchange between marketer and publisher.

So what’s an Ad Tech CEO to do?  Build your company and your services to last 25 years, not 25 months.  Build products that grow new value and create new revenue, rather than simply finding incremental savings in an already collapsing banner market.  In the flood of VC money, a lot of things floated that weren’t necessarily boats.  Now is the time to build well.

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The Thumb on the Scale.

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I’ve had the pieces of this blog post written on scraps of paper over the past month.  But Mike Shields’ post in Digiday this week (“The Trouble With Trading Desks”) inspired me to pull them all together.  In 2,400 words, Mike did a service for the entire ecosystem by giving very public voice to what had heretofore only been whispered. For those who haven’t taken the time to read it, a quick synopsis:

(1) While logical in theory, the so-called Agency Trading Desks (ATDs) are subject to serious conflicts of interest; (2) clients are getting concerned that they are being asked to pay twice — once to planning, once to the ATD — for the same plan; (3) it’s being said that some holding companies are mandating that planning teams funnel business through ATDs (and away from ad networks — a point validated by agency buyers in comments posted to the article); (4) all leading to the conclusion that ATDs are in practice using client dollars to fix the agency’s own margin problem.

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I don’t doubt that the architects of Agency Trading Desks are both smart and well-intentioned.  And I’ll even go so far as to say that their ultimate development may end up being a positive for the industry.  But right now their implementation appears pretty ham-handed and their ethical GPS seems to be at least temporarily unable to find the satellite.  I’ve heard versions of the same troubling stories many times in recent months:
  • Ad Networks are being told by planners that they are not allowed to do business with one another;  they are then sent into the cattle chute to the ATD, where baseline prices are dictated.
  • Sellers go through a lengthy period of planning and negotiating a program with the planning team, only to have their deal cut by 50% or more by some unseen higher up at the agency or holding company, with the difference being funneled to the ATD or some vendor designated with preferred status.
The inherent charge in these scenarios is that the choice is being made to do what’s good for the agency bottom line and not necessarily what’s in the best interest of the client.  That may or may not be.  But even giving holding companies  the benefit of the doubt, here is what’s beyond question:
  • The agency can not truly be an agent for the client’s brand if it has its own separate profit center — the ATD — on the field as a competitor.
  • If the acumen and technologies are real — and if they do indeed generate better results for the brands — then ATDs should be competing on the open market.  The impression of corporate nepotism will remain until they are completely sold off and spun out.
In the financial world, role definition used to mean something.   The analyst, banker and broker all played distinct roles which were enforced by securities law.  Once those strictures were relaxed and the roles morphed, we ended up in a hell of a mess. It seems that it would be better for the holding companies and agencies to fix this problem early by laying down some ground rules today.
Nobody sets out to create a flawed system:  More often impropriety creeps in quietly on little cat feet.

Think I’m wrong?  Have a story of your own?  That’s what comment boxes are for.
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