The rise of transparent digital ad buying

As marketers push for greater transparency in how the murky world of digital ad buying works, agencies are rethinking their approach.

For the past several years, as automated ad buying has taken flight, agencies have made a lucrative business out of running an arbitrage-based model — buying digital inventory in bulk and then marking it up for advertisers. The clients didn’t cry foul, because they were happy with the performance of digital campaigns or because they weren’t clued into the complexities of digital ad buying and agency profitability.

But now marketers are becoming less comfortable with that approach, and more interested in knowing the underlying cost of the media inventory and agency support that they purchase. Agencies are evolving in response.

At Omnicom , clients are opting for an “unbundled” deal structure, which “puts us in a position of treating it as if we were their agent and not selling them a product,” said Omnicom Chief Executive John Wren on an earnings call last month.

An unbundled model typically involves itemizing costs instead of the approach in which media costs are bundled with agency and tech costs. That has had an impact: the company said first quarter revenue from digital ad buying group Accuen was “basically flat” and “down slightly” in North America — a shift from previous quarters of growth.

Read more…