Advertisers are revolting against wasting huge portions of their digital advertising budgets on “non-working media.” The process of buying digital advertising is notoriously inefficient; Google estimates we are wasting $3.6 million per hour using our current methods. In this session, we’ll dissect the problem, discuss implications, and present a path towards reform. This presentation was given by Bionic Advertising Systems CEO, Joe Pych at the IAB Ad Operations Summit on November 3, 2014 at the Crowne Plaza Hotel in New York, NY.

1. The Revolt Against the
"Inefficiency Tax"
in Digital Advertising

2. Hotwired served up the first banner ad for AT&T on Oct. 27, 1994

4. The Problem

5. Planning and Buying Media is Complicated

6. Complicated 42-step process

7. Most agencies just throw more people at the problem

8. Typical Agency Workflow System

9. … and as a result …

10. Phase Task
TOTAL PROJECT HOURS
VP, Digital
Media Director
Supervisor
Media Planner
Assistant Planner
Media Buyer
Director of Ad Operations
Campaign Supervisor
Campaign Manager
Ad Trafficker
Campaign Coordinator
Cost
Project Scope Scope of Work Definition 10.0 3.0 3.0 2.0 1.0 - - 1.0 - - - - $ 1,978.18
TOTAL PROJECT SCOPE 10.0 3.0 3.0 2.0 1.0 - - 1.0 - - - - $ 1,978.18
Strategy Brainstorming Session 21.0 5.0 5.0 5.0 - - - 6.0 - - - - $ 4,050.91
Audit History / research / data review 14.0 1.0 2.0 1.0 1.0 - - 3.0 1.0 5.0 - - $ 1,781.82
Media Brief 5.5 - 1.0 4.0 - - - 0.5 - - - - $ 734.55
Target Audience Definition 6.0 1.0 2.0 3.0 - - - - - - - - $ 1,054.55
Develop / Agree on Objectives 6.0 1.0 1.0 3.0 - - - 1.0 - - - - $ 996.36
Prepare Strategic Plan 16.0 3.0 5.0 8.0 - - - - - - - - $ 2,836.36
TOTAL STRATEGY 68.5 11.0 16.0 24.0 1.0 - - 10.5 1.0 5.0 - - $ 11,454.55
Planning Develop Consideration Set 17.0 - 1.0 1.0 10.0 5.0 - - - - - - $ 1,418.18
Send RFPs 3.0 - - - - 3.0 - - - - - - $ 218.18
Collect Proposals 1.0 - - - - 1.0 - - - - - - $ 72.73
Evaluate Proposals 17.0 - - 2.0 10.0 5.0 - - - - - - $ 1,309.09
Negotiate / Prepare Buy options 20.0 - - - - - 20.0 - - - - - $ 1,018.18
Finalize Media Plan 15.0 - - - 10.0 - 5.0 - - - - - $ 981.82
Prepare and Deliver Client Presentation 14.0 1.0 1.0 4.0 5.0 3.0 - - - - - - $ 1,527.27
Revise Media Plan 5.0 - - - 5.0 - - - - - - - $ 363.64
Get Media Authorization 1.0 - - 1.0 - - - - - - - - $ 109.09
TOTAL PLANNING 93.0 1.0 2.0 8.0 40.0 17.0 25.0 - - - - - $ 7,018.18
Implementation Issue Insertion Orders to Publishers 2.0 - - - - 2.0 - - - - - - $ 145.45
Collect Insertion Orders from Publishers 3.0 - - - - 3.0 - - - - - - $ 218.18
Get Creative Specs 5.0 - - - - 5.0 - - - - - - $ 363.64
Gather creative Assets 47.0 - - - - - - 2.0 5.0 30.0 - 10.0 $ 2,974.55
Build Tags 20.0 - - - - - - - - - 20.0 - $ 945.45
Traffic Tags 10.0 - - - - - - - - - 10.0 - $ 472.73
QA/Confirm Tags are up 15.0 - - - - - - - - - 10.0 5.0 $ 672.73
Bill Client 12.0 - - - 5.0 5.0 - 2.0 - - - - $ 1,047.27
TOTAL IMPLEMENTATION 114.0 - - - 5.0 15.0 - 4.0 5.0 30.0 40.0 15.0 $ 6,840.00
Execution Delivery Monitoring 24.0 - - - 2.0 5.0 - - 2.0 5.0 10.0 - $ 1,476.36
Optimization 24.0 - - - 2.0 5.0 - - 2.0 10.0 5.0 - $ 1,530.91
Monthly Invoices 36.0 - - - 2.0 5.0 - 2.0 2.0 5.0 - 20.0 $ 2,123.64
TOTAL EXECUTION 84.0 - - - 6.0 15.0 - 2.0 6.0 20.0 15.0 20.0 $ 5,130.91
Reporting Campaign Reporting 40.0 - - - - - - - 10.0 10.0 - 20.0 $ 2,400.00
Reconcile Invoices 40.0 - - - - - - - 10.0 10.0 - 20.0 $ 2,400.00
Prepare and Deliver Client Presentation 33.0 - 2.0 3.0 - - - 3.0 10.0 15.0 - - $ 3,134.55
TOTAL REPORTING 113.0 - 2.0 3.0 - - - 3.0 30.0 35.0 - 40.0 $ 7,934.55
Cost Per Media Plan 482.5 15.0 23.0 37.0 53.0 47.0 25.0 20.5 42.0 90.0 55.0 75.0 $ 40,356.36
Number of Hours by Function per campaign
$40k / campaign
>8% of budget on
buying overhead
Source: www.Bionic-Ads.com/calculator
Media Planning and Buying is
Wasteful and Expensive

11. Advertisers don’t like paying for “non-working” media costs

12. ×
Hourly Rate
Number of Hours

13. ×
Hourly Rate
Number of Hours
Procurement

14. Agencies are underpaid

15. Nancy Hill is Right

16. Agencies cannot afford to pay enough for entry level work

17. Entry Level Salaries by Profession
$25,000
$70,000
$80,000
Agency
Consulting
Technology
Source: Why Agencies are Starved for Talent, August 2014

18. 2/3rds of Agency Staffers Planning to Quit Soon
19.3
42.7
30.6
7.5
Actively looking
Next Year or Two
Five Years
Lifer
Percent by Commitment
62.0%
Source: Digiday State of the Industry Survey, February 2013

19. Advertisers are paying agencies too much

20. Bob Liodice is also right

21. The “Cost Plus” Agency Compensation Model creates a perverse incentive to be inefficient

22. ×
Hourly Rate
Number of Hours
Procurement
Inefficiency

23. “The cost of not having a connected business is costing the [digital advertising] industry $3.6 million dollars per hour.”
Neal Mohan, Google’s Vice President of Display Advertising Products at Google’s thinkDoubleClick June 2013 event.

24. The Revolt Against the
"Inefficiency Tax"
in Digital Advertising

25. “We are pulling all digital media planning and buying responsibilities in house from our current agency.”

26. Inefficiency is the root of the problem

27. The Solution

28. Programmatic?

29. Programmatic Buying
has gotten smarter…

30. … but programmatic buying does not solve the workflow problem

31. Programmatic streamlines transactions

32. Media plans are still made in Excel

34. Billing and Reconciliation

35. Data-driven workflow automation solves the workflow problem

36. Data-Driven Media Planning
Product Data
Media Planning Process

37. Product Directory

38. Data-Driven Media Buying
Buyer
Seller
Interface

39. OpenRTB and OpenDirect

41. Data-driven Media Optimization
Performance Data
Media Optimization Process

42. Payments
Invoices
Performance
Data-Driven Billing and Reconciliation
Media Plans
Billing and Reconciliation
Process
Insertion
Orders

43. Automate the entire workflow

45. Man versus Machine
Man and Machine

46. Humans + Automation = Achieve Super-Human Results

47. Benefits of Data-Driven Workflow
•Reduced “Non-Working Media” Costs
•Increased Speed and Agility
•Higher Value Work
•Higher Pay and Job Satisfaction
•Better Advertising Results
•Happiness