(8 min read)
What’s At Stake
There’s countless ways a new company can fail, and one big trip-up can end it all if not caught soon enough. How sad it is when that trip-up is gross negligence; or worse, fraud. The cliché is that 9 out of 10 startups fail. They don’t have to.
If you watch CNBC or browse the business blogs from time to time, you’ve seen references to media & advertising fraud. The ANA—which represents the biggest global brands—commissioned an 8-month investigation from K2 Intelligence uncovering normalized practices and ecosystems of pervasive fraud throughout the country.
I’ve witnessed it first-hand, combing over new client accounts. It’s like surveying a business war zone after the dust has settled: months or years of budget wholly wasted.
Causes: Negligence, deception, and bribery
Agents involved: Snake Oil, Snake Oil Suppliers, and Snake Oil Traders
Bots cover the web, posing as people and ad clicks (an example of Snake Oil), and according to the ANA study, cost digital advertisers $7.2b in 2016. Countless website and app owners (Snake Oil Suppliers) sell this bogus ad real estate. Media, marketing, and advertising agencies are often, effectively, ‘Snake Oil Traders.’ They’re known for taking huge kickbacks from the channels that sell advertising space, negligent to your company’s benefit, while your company foots the bill.
Kickbacks can start with dinner or expensive sports and concert tickets and in the end the kickback offers can total 25% of the committed budget.
David Taylor, CEO of Proctor & Gamble had enough, recently cutting $140m in budget with several agencies who were carelessly spending P&G’s money. “We’re not going to follow a formula of how much you spend,” he said, citing unjustified ad spending—often programmatic. This is the CEO of the largest advertiser in the U.S. starting to get smart to media agency negligence of epic proportions. Imagine the rebates P&G’s branding and media agencies are receiving in behind-closed-doors or overseas transactions. That’s a grim realization for any business.
If it were an early-stage company, that would be the trip-up that derails it. There’s almost no climbing back from 12 months of time and money lost for a start-up or early-stage business. Bad brand and media agencies are start-up killers.
"We shut it down."
Here are 10 standalone ways to sniff out a problem before it’s too late—without needing private investigators—and rethink your business's potential growth.
1. For fairness: There’s honest marketers who just aren’t ready to deliver results.
We started off by alleging widespread fraud. There’s good intentions abound as well, so let’s start by thanking marketers for their effort and for their time.
A marketer should be held to an elevated level of responsibility for results. There’s too much at stake and innocent negligence is not right, either. Make sure you hear your media and marketing professionals reference results more often than they reference their effort or time spent.
2. An easy check: The Change History
In most marketing platforms you can view all account activity in the change histories. Check it, and if your marketers are barely doing anything (not uncommon), you know they’re coasting along or don’t know what they’re doing.
3. Not properly based in numbers
Many people still think of marketing as a creative field. Creative genius is a huge factor, but successful marketing starts and ends with numbers and the critically important creative components fit into the math. (If not, then what's the point?) Make sure your marketers tie everything to the mathematic effect on your bottom line—which again, is not to discount the need for profound creativity, rather it's to define its purpose and set parameters for its success.
I can’t tell you how many times I’ve had to explain with basic arithmetic that presented plans will limit potential results to, say, 10% of the actual revenue goals, with explanations like, “this plan will only hit the numbers if every email recipient opens your email and purchases,” or, “this plan will only hit the numbers if the conversion rate on your website is 25%, not 2.5%,” or, “this plan would only hit the numbers if your email list was 5,000,000 long, not 500,000.”
4. PowerPoint presentations with lots of colors and exclamation points
If “work” is regularly presented with fluff and pizzazz, you might be being ripped off. If you’ve ever been shown PowerPoint slides with only one word on them, you might be being ripped off. If it feels like you’re being presented a sales pitch two months into working together, you might be being ripped off.
5. They don’t discuss bottom lines, or the fate of the company
Do they speak in terms of how many people they’ll reach, or brand awareness? Ask them how many dollars that equates to.
Further, if the fate of my company were hanging in the balance and hinging on results, I’d want people who aren’t afraid to address it pertinently, tackle it head-on without delay, and orchestrate steps to success. If they aren’t talking about the elephant in the room, they’re either afraid, oblivious, or trying to pretend it’s all peachy. Meanwhile, they'll continue collecting paychecks until the final day.
Be careful: Placating full-time managers can be catastrophic when they cautiously keep their mouth shut about negligence of the outsourced agencies or faulty plans instead of speaking up.
6. Spreading money and resources in too many places
If you’re a lifestyle brand with $100m in marketing budget, it might be smart to spread your message all over and create as much compounded awareness as possible. (And that’s the approach many marketers have been taught.) But for the vast majority of businesses—especially early stage ones—there's at least two simple reasons striving for that compounded effect is the wrong approach:
- It's not achievable at critical mass levels.
- You will spread efforts and resources too thin and lack adequate focus needed for learning and optimization.
More often, an early stage company needs to find one or two pathway combinations that work. Bogus agencies want to spread your money in as many places as possible. Why?
- It’s what they taught.
- It reduces transparency into what’s really driving or not driving results.
- They can avoid blame when none of it works, while blame instead falls on the product.
- They are receiving kickbacks.
7. They’re constantly asking for approval
Many agencies make this a critical point of their sales pitch: “You will be making the final call on everything we do.” Why would you want that? Aren’t they supposed to be the experts? Shouldn’t they be confident, not seemingly insecure?
This is a common method agencies use to impart responsibility back on you. If the project succeeds, they’ll reap praise and reward. If there’s failure, you’ll have been signing off on all the initiatives all along.
8. Red Flags: “Display ads”, “YouTube ads”, “Adroll” or “Banner ads”
Entertaining those ad placements is like climbing into a garbage dumpster and dropping your wallet. Consider them with high skepticism.
Tempted? Think of it this way: It’s rarely worth the resources to build out content with which to give them a try.
FYI: Google will kindly offer to set up all your ads for you and say you can turn off whichever you don’t wish to run. You’ll trust them. They will set it up for you to spend budget on YouTube and Display ads because that's where lies their never-ending sources of ad real estate—in comparison to Google Search, which is quite finite and provides limited capacity to grow Google’s yearly revenue.
9. Red Flags: “Programmatic” or “Automation”
Such services are promoted as new, advantageous setups. Hmm. Who’s watching these campaigns? Nobody. Who’s beating them out in the marketplace? Competitive and creative marketers.
Media, marketing, and advertising agencies are currently trying to find ways to automate processes and spend fewer and fewer man-hours on each of their clients so they can set it and forget it. Don’t let them!
10. References to Media Buying or Ad Buying
Think about it: If they're "buyers," then they have just been sold.
Marketing has changed from what's depicted in “Mad Men” and continues to change every day. No longer should you create a big campaign and run it. The feedback loop is now instantaneous, and if you aren’t taking advantage of the fastest feedback that fits your budget, you’re not being competitive. Anyone who refers to the antiquated Ad Buying term could fall into one or more of these groups:
- They haven’t adjusted since 1975, and don’t get it.
- They have just been sold ad real-estate, and have now just sold you ad real-estate.
- They're receiving kickbacks.
- They’re marking up the cost as they resell it to you without your knowledge.
- They’re purchasing an advance buy of media before you need it, which assures their profits via increased kickback margin and volume at no benefit to you. *!*
*!* ADVANCE BUYS ARE A MAJOR RED FLAG: Nobody needs to buy media in advance. That’s the advantage of the age we live in. You can pay as you go with instant feedback, flexibility, pivots, and optimization.
Remember when we referred to them as Snake Oil Traders? Make no mistake— anyone who calls himself an Ad Buyer is also an Ad Seller.
Don’t get ripped off. Spread this message. It hurts, reviewing people’s accounts and breaking the news that they have been ripped off, their company has been abused, and 12 months have been lost; but, if its stopped before it’s too late, it brings promise to let them know it can be turned around immediately. By firing that shit agency who ate your sunk costs, shutting down their campaigns, and starting fresh with your great product and real strategies.