During the last weeks I had to explain this issue several times, so I realized I should write a new Blog post to save some time in future meetings 😀
With this article I pretend to introduce the big value that in-house accounts helps to increase transparency, maximize investment and boost performance. I will based my article on the Facebook and Google accounts as these two ads platforms allow you to invest in media on Facebook, Instagram, Google Search, YouTube, G-Mail, Maps and GDN.
Ok…. So, what is the problem? Why is there an overpricing on Facebook and Google media purchases? How is the current situation?
The chart below could be a good intro of the scenario. Let me go step by step:
Let’s say that Mc. Donald’s has a brand new product and and asks their Digital Agency (lets say…. Ogilvy, Leo Burnett, Dentsu or other digital group) to run a campaign in Facebook, YouTube and Facebook. For the example I will chose Dentsu due to the recent scandal commented to by the Financial Times they had in Japan for some of these practices
Dentsu starts working on the campaign: The creative and content teams start making magic and once that the direction is clear they discuss with their media folks on the final proposal
Problems start when agencies work out media proposals that don’t provide:
- Final performance of Clicks (CPC) / Engagements (Cos per engagement) gaps* based on Facebook/Google Ads estimations or variable costs. Instead of that, they set up fix Unit Cost (cost per click, cost per engagement, etc…) most of the times are three to four times higher than they are actually paying to Facebook.
- Access to the client to their Facebook / Google Ads accounts
- Support to their clients to create their own accounts
At this point, some of you may think:
- Why should they provide a gap? – Most of the big digital publishers (Facebook, Google, Yahoo!…. do not have fix pricing lists but complex bidding systems (click her for further info)
- Why they bill 3-4 times the price they pay to Google/Facebook? Several reasons:
- As a back-up in case they fail in their estimation.
- As a back-up to spend less time in optimization/set ups.
- Media budgets are usually 20% – 50% of the total costs. Big agencies charge big fees in creativity and content direction that cover media overspending.
- To earn more money – Good agencies. Good optimization teams master their jobs in order to boost the gap from the ‘Unit Cost’ accepted by the client and the price they finally pay to the publishers
- To ease quotations and boost long term plans.
Given this point, the agency (usually) finishes the quotation with a unit cost a way higher than the market price.
- The agency delivers a proposal:
- The Client approves: Let’s go!
- The Agency uses their own accounts to work with the publishers:
- Facebook Business Manager Account to pay Facebook for Facebook ads, Instagram Ads, etc…
- Google Adwords Account to pay Google for ‘Google Search Network, GDN, YouTube Ads, etc…
Facebook and Google deliver ‘performance report’ and ‘bills’ (this is the key) to the Agency, not the client. Afterwards the Agency sends back the invoice but they (almost never) include the Facebook or Google Invoice…. In other words… The client has no clue of how much money the agency paid for the services!!!!
This is a big problem because Mc. Donald’s actually cannot request Facebook how much money the agency spent on the campaign:
- Facebook client is Dentsu, not Mc. Donalds’s.
- Facebook has no liability of giving any explanation to Mc. Donald’s.
- Facebook is not allowed to display any data of Dentsu account without their approval.
Damnnn, how can Mc. Donald’s solve this issue:
Ask Dentsu to grant you access to their account: agencies usually reject this option as they say that there is info about other clients they do not want to share
By having in-house accounts Clients get the full control of how much money is spent in Facebook. Given this point, Clients have two options to run campaigns:
- Let the Agency use their account: By granting advertising permissions to the agencies, Clients can monitor the performance and the budget spent by the vendors. On top of that, they can access to the detailed performance information and develop digital know-how of the industry for future plans
- 100% In-house campaigns: Clients can run campaigns by themselves without agency intermediaries, which usually saves the ‘agency fees’ plus the VAT costs. Recommended only if the ‘head of digital’ has a strong background and extended experience