Digital: Disrupted: Navigating the Complexity of Digital Advertising

Paul Muller: So, let's take it to the top. Talk to us about where you see some of the big opportunities and challenges as it relates to effective digital marketing.

Scott Thomson: Yeah. Well, I mean first and foremost I would say you've got to be very, very clear about diagnosing what your problem is. I mean, it's very easy for us to say that advertisers are confused, but you must go to the very heart of that confusion. If, for example—and this has happened to us on quite a few occasions—we've shown people some evidence that says there's X percent and it's a scary percentage, X percent of a particular budget that's clearly not doing anything. There has to be some corrective action there. Some people have come back to us and said, look, I'm the CMO, I don't have bloody time for this.

This will take a lot of effort. So, there's a time and effort equation there that you have to respect and therefore has to be elsewhere. We can't go in there constantly banging your head against the door and saying, why haven't you changed yet? Yet there has to be something fundamental in their skillset that makes it easy for them. And frankly it is a lot about skill sets. I'm a great believer in that. Have you ever heard of that? There's that great Hungarian dude called Mihaly Csikszentmihalyi, he's a Hungarian psychologist that looked at when people play games effectively and when they're in a state of what he refers to as flow, and being in a state of flow is literally about making sure that not only your skill sets are aligned with the task at hand, but also that it's a highly challenging task aligned with a highly skilled individual.

And what we've got here in the digital ecosystem is just sheer complexity and confusion, which is it tends to be highly complex. The only thing we have to do is highly scale up the key individuals involved. And that's a difficult thing to do because a lot of the people who are involved in the industry, who are very skilled, tend to be at that kind of domain expertise level a bit more junior and they don't have any influence either in agency land or on the brand side. So, it's a lot to do with skill sets. It's also got to do with technology. You have to have a clear and transparent method that's not a black box, that there are no mathematical somersaults involved in it. It's about clear counting. You need a receipt of effective ad events basically. And also those kinds of operational and contractual things like making sure that one brand owns the relationship with appropriate technology partners plus those access rights involved.

I was talking about the latest example of an industry report that tried to diagnose the problem and pointed out some kind of solution and it literally came out this week. Around 70 member companies initially signed up to participate in this study, but around 40 of them or more I think had to pull out eventually because they couldn't get the requisite data access, which was one of the things I was beginning to talk about. Basically, they were unable to get their hands on log files from their technology partners or ad verification partners. And that of course doesn't mean that getting access to that kind of data is absolutely fundamental, but it's a great starting point. There are fewer things that you can do to minimize your exposure to wastage, but if you're going to do it properly, you really need to get your measurement in place and you really need to get your contractual arrangements in place with the technology partners involved.

There were a couple of things that have just come out of that latest report that we totally agree with that are covered in our book. And I think it refers to information asymmetry, which is basically saying that somebody else has got more information than you have. And certainly, the supply side in the industry has, and tech platforms have far more information than any individual advertiser. And that is a problem that can obviously be solved by getting greater data access. The other problem that the report rather kind of repeated, it's a little bit like Groundhog Day, this one is misaligned incentives. That's basically saying that given all of the players in the ecosystem, brands sometimes can seem very lonely. People talk about the demand side and the supply side, but at its very, very worst, there's only one entity on the demand side and that's brands themselves.

And it doesn't matter how many great agency partners you got. I mean the kind of classical one for me was always people used to describe a great branding agency partnership being like a marriage. Well, I don’t know about your marriage, but I married my wife, but I also married her whole family as well. So, you might have a fantastic agency, but they've got a whole stack of relationships with tech suppliers for example. And you've got to know the entirety of what it is you're getting into. And I think that's where a big part of the issue set.