Publicis’ proposed acquisition of LiveRamp has provoked a frenzy of commentary from the industry.
The hot takes on LinkedIn have come thick and fast, and many of them offer great observations on the effects this deal will have on the agency and ad tech sectors.
Yet practically no one has talked about the consequences for advertisers.
Individual advertisers prefer not to talk publicly about the deal, and their trade associations have to remain neutral, so there is a danger that the advertiser voice may not be heard
It’s worth pausing, then, to think about what effects the deal may have on the people who provide the money for everyone else in the ad industry.
Clearly, Publicis is aiming to add LiveRamp to its existing suite of data tools, complementing Epsilon and Lotame, in particular.
The implication is that clients will benefit from the combination, but the net result will be that Publicis controls even more of the ad tech supply-chain than it already does.
The holding company has been explicit in its aim to preserve LiveRamp’s neutrality. After all, why jeopardise the non-Publicis revenues of a £1.6bn acquisition?
So, the message is: no one is adversely affected by this, but if you’re a Publicis client, the range of data tools we will be able to offer will be unrivalled.
This ups the stakes for other agency groups, and will likely lead to more consolidation in the identity and privacy market.
But this may not be the whole story for advertisers.
Online advertising is populated by a web of platforms and systems that purport to make the process more efficient and effective, and advertisers sacrifice a proportion of their budgets to pay for the apparatus that supposedly delivers better targeting, results and ad exposure in the Open Web and Connected TV.
The ANA has produced countless studies that show just how much budget is lost to the ‘tech tax’ The latest numbers estimate about 30% of budgets — excluding agency fees — go to feeding the DSPs, SSPs, data providers, verification providers and other ancillary mouths.
However, that isn’t the whole of the loss. Once the advertising is served to the public, a combination of ad fraud and other invalid traffic, poor viewability and latency issues combine to reduce the true exposure even further, to around 35-40% of the original budget.
The study is very important, but the loss of advertiser value is almost certainly greater as it undoubtedly makes insufficient allowance for fraud, uses artificially low MRC exposure rates and excludes agency fees.
In truth, advertisers are lucky if 15-20% of their money reaches anyone, let alone stimulates a reaction.
So, the money that goes to the panoply of tech providers is mostly wasted if the advertising produces virtually nothing.
This has been going on so long that everyone is now browbeaten into accepting it, with the option to either shrug their shoulders and move on, or spend more to compensate for the attrition.
This latter option is the preferred one among the tech companies, even if it’s not in anyone’s long-term interests.
So, the questions for advertisers arising from the Publicis/LiveRamp deal are:
- Does this solve the problem of massive inefficiency and ineffectiveness in online display advertising?
- Will the combination of data platforms offered by Publicis lead to better advertising results that benefit advertisers more than the agencies and ad tech operators?
Logically, the answer is ‘no’ to both.
Publicis was working with LiveRamp anyway, no doubt integrating it with other platforms, and the company’s been a key part of the ad tech infrastructure for many years, meaning it’s been taking its share of the ‘tech tax’ with the results outlined above.
So, nothing much changes other than who collects the tax.
No doubt this matters to the other holding companies and other ad tech players, but it hardly matters at all to advertisers.
They may be more inclined to appoint Publicis to help them, but when the ad group controls even more of the buying and selling process, it will mean greater control for the hold co and less transparency for advertisers.
It is understandable that our trade titles are brimful of content on Publicis/LiveRamp, but the reaction in the offices of the marketing department of Mega Corp Inc will be a lot more circumspect.
If this deal doesn’t change the game for advertisers, it only redistributes their money into different hands within a complex, inefficient supply-chain that siphons clients’ money without producing better results.
For advertisers this is no big deal.
