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Whoever holds the gold makes the rules
Tom DenfordSep 14, 20233 min read

"Whoever holds the gold makes the rules."

Brands Deserve Better Media

A weekly column from @tomjdenford



Only the advertiser pays the expense of advertising. To everyone else, that money is income.



The famous adage about the ‘golden rule’ states that “whoever holds the gold makes the rules.” In advertising that means of course that the advertiser should make all the rules. They are at the top of the tree, paying the sizable expenses of advertising. Only they see advertising as an expense (or hopefully an investment in growth). For everyone else in the supply chain, that money is nothing but income. 


This is important because it creates a divide between the advertiser, who will ultimately want to minimize their expenditures, and everyone else who wants to maximize their incomes by encouraging advertisers to spend more. 

So why don’t advertisers make the rules?


A quirk of our industry (if you’ll permit me to call it that) is that advertisers have certainly not been setting the rules in media for a very long time. Why so? There are many reasons we could pick from but my preferred, and the most logical, is that you cannot dominate something you do not understand. 


Media has become so painfully complex that you cannot blame the advertiser for not knowing how to assert their primacy. It's reminiscent of the days of the Wild West, where the Sheriff had to use hope and charm to create order in the absence of having much respect or leverage. 

An asymmetry of information value


Recent reporting by the Association of National Advertisers in the US on the (lack of) transparency in the programmatic supply chain suggests that advertisers are being disadvantaged by what they call ‘an asymmetry of information.’ The ANA is saying that their members (understandably) don’t understand the complexities of the supply chain and therefore cannot get a good deal. 


I think it's even worse than that. In my view, there has been for a long time an asymmetry of value in the supply chain. This relates back, unfortunately, to the golden rule. It is the advertiser that funds the entire supply chain. Their expenses on advertising are everyone else’s income.


Yet, over the last decade, the greatest value from advertising investment has not benefitted the advertiser. It has been created in the supply chain (notably in ad tech), and not always in support of the brands we are all supposed to be serving. 

Can we ask better questions?


The following few paragraphs are thoughts from my ID Comms colleague PJ Leary on this topic and are taken from a recently published column in MediaPost:


As the [ANA] study points out, “there are strong characteristics of information asymmetry in cases where sellers typically have more or better information than buyers about the quality of media inventory being sold in auctions. If buyers are unable to properly access the price of the goods in question (i.e., programmatic inventory and audiences), they tend to overpay. If buyers are unable to know enough about the underlying quality of the goods being sold, particularly in auctions, they cannot know how to price it with any precision or certainty.”   

This is fueled, the report goes on to say, by a “complicated, decentralized, highly technical system comprised of many disparate players that has and is subject to minimal oversight or regulation." 

As [ANA partner] Kroll notes: “it would not require a herculean effort for advertisers to simply be able to ask better questions and give better direction to their agencies. Clearly, advertisers do not always have the time or resources to become experts in the space. However, this is not an excuse for advertisers to avoid acquiring even a minimum level of strategic knowledge." 


I encourage you to read the full piece by PJ on MediaPost here.


Brands deserve better from their investments in media. When brands get the media they deserve they flourish. 


When brands grow, we all win!




This post was featured in ID Comms’ weekly column, Brands Deserve Better Media. Each week, CEO Tom Denford shares insights on media and advertising and inspires us to work together to build a better future for the industry.

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