Where Did the Marketing Dollar Go?
The growing distance between what companies spend on media and what actually reaches the market.
A company approves a $1 million media budget. But how much of that $1 million actually buys media?
It sounds like a question the CFO, CEO or CMO should be able to answer in about ten seconds. But these days, it increasingly isn't.
Modern media buying has created capabilities marketers could only dream about just two decades ago. We can identify audiences with extraordinary precision, automate billions of buying decisions, measure exposure across channels, protect brands from questionable inventory, connect activity to business outcomes and optimize campaigns while they're still running.
All of that capability comes with an economic infrastructure underneath it: agencies, buying platforms, selling platforms, audience data, identity solutions, verification, measurement, attribution, managed services and publishers. Depending on how the investment is structured, there may be several other participants along the way.
While each may have a legitimate role, each may also take a piece of the dollar. Which leads back to that deceptively simple question: Where did the dollar actually go?
Working Media Isn't Quite That Simple
For years, marketers have used the idea of "working media" as shorthand for the portion of a budget that actually reaches the marketplace. It is an appealing concept. If 80 cents of every dollar purchases media, that sounds better than 50 cents.
But that comparison can become misleading pretty quickly.
Audience data may cost money, but better data can reduce wasted impressions. Verification costs money, but protecting a brand and confirming that advertising was actually viewable has value. Measurement costs money. Technology costs money. And people with the expertise to manage increasingly complicated investments should cost money.
So, a campaign in which only half the budget technically qualifies as "working media" isn't automatically inefficient. Conversely, a campaign that directs 90 cents of every dollar toward media isn't necessarily efficient if those 90 cents are buying low-quality inventory, reaching the wrong audience or producing little business value.
The percentage alone doesn't tell us enough. A better question is whether the organization understands what it received for the other cents.
That's an important distinction because the conversation around media efficiency can easily become a hunt for fees. Lower fees sound better. Fewer intermediaries sound better. More money reaching publishers sounds better. Sometimes all three are better. And yet, sometimes they aren't. Confused yet?
The objective shouldn't be to construct a media supply chain with the fewest possible participants. It should be to understand why each participant is there, what capability it provides, what that capability costs and whether the value being created justifies the economics.
How Did We Get Here?
Media buying used to be comparatively easy to visualize. An advertiser hired an agency. The agency negotiated with a television network, radio station, magazine, newspaper or other media owner. Money moved through a relatively short chain, and the economics were generally understandable.
Digital media changed that, not because someone intentionally set out to make advertising incomprehensible, but because the capabilities became more sophisticated.
Automation required technology, and targeting required data. Billions of available impressions required marketplaces capable of matching buyers and sellers in fractions of a second. Fragmented audiences created new measurement challenges. Then fraud created a need for verification, and privacy changes created demand for new identity solutions.
Layer by layer, the infrastructure grew. And every layer created another commercial relationship somewhere between the advertiser and the consumer.
The more places a dollar can go, the harder it becomes to know where it went.
That creates a governance problem because the person ultimately approving the investment may be several organizational layers removed from the people and technologies actually deploying it.
A board may approve the marketing budget. A CFO may authorize the expenditure. A CMO may allocate the media investment. A marketing team may brief an agency. The agency may work through platforms, data providers and other partners. Eventually, an ad appears in front of a consumer.
Between all of that, the economics can become surprisingly difficult to follow.
And let’s be honest. The industry knows this. Advertisers, agencies, publishers, industry associations and technology companies have spent years debating fees, supply paths, rebates, incentives, platform economics and the amount of advertiser investment that ultimately reaches publishers.
Those debates continue in part because there isn't one simple culprit, or one simple fix for that matter.
Reducing fees isn't necessarily the same thing as improving performance, and removing intermediaries isn't necessarily smart if those intermediaries are creating measurable value. And the cheapest possible path to an impression isn't necessarily the most productive one.
The more useful question is: What value are we receiving from every layer between our budget and the consumer? And that's simply a business question, not an ad-tech question.
When the Numbers Hide the Economics
Connected television provides a useful example because the language executives use to describe it can sound deceptively familiar. "We bought television."
Simple enough.
Except today's television investment may include premium streaming inventory, programmatically purchased inventory, audience data, demand-side technology, supply-side technology, identity services, verification, measurement, attribution and management fees. A campaign may also include other digital inventory, sometimes including display or retargeting, as part of the broader program
Now imagine looking at the campaign in aggregate. The blended cost per thousand impressions looks terrific. But … what exactly are we looking at?
If lower-cost display impressions are combined with more expensive premium television impressions, the average CPM will naturally fall. That doesn't necessarily mean anything improper happened, but it also doesn't mean television suddenly became cheaper. It’s just that the denominator changed.
That distinction sounds elementary once someone explains it. But it illustrates a much larger issue with modern marketing measurement: aggregated numbers can create the appearance of clarity while concealing what's happening underneath them.
The dashboard may be accurate. The interpretation may still be wrong.
The same issue applies beyond CPM. An executive dashboard can show impressive reach, low acquisition costs, strong return on ad spend or millions of impressions while providing remarkably little visibility into the economic machinery producing those results.
And that raises a fair counterargument: What if the campaign worked?
Suppose a company spends $1 million and generates $4 million in incremental value. Does leadership really need to worry about whether 40 cents, 50 cents or 70 cents of each dollar technically reached media? Maybe not in the way the industry often frames the debate. A strong business result matters more than achieving some arbitrary working-media percentage. But performance and transparency aren't competing ideas.
Performance tells you whether the investment worked. Transparency helps you understand whether it could have worked better.
If $1 produced $4, that's good. But understanding the economics underneath the investment may reveal an opportunity for that same dollar to produce $4.50. Or perhaps the company could produce the same $4 while putting less capital at risk. But maybe neither is possible. That's fine, too.
The point isn't to assume inefficiency. It's to know. And that’s ordinary business discipline applied to marketing.
Good Complexity Earns Its Place
None of this is an argument against agencies, technology platforms, data providers or the broader infrastructure that makes modern advertising possible.
If an agency brings expertise the company doesn't have internally, it should be paid for it. If a buying platform improves access, execution or optimization, there is value in that technology. If better audience data materially improves targeting, pay for better data. If verification reduces fraud or protects the brand, that's providing a service. If measurement helps the organization make better capital-allocation decisions, that capability has economic value. Again, good complexity earns its place.
Businesses make these decisions everywhere else. They pay attorneys because legal expertise has value. They pay financial advisers because expertise has value. They invest in enterprise technology because capability has value. And nobody reasonably expects sophisticated expertise or infrastructure to be free.
The issue isn't whether somebody earns a margin. The issue is margin the buyer doesn't understand, didn't knowingly approve or can't connect to value.
I that's a very different conversation. And it doesn't require an adversarial relationship between advertiser and agency, or between buyer and technology provider. It requires visibility.
The alphabet soup of marketing acronyms can be confusing to even the most seasoned marketer these days. And an executive doesn't need to interrogate every line item or become an expert in programmatic media. But leadership should be able to get straightforward answers to a handful of straightforward questions:
Of every dollar we're calling "media spend," how much actually purchases inventory?
What does each additional layer cost us, and what value is it providing?
Are actual media costs separated from technology, data, measurement and management fees?
Do we own and have access to the underlying accounts, data and performance information?
If we removed a layer tomorrow, what would we lose?
That last question may be the most useful. Instead of asking, Why are we paying for this? ask: What stops working if we stop paying for it?
If there is a clear answer, the layer may be earning its place. If nobody can explain the answer, that's worth digging into and understanding.
Complexity Isn't the Enemy
Modern media will never be as simple as buying a television spot or a newspaper page. Nor should it be.
Marketers today have capabilities that would have seemed impossible just twenty years ago. Better targeting, faster optimization, richer measurement and greater access to audiences all require infrastructure. Sophistication has value. But sophistication shouldn't require surrendering visibility.
A CEO doesn't need to understand every auction, algorithm or acronym behind a modern media buy. The people responsible for that investment should.
And they should be able to explain it in plain English: Here's where the dollar went. Here's what each piece bought us. Here's what worked. Here's what didn't. And here's what we're changing next time.
Because ultimately, this isn't really a media question. It's stewardship.
Perspective by Clint Allen | President & Founder, CLINTONSCOTT
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