The need for transparency
Online marketing has become an essential part of business strategies worldwide, but with its rapid growth has come increased need for transparency of costs. In Europe, digital advertising is undergoing important transformation as regulators and businesses themselves demand more openness and clarity.
The online marketing landscape consists of various actors, each playing an important role in the process of promoting goods and services. These actors include advertisers, advertising platforms, marketing and creative agencies, Ad Tech companies, analytics providers, content creators, data brokers, and others.
price transparency: meaning
Transparency in online marketing refers in principal to the open disclosure of the elements of the price paid by the advertisers for marketing services. Transparency of costs is crucial for businesses willing to promote their goods or services, to enable them to make informed decisions, optimize their strategies, and avoid hidden fees. It involves a clear understanding of how much is being spent on various marketing channels, services of intermediaries, platforms, and how does these fees correspond with the effectiveness of the marketing campaigns.
The role of a legal counsel representing the advertiser in the negotiations with marketing service providers is to ensure that all costs incurred in connection with the advertising services ordered are transparent to the client and that the budget allocated to campaigns is not spent on hidden additional fees.
breakdown of fees
The most important aspects to pay attention to are the breakdown of fees charged by various marketing service providers. The advertisers should be aware of the budget spent on the inventory (advertising space), various platform fees, agency and management fees, third party services costs, additional features engaged to enhance the effectiveness of the campaigns, as well as any potential markups.
Advertisers must be aware of the fees charged by the advertising platforms fees for hosting ads, including not only the base fee, but also any additional elements, such as setup fees, premium placements, etc. Agencies managing the campaigns often add management or service fees (as a fixed monthly fee or a percentage of ad spend) which should be transparently communicated to the client and described in the marketing services agreement.
The most common settlement models for online advertising services are: CPC (cost per click), CPV (cost per view) and CPM (cost per mille). In this regard, transparency means being aware of how much each interaction costs and what affects the price, as well as and how much of the budget is allocated strictly to the campaigns.
the importance of reporting and analytics
Hidden fees can arise also from untrustworthy tracking or unclear reporting regarding the effects of the campaigns, which can be prevented by setting out the clear reporting rules during the negotiations of the marketing services contract.
Some platforms or third-party technology vendors participating in the provision of online marketing services can charge the advertisers for usage of advanced analytics and optimization tools. Sometimes the hidden markups are added to advertising budgets, making it unclear how much is actually being retained as a margin by each of the intermediaries participating in the process (e.g. advertising agency, DSP, SSP, etc.). Advertisers need to demand to set up the clear invoicing rules, including the disclosure of discounts or rebates based on ad spend or other criteria.
make your ad spend effective
Transparent cost structures in online marketing have positive influence on the decision-making and lead to more efficient spending and higher returns. Clear visibility into marketing costs allows the advertisers to better allocate their marketing budget across channels that perform best.
Europe continues to lead in setting high standards for digital transparency through regulations such as French Sapin law I. As regulations continue to evolve, companies that prioritize transparency will be better positioned to navigate the future of online marketing in Europe.
The role of specialized legal counsels is invaluable in the process of protecting advertisers from negative financial consequences of lack of legal awareness in the process of negotiations of marketing services contracts.