The goal of advertising is to make a business money, but conflicts of interest are all too common. Agencies talk a big game about protecting their clients' long-term interests, but many agencies fail to serve their clients first when their financial incentives don't align.
As a marketer, you need to know your agency's potential conflicts of interest to make sure you're getting the results you're paying for.
At the root of agency conflicts of interest is a historical payment system based on percentage of ad spends. That motivates agencies to increase their revenue by spending more on paid advertising.
The biggest culprits include display advertising fraud, pay-per-click (PPC) advertising, and commission-based affiliate marketing.
Display advertising fraud
Display advertising fraud is a huge issue. Advertisers devote billions of dollars to online display ads, often purchased "programmatically" or through buying software that automatically places ads on sites that fit a brand’s media plan.
However, at least 36% of clicks from display ads may be fake. So, marketers not only pay a lot of money for worthless traffic, but agencies also have little motivation to fight fraud—they're compensated on a percentage of spend and want increased volume.