Transparency in Programmatic Advertising Won’t Happen Until Marketers Demand It

By Marcus Startzel    August 21, 2018    

PARTNER CONTENT

From the outset of the programmatic era, advertisers and publishers alike have decried the murkiness of the programmatic advertising supply chain and asked for greater transparency. In order to achieve better transparency, however, marketers must stop asking for it and start demanding it — and refuse to work with any ad tech company who can't provide it. Establishing that line in the sand is the only way to change the status quo.

But what does transparency in the programmatic era actually mean? And how much is sufficient?

The answer is actually a pretty simple one for brand marketers. Transparency in programmatic advertising means marketers know exactly where every penny in their campaign budget goes. That is, they would know how much money makes it into the pockets of publishers and how much goes to the various ad tech providers who keep the supply chain moving.

Very few marketers have achieved this level of transparency, making it nearly impossible for those who haven't to fairly evaluate their programmatic partners and eliminate the ones who can't justify the fees they charge — many marketers don't even know what those fees are. This would be considered an outrage in nearly any other industry.

Some marketers may read this and think they're better off moving spend away from programmatic buying, but that would be throwing the baby out with the bath water. Programmatic already represents at least 78 percent of all digital advertising spend, according a recent whitepaper by AppNexus, and that number is likely to increase in the coming years. Opting out of programmatic media buying would mean cutting one's advertising off from a huge percent of the digital ad inventory available, not to mention the emerging types of inventory that will primarily be transacted on programmatically.

Ditching programmatic buying would also ignore the fact that the lack of transparency is a solvable problem. All the data generated by programmatic transactions — including the prices paid to publishers and the programmatic providers separating them from the brands — is logged and available to marketers. Marketers just need to demand it, and refuse to work with partners who can't or won't provide it.

But first, marketers need to educate themselves on all the intermediaries along the programmatic supply chain taking pieces of their budget and on the new third parties that can help them quantify those pieces.

 

Think You've Got Transparency? You Might Not

Many brand marketers think they already have an adequate understanding of where their programmatic media budgets are going because they know how much of a cut their agency or demand-side platform (DSP) takes. That, combined with the partners' handy monthly reports that explain what sites a brand's ads showed up on and how they performed, may give marketers the impression they have everything they need to know.

But that's not the case.

The programmatic supply chain stretches well beyond the DSP before it reaches the publisher. Other types of intermediaries that sit between marketers and publishers include ad blocking services, ad servers, data segment providers, data management platforms, viewability partners, and supply-side platforms (SSPs).

Many marketers likely can't say what the 2017 average take-rate was for each of those partners. Some, perhaps, won't be able to name the partners they work with in each of these categories, the work they do for the brand, or the exact percent they take from each programmatic buy. Without knowing those key pieces of information, marketers can't claim they've achieved transparency.

 

So, What Can Be Done to Fix This?

To be clear, most marketers can't say how much of their budget is going to these ad tech intermediaries. After all, they don't own the relationship with them; their agency, DSP, or potentially even another intermediary further down the chain does. And this works to the intermediary's advantage, especially if they don't add all that much value — it's impossible for them to have their performance ruthlessly evaluated if the person providing the budget doesn't even know who they are.

By finding out who these intermediaries are, marketers can start the process of auditing them. There are two routes one can take:

1. Ask the current agency or DSP. Marketers can call up their DSP or agency and ask who they work with in each of the categories noted above and how much they make on each individual ad buy. If they can't give an exact breakdown, then the marketer needs to get in touch with those companies directly and ask how much they take out of each programmatic transaction.
2. Reach out to a transparency provider. If marketers can't get transaction data from their programmatic intermediaries — or, better yet, they want to verify the information those intermediaries provide — marketers can also work with one of the ad tech transparency providers that have cropped up in recent years. These companies use blockchain and other new technologies to audit the programmatic supply chain to say with certainty how much of a brand's budget goes to intermediaries and how much goes to the publisher. Examples of these providers include Amino Payments, AD/FIN, and Lucidity.

In other words, marketers need to be pushy. They should press their DSPs and agency partners to be open about how much of the budget goes to these intermediaries. If they can't say, marketers should ask the intermediaries themselves. If that doesn't work, marketers can find someone who can run an audit. Most importantly, marketers should refuse to work with anyone who doesn't give basic business-critical information — that information is readily available, so there's no reason they shouldn't provide it.

 

Transparency Is the Key to a Better Internet

By creating an open, real-time market for digital ads, programmatic media buying can give more marketers greater access to their audiences, put more money in the hands of high-quality publishers, and give users a more positive, relevant digital ad experience. But first, the industry needs to solve the transparency problem. Advertisers can't continuously improve their programmatic campaigns if they can't fairly evaluate all the providers involved. The data they need is out there — all they need to do is tell their partners to give it to them.

Marcus Startzel (@startzel) is the SVP of marketplace development at AppNexus. You can email him at mstartzel@appnexus.com.

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