How seriously do the world’s biggest advertisers take the issue of transparency, and what are the implications for publishers and the adtech ecosystem?
Let’s start with Procter and Gamble. The company revealed that last year it cut its digital advertising spend by $US200 million after analysing data provided by its tech and media partners.
That data revealed huge amounts of wastage and a very black eye for the digital advertising world. There was little impact on its sales at Procter and Gamble despite the huge adjustment, but you can bet the effects were felt right through the digital ecosystem. After all that was $200M less into the pockets of digital publishers and $200M less flowing through the many, many toll gates that clip the ticket on the road between advertising buyer and seller.
And Procter and Gamble was not alone in the actions it took. As Which-50 reported last year, Unilever’s digital ad spend dropped 59 per cent year-over-year between January and May of 2017 compared with the same period a year before, according to the Gotham City Research. And that same Gotham City Research report also referenced Chase Bank which reduced the number of sites it advertises on from 400,000 to just 5,000 after discovering the ineffectiveness of a broad programmatic strategy.
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“Only 3 per cent of the 400,000 sites led to activity beyond an impression. Of the 3 per cent, more than 50 per cent were sites that Chase did not want to advertise on,” the report said.
Marc Pritchard, chief brand officer, Procter and Gamble told journalists at the Association of National Advertisers’ media conference last week, “Transparency shined a spotlight on reality and we learned valuable lessons which are driving profound change.”
That valuable lesson was how much money, they and their peers waste every day on ads that are unseen by human eyeballs, or served into worthless remnant inventory spots… Or most worryingly, channeled to scam sites whose content varies from puerile to pornographic and where clicks are as likely to be delivered by fraudulent bots as by people.
Trust, but verify
Transparency and trust remain the key issues to marketers. But instead of completely understanding the supply chain, many marketers are still struggling to grasp all the implications, or worse accepting at face value the opinions of those who stand to gain most from opacity in the market.
Little wonder then that transparency featured so prominently in many of the presentations, and water cooler conversations at last week’s Ashton Media programmatic summit in Sydney.
According to Paula Parkes, Senior Director, APAC Enterprise Marketing at Adobe which was one of the major sponsors of the event: “Transparency should not be optional. Brands are demanding visibility; they want to know where their ads are running, how much they’re costing and the impact they’re having.”
While traditionally Adobe is considered more of a marketing tech platform its acquisition of TubeMogul puts it squarely in the heart of the adtech world. And on transparency TubeMogul (now renamed Adobe Advertising Cloud) was an early leader. In 2016 under former CEO and founder Brett Wilson, it became one of the first video DSP services to guarantee the quality of the inventory in its system by providing refunds to brands if a small, arbitrary level of fraudulent inventory was identified and breached during a campaign.
But it wasn’t the first to offer refunds. Indeed DataXu lead the way in 2015 and lately platforms like Pubmatic, and Appnexus have followed suit.
Adobe last year also became the first media buying platform to partner with supply-side platform (SSP) and exchange partners to make all fees – including some that were previously undisclosed – fully transparent.
Parkes told Which-50, businesses want to ensure that their brand is protected from ad fraud and objectionable content. “With today’s media fragmentation and an explosion of data and technology tools, brands should expect a transparent platform they can trust.”
Among the key transparency topics discussed with Which-50’s journalists at the programmatic conference this year;
- Transparency around the so called of Ad-Tech Tax: This is the ticket clipping business model underpinning most ad tech businesses. Delegates were concerned about the separation of technology and media fees and expressed a desire to be invoiced for each individually.
- Transparency of Supply Chain Management: This involves understanding how many companies sit between the advertiser and the publisher. The goal is to cut out businesses which simply arbitrage rather than add value.
- Transparency in site ownership: Knowing which site you are advertising on and who the owner of that site really is.
- Transparency of metrics: ability to know more about the impression that was delivered. That then brings in the wider issues of viewability and attribution.
Transparency, in other words, means different things to different people depending on how they plug into the ecosystem.
For publishers, they want to understand exactly who is clipping the ticket in between them and their brand customer.
For marketers, the cost and return on ad spend is an issue – but brand safety is probably more important – as speakers from Lenovo and Westpac each emphasised on the day.
And for tech vendors the issue has moved from an embarrassing weakness in the business model that was best avoided during sales calls, to now being positioned as a competitive advantage.
This more enlightened vendor view lead off the Programmatic Summit last week with AppNexus’ chief strategy officer Tom Shields pitching the idea of radical transparency. He called on publishers, tech vendors and agencies to reveal their margins in order to allow marketers to be able to evaluate their place in the programmatic supply chain.
“The point of transparency is to look at the ecosystem, find areas of inefficiencies and root out bad actors,” said Shields. He went on to advise marketers if they can’t get clarity on the fees that were being paid through the chain then marketers would be right to question if those actors had their clients best interests at heart.
Shields maintained that it was perfectly reasonable that marketers ask vendors to reveal their margins. He said it shouldn’t be difficult for vendors to articulate why they were valuable. (The IAB’s CEO Vijay Solanki took a contrary position referring to the digital ‘ad-nogistics’, many of whom are in the C-Suite and ultimate decision makers, needing more education to understand the programmatic marketplace.)
Shields said, “The ecosystem is complicated but it doesn’t have to be that complex. Or you don’t need to understand how auction dynamics work and the bits and bytes to answer the question of where are my dollars going.”
The evolution towards full transparency
Laura Quigley, sales director at Integral Ad Science, one of the leaders in the verification space, said the push to transparency was really about “marketers wanting to look under the hood” for the first time.
Clare Smith, Digital and Customer Marketing Director at Village Roadshow, concurred saying that transparency is a natural evolution as programmatic becomes more fully embedded into the marketing department.
Speaking on the Building Trust in Programmatic panel, Smith said for a long time programmatic was considered one of the black arts of marketing – brands didn’t know what data was being used or where or when their ads were being shown. That put it at odds with other digital and offline channels.
While marketers have managed and understood martech for a long time, now they know that this data can be used to enhance their ad tech as well.
While suggesting that the only path to full transparency was to bring programmatic buying in-house, Smith talked through the importance of trust if you were going to have an agency – including offering them full access to Village Roadshow’s internal martech stack – in order to deliver the best results.
“If not, you’re always hounding them,” said Smith “They’re not efficient and it feels like you’re hovering over them.”
The future is transparent programmatic
Marketers are keen to invest in programmatic into the future if problems like brand safety, ad fraud and transparency can be overcome.
Given such circumstances marketers would continue to increase their programmatic budgets said David Goddard, Global Head of Programmatic for BBC.
Presenting results from the BBC’s Attitudes Towards Programmatic survey, Goddard said that lack of transparency around fees in the supply chain is one of the key factors (40 per cent) scaring people away from using programmatic, echoing the sentiment Shields’ keynote presentation.
With more advertisers (23 per cent) and agencies (54 per cent) bringing their programmatic advertising-house, Goddard echoed Smith by saying “You really have to get your hands dirty”.
Their views on fees, in particular, were reinforced by the head of programmatic at a very large media business who spoke to Which-50 anonymously as they were not authorised to comment on behalf of their company.
“We see that as a threat to our margins and we see that as the lowest hanging fruit to recapture the lost dollars that are ultimately going to everybody else unquestioned. Looking at the SSP model, maybe they’re doing buy-side fees, that’s been reported over the past year or so. And when you scrutinise that, look at that a level deeper, it creates all sorts of questions about the business model itself.”
The programmatic specialist said they would be comfortable giving 10 to 15 per cent on an open exchange as the exchange is going out and doing integrations with all of the buy-side platforms.
“They have their business development people having those conversations. They’re having technology people have those conversations and do those integrations, so they are adding real value.”
But he said he would be less comfortable if his company was using the platform to do a preferred deal or programmatic guarantee arrangement. “In that case it’s my resources, my sales team, and we’re just basically using an ID to make a connection. They (the platform) don’t deserve 10 to 15 per cent of that transaction. It should probably be a different business model like for instance a CPM model, or subscription fee model.”
Another programmatic executive on the publisher side was even more direct, telling Which-50, “All I care about is yield and revenue. If transparency is one of the levers I can control to grow yield and revenue, then it’s a good outcome.”
She said publishers are eeking out a living against the duopoly (Google and Facebook) and only have a few levers at their disposal.
“Transparency, and shopping around for a transparent tech vendor is one of them. The transparency conversation is certainly at the forefront, but I don’t see there has been much change as yet.”
On the upside, The BBC research also found that 75 per cent of marketers see programmatic as a more efficient investment. Programmatic video was a key driver of growth, up 150 per cent since the survey in 2016 but Goddard says that comes with a warning. The struggle by publishers to meet demand had given rise non-LEAN video formats that had the potential to increase the use of ad blockers and risk publisher site traffic.
According to Jonas Jaanimagi, technology lead at the IAB, “All the required tools are available for marketers to manage every aspect of both brand safety and the risk of adjacency to inappropriate online content. Whether or not one chooses to understand, utilise, or pay for the appropriate tools is up to those brands and their related representatives.”
Jaanimagi told Which-50, that having sufficient controls over the domains, content and context of where brands are prepared to play, depending upon their appetite for risk, are the basic starting points.
“Thereafter strictly filtering out both invalid and sophisticated invalid traffic will cover-off any remaining elements of risk so as to ensure that brand marketers can sleep at night. Being prepared to understand the true value and benefits of the related available technology solutions that are available is absolutely critical.”
The bottom line
Ultimately, transparency matters because the better marketers understand how their money is being spent and what the data is telling them the more effective their campaign activity.
This was borne out in a presentation by Lenovo’s APAC Digital and Social marketing manager Danielle Uskovic. Her team brought management of their programmatic activity back in-house in 2015 and the results were telling.
According to Uskovic, speaking at the conference, “We improved efficiency by 30 per cent. We dropped our CPM by 50 per cent. Viewability increased by 337 per cent and fraud fell down below 3 per cent.”
And the bottom line; depending on the campaign, Lenovo’s return on ad spend is between 15 to 1 and 90 to 1.