If you’ve ever been at the receiving end of an obviously padded bill, rife with hidden charges and fees, you probably already appreciate the need for transparency. In all probability, you never returned to that store or service provider. Your trust was too shaken.
Aside from value, trust is one of the most important aspects to business. And as the head of marketing for a revenue optimization platform for publishers, I believe the digital publishing industry presently has a dire lack of it. As programmatic advertising has grown, so has the call for more transparency in its operations.
What is programmatic transparency?
Transparency, like the word suggests, means total visibility of the buying funnel, including ad placement, pricing and data. With access to accurate, complete information on these aspects, buyers can make informed purchase decisions, and advertisers can optimize their spending and ad delivery. It is the responsibility of the demand-side platform to report this information in a reliable manner to buyers.
Of the above, pricing has been the most contentious. According to a 2017 analysis by Warc, only 45 percent of total programmatic revenue reached publishers. A whopping 55 percent, infamously dubbed "tech tax," was captured by the various players in the supply chain. Undoubtedly, the supply chain service providers play a crucial role in ad placement and should be paid their due, but buyers have a right to know how their money is being used.
Ad viewability (a measure for ads placed in an area of the screen not visible to a user but still counted as an impression) and ad fraud (bot traffic and fake clicks) further pad advertiser bills but bring no return. They have also been identified as issues that need to be addressed. According to eMarketer, ad fraud costs the industry anywhere between $6.5 billion and $19 billion a year. In 2018, a study by Adobe found that 28 percent of website traffic could likely be attributed to bots and “nonhuman signals.”
How does this affect publishers?
Lack of transparency doesn’t just affect advertisers; it costs publishers as well. Every cent pocketed by supply chain players is money that did not reach publishers. That is not to say they shouldn’t make money. However, it is only fair to expect a detailed picture of how the pie is being shared.
Overall, digital advertising revenues clearly show that the industry is not being held back by what advertisers are willing to pay, but publishers are still not getting the right price for their inventory.
That said, there is more to it than just the opportunity cost of lost revenue. With an increasing number of large advertisers clamoring for transparent advertising practices, it is only a matter of time before tech vendors and agencies that do not offer complete visibility start to lose business. By picking reliable vendors and supply side platforms and monitoring them closely, publishers not only stand to make more money in the present, but can also be assured of steady, sustainable revenues in the future.
The heralds of change
After years of criticism about how ad spends were being divvied up, the debate around programmatic transparency finally reached its crescendo in 2017 when The Guardian sued Rubicon Project for undisclosed buy-side transaction fees that buyers of its newspaper’s ad inventory were being charged without their knowledge. While the companies settled the dispute in October 2018, the case opened a Pandora’s box of productive discussion and action to further transparency.
At the head of the era of change was Marc Pritchard, chief brand officer of Procter & Gamble. In 2017, Pritchard announced P&G’s slew of measures to clean up the digital advertising supply chain. Prominent among them were shifts to one viewability standard, third-party measurement verification, setting up an initiative to combat ad fraud and emphasis on transparent agency contracts.
What lies in the future?
P&G is not the only company going through agency contracts with a fine-toothed comb. With advertisers learning the ins and outs of how the supply chain works, trust has become a keyword in every ad tech agency pitch, and both advertisers and publishers expect transparent access to how money is being distributed throughout the supply chain.
Last year, several exchanges wrote an open letter to advertisers and publishers, promising to set standardized marketplace principles to promote transparency. An explicit fee or cost-plus pricing model will become the norm, with each player’s fee or commission clearly stated in the contracts to leave no room for obfuscation. These factors are now being included in the Trustworthy Accountability Group (TAG) accountability and compliance certifications.
Knowing where the money goes is just the first step. After that will come cutbacks. Fifty-five percent of the pie is more than just a hefty chunk, and there is already increasing thrust toward cutting down intermediary costs. This will likely lead to consolidation of platforms and elimination of some members of the funnel to lower costs and make reporting on fees, traffic and ad quality easier and more transparent.
In 2020, ISBA and PwC conducted a study to understand how advertiser spends were being attributed and found that as much as 15 percent of advertiser spend could not be traced. Collaboration between all parties will be required to identify and eliminate this wasted spend in order to foster an environment of accuracy and efficiency in revenue sharing.
There are also a variety of tools available for publishers to detect and prevent ad fraud, which can help publishers offer a brand-safe environment. I've observed that more publishers are already using standards such as "ads.txt" to declare which companies are allowed to sell their inventory, thereby reducing the risk of counterfeit inventory and contributing to a cleaner digital programmatic supply chain.
These efforts are undoubtedly steps in the right direction to ensure completely auditable and open supply chains so that programmatic advertising can deliver on its promise of unlimited potential and publishers will finally be able to monetize their inventory at rates that they deserve.
