It likely implies something different to advertisers compared to the vendors that include the word in their value propositions. There’s no current consensus on what transparency should entail, which means there’s still tension between the demand and supply sides and their respective interpretations -- tension that will remain until we actually figure out what’s important for all the involved parties. Let’s look at how transparency, the word, is used today -- and what needs to change.
Perhaps the most common use of
“transparency” from a vendor perspective refers to visibility into the sites where an advertiser’s ad ran. A recent MediaPost piece encouraged marketers to ask seven questions of their
programmatic vendors to address transparency into where their ads appear, whom they’re reaching, and the intermediaries involved in the buying process.
This opinion is a bit out of touch, largely because programmatic, data-driven buying is designed to provide the type of transparency described. Therefore, advertisers shouldn’t have to ask. This kind of reporting should be a foregone conclusion. What’s currently not provided to advertisers is insight into all of the costs associated with purchased media.
The Shift to Pricing Transparency
Contrary to the popular perception, trading desks and DSPs have moved away from the black-box model historically popularized by ad networks. However, it’s been difficult for these desks and platforms to adopt comprehensive pricing transparency by showing a breakdown of the markup on media. One reason is that auctions exist between the supply and demand sides, so the DSP may not know the wholesale cost of media from the publisher due to an auction between two supply partners, such as Rubicon and AppNexus. Vendors also want to make enough margin to cover their overhead and technology costs, so many aren't willing to show all the costs that go into the markup.
Full pricing transparency requires visibility into all fees associated with the purchase price for media. The markup on media usually covers ad-serving fees, labor costs, the margins taken by SSPs and DSPs, and technology innovation. We may begin to see a shift in the direction of this type of reporting as more advertisers request pricing transparency.
Trading Desk Needs
Trading desks are in the unique position of being able to leverage multiple sources of inventory via different DSPs. RTB has afforded efficiencies previously unsupported by ad network or direct buying models, allowing buyers to weigh the value of an impression to bid on it accordingly. Trading desks need full transparency into pre-bid data, including the URL and IP address of the bid request. Today, the market does not allow buyers to see the winning bid prices for impressions not won, a valuable piece of information for shaping future bid strategies. The goal to gain transparency into costs across buying platforms and data sharing between platforms would facilitate a more efficient marketplace for buyers and sellers.
Transparency & Finger Pointing
With an industry as crowded as digital media, it’s tempting for competing vendors to call each other out for obscuring elements of the media buying process. Statistics such as “24 percent of an advertiser’s budget is spent on ads matching the consumer target” only serve as a scare tactic and detract from the nature of programmatic buying, implying that the practice generates huge amounts of waste. In reality, the fees associated with programmatic media benefit advertisers by covering the expertise and investment in future technological capabilities. It always benefits vendors to chase the best returns for their clients. Whether or not vendors decide to show those costs to their clients is still up for debate.
As companies in our industry continue to proliferate, we may begin to see an ecosystem that more closely mimics the stock market, in which economics dictate pricing in conjunction with full transparency. It will take a few vendors to blaze the trail for widespread adoption of all-encompassing transparency.