Commentary

A Funny Thing Happened On The Way To Ad Industry Transparency...

...It has become even more opaque. That’s the message the team at data-driven marketing analytics firm Ebiquity put out this week on the eve the Association of National Advertisers annual conference, which begins today in Phoenix. In an opinion piece written by Nick Manning, president-international at Ebiquity, he asserts that the acceleration of real-time trading isn’t creating the kind of market transparency many of its supporters claim it is. If anything, he says, it’s making the process even more difficult for marketers to decipher.

And the pending merger of Publicis and Omnicom, he claims, will only exacerbate the situation, concentrating “two-thirds” of the media marketplace in two agency holding companies -- Publicis Omnicom and WPP -- and and an even greater share of the digital marketplace, which he asserts is the, “least transparent sector of the whole media market.”

How can this be? All the players in the landscape -- everyone from exchanges to trading desks -- keep telling me it’s -- finally -- making media-buying an open, transparent book. And based on the free flow of data we’ve started to report on, it certainly seems that way.

Not so, says Manning, asserting that advertisers are actually “shrouded in an increasingly opaque transactional chain” and that, ‘in many instances, advertisers are asked to sign contracts that, if implemented, specifically prevent them from being able to achieve full transparency of the data and money flows in digital media.”

Ah, I get that. But my response would be, then don’t sign those contracts, and don’t enter into those agreements. I mean, who’s holding a gun to your head?

Don’t get me wrong, I’ve heard horror stories. About six months ago, the head of a major DMP (data management platform) walked into my office shaking his head. “What’s wrong,” I asked? Still reeling from his previous meeting with an agency trading desk, he said they showed him data on an audience buy costing the client more than a dollar per user, and when he pointed out that his platform’s data could enable them to buy the same audience for pennies, they replied, “No, you don’t understand, that’s what the budget calls for.”

So if that’s the kind of relationship you have with your vendors, and the kind of specifications you give them, then what would you expect? I have not idea how prevalent those cases are, but I suspect they are more the exception than the rule. But those exceptions have always been around in the media-buying world, even pre-digital. Over the years, I’ve known of plenty of examples of agencies that “time-banked” inventory with broadcast stations, paid them less than they charged their clients, and pocketed the difference. There’s nothing illegal, or even elicit about that (not the U.S. anyway), as long as the clients understand that is their agreement.

So when people make a big deal out of organizations like GroupM and Xaxis being public about arbitraging their clients media trading dollars, I ask, what’s the fuss? They’re actually being transparent about their opacity, and what’s wrong with that? (I even wrote about that when GroupM chief Irwin Gotlieb took some heat for saying as much at the 4As conference earlier this year.)

To me, that is actually a form of transparency. The exact margins -- and all the mark-ups along the way -- may not be evident to a client, but the final cost of doing business, and the method that got them there is 100% apparent. The rest is just a decision about how you want to conduct business.

On the flip-side, I imagine there are situations where client procurement departments are conducting the equivalent of forensic accounting, or maybe even a proctological exam, to get at the essence of every touchpoint and transaction along the way from bid to buy to an ad being served.

And don’t get me wrong, there are plenty of opportunity for margin in the current media trading infrastructure. One reliable source claims to have seen the log file of a buy that had “100” different touchpoints on it, meaning 100 different intermediaries touching it, and presumably marketing it up, before an ad got served. During a recent conversation with another pretty big ad tech player that facilitates such transactions, they told me that would be an extreme situation, but that there normally are dozens of touchpoints per trade, and they all occur within that 100 millisecond bid window.

I get that. But I don’t get Manning’s charge that it is creating more of an opportunity for marketres to be cheated than the old fashioned way. Yes, it happens faster, increasingly by machines, and there is lots and lots of volume of data involved, but so what? The real issue is business rules, agreements, and contracts. And, oh yeah, trust. If you don’t like the deal you have with your marketing services partner, change it. If you don’t trust your marketing services partner, change them. I believe the good ones will thrive, and the bad ones will disappear, but that’s because I believe in open and transparent markets. And in the end, I believe data-based trading will make the marketplace more transparent, not less so. But we may need to give it time.

I also believe others can play a role in helping make it transparent, even the trade press. It’s part of why we launched RTM Daily, and it’s part of the reason we’ve been reaching out to a variety of industry sources to develop data and metrics to cover the business in a far more transparent way. We’ll be launching some of those soon. In the meantime, if you’ve got any ideas for doing it better -- data we can publish, whistles we can blow, anything -- just let me or Tyler Loechner know, and we’ll be sure to cover it.

Image provided courtesy of Shutterstock.

4 comments about "A Funny Thing Happened On The Way To Ad Industry Transparency...".
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  1. R.J. Lewis from e-Healthcare Solutions, LLC, October 3, 2013 at 5:34 p.m.

    Transparency starts at an even more basic level than just the media buy. How about transparency of impression counts. With 100 "touches" of a creative, how many redirects occur in the process of deliverign that ad? 65-75% of ads today are 3rd party delivered, with an increasing number being 4th party delivered (think rich media services). With an average discrepancy loss (impressions that vaporize between the publisher page and the final delivery of creative. Making just two hops means that 14% of your inventory disappears in thin air. There are several forces that are making this worse: Click fraud and Bot-driven impressions are forcing more scrubbing and "sanitation" of impressions. Additionally, services such as DoubleVerify, IntegralAds, and now comScore, are determining (in a black box) what "qualifies" as a legitimate impressions. In short, there is often not a lot of transparency on how these server side "sanitizaitons" occur. While Ad-Juster allows for the easy aggregation and managment of all the various server data, and even points out who's been "santitizing" at times as you watch the agency numbers change post-scrub, there also needs to be transparency in how the systems by which billing and payment are being issues are being managed and sanitized. In the premium advertising world, this is probably an even bigger issue than who's taking a opaque cut of a $1.20 CPM.

  2. Jeff Bander from Sticky, October 3, 2013 at 7:15 p.m.

    Joe,
    Terrific piece as usual, spot on.

    The industry as a whole is making great strides in bringing transparency to the digital world.

    It will happen, and when it does billions of branding dollars (94% if which is offline) will start to move online and the whole digital world wins.

    Deloitte TMT Predictions

    CMO's said in order to move branding dollars online the CMO's need the following:

    1. Improved clarity around ROI
    2. Verify impact of advertising
    3. Verify delivery to target market

    Transparency is the key to this move.

  3. John Grono from GAP Research, October 4, 2013 at 10:20 a.m.

    For online transparency I think I would start with looking at planning metrics - as that is when the budget dollars are allocated. And a good start there would be to move to the 'average minute' metric used by broadcast (always-on) media. That is, a TV rating for a programme means that is the audience for the average minute that it was shown. So when you interrupt it with an ad that is a pretty good estimate of how many people get the opportunity to see your ad. The same goes for the audience data for radio sessions - it is the average minute. (You can always argue that it should be the average ad minute of course!). But when you look at online measurement many publishers still insist on average browsers instead of average audience. Every man and his dog knows that due to cookie deletion browser data inflates that number when measured over a month. But even worse is the data is reported as monthly! An electronic always-on medium that has to look at a pseudo-cume across a month?!?!? How big is this problem? I'll give you one example from here in Australia of a Top 25 website that has a monthly Unique Audience north of 2.5million (remember our population is only 23million of which around 80-90% are online). However on their website. It has an average daily unique browser figure up just south of 1million. And here's the clincher - on their website they have a counter of "Online Now" ... you rarely see it over 25,000. THAT is the number of eyeballs you typically buy. Let's move to average minute daily data and THEN we will have transparency instead of hiding behind monthly cumes.

  4. Zachary Cochran from CPXi, October 4, 2013 at 9:08 p.m.

    For those new to the industry, understanding the contours of "transparency" is still challenging. Keep up the great analysis + this very important discussion!

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