• by Mike Peralta , Op-Ed Contributor, June 3, 2014

The online ad industry has been battling issues of transparency for most of its existence and adoption of programmatic media sales has only fueled the debate. Fewer than one quarter of client-side marketers understand programmatic and use it in campaigns, while 42% feel that concerns over transparency have increased in the past year, according to a recent survey by the ANA and Forrester.

Advertisers have a right to be concerned, as less of their budget is going toward ads that are actually shown to the target audience, in a suitable environment and the right number of times. Internal AudienceScience research finds that an average of 24% of an advertiser’s budget is spent on ads matching the consumer target, environment and frequency, or “working media.” That’s unacceptable, and advertisers need to take action and press their partners to ensure a higher percentage of their ad dollars goes toward their actual advertising goals.

Before we get to the preventative measures, it helps to know where that remaining 76% of the budget goes. Part of it goes toward transparent third party fees, such as the agency and DMP. The rest goes toward non-transparent costs, such as inventory arbitrage and -- because we’re talking about working media -- non-viewable impressions and frequency inaccuracies, which eat away at the total budget without helping the marketer.

The 24% we’re using here is an average as well, so some advertisers may be paying up to 80% of their budget to middleman fees. When the advertiser and agency have little insight into execution, the agency is removed from where the ads are served and why.

Are agencies combating this on behalf of their clients? They are -- some of the time. Many agencies recognized the demand for programmatic media buying and introduced their own trading desks, bringing the technology in house and hoping to educate marketers. These desks haven’t helped assuage transparency issues; the ANA study finds 41% of marketers are either unaware or lack understanding of programmatic.

Worse, the desks operate as black boxes with little insight. Data is typically pooled with other trading desk client data, helping the trading desk gain scale (a benefit to the agency), while leaving the advertiser with no control (a major drawback). Agencies won’t necessarily argue with you on this front, either. A year ago GroupM Global Chairman Irwin Gotlieb was quoted saying that transparency wasn’t his primary concern and “it doesn’t say in Genesis that everything we do has to be on a fully disclosed basis to clients.”

To combat the transparency challenge, marketers need to start by asking their digital media team the following seven questions:

1.     Where exactly are my ads running?

2.     Why are they running there?

3.     Who is seeing my ads?

4.     How many times are they seeing them?

5.     What intermediaries are involved in the process?

6.     What am I paying for the intermediaries and the ads?

7.     What was the result of the ads against my KPIs?

An effective and efficient advertising operation can answer these questions easily. If the answers are unsatisfactory -- or if it’s difficult figuring out the appropriate party to ask the question -- then advertisers need to seek alternatives to introduce transparency into their campaign strategy. These alternatives include managing transparency through contractual terms, building an in-house solution, or licensing programmatic technology directly. All three come with their own pros and cons, and advertisers will have to decide which works best for their situation.

The goal for all marketers is to invest their digital dollars with no fear of hidden margins, and no black box that keeps them from knowing where and why ads are served. Marketers need solutions that allow them to access the platform and to own the data sets themselves. Keep this in mind when investigating transparency.