• by John R. Osborn , Op-Ed Contributor, March 22, 2016

I’m enthused about the potential for programmatic TV and video, and all digital ad forms, to change for the better in the ways advertising is bought and sold. But there are some things that I want to feel better about before I would advise any buyer or seller to put all their eggs in the programmatic basket.

I recently attended MediaPost’s Programmatic conference with the intriguing title, “The Reckoning," which discussed the hard questions we are all facing about  trust, transparency, science and accountability.

I was reminded that there are plenty of trust issues manifesting from the various stakeholders in our business:

Consumers(based on user experience) are increasingly defending against excessive bombardment of advertising through ad blockers, which hurts publishers who need ad revenue to produce content.

Consumers (based on privacy and safety questions) are concerned about how publishers, ad-tech and data companies are capturing and using their behavioral and personal data to increase profits.

Content Providers / Publishers in this age of ad blockers are losing confidence in whether consumers will even see ads, thereby reducing revenue. The unspoken contract that consumers will watch ads as a way of paying for content no longer exists.

Publishers are also losing money to fraud, as those on the fringe run scams to simulate delivery and divert ad dollars. Many publishers are also concerned with the “tech tax” of having many players between buyer and seller, compromising profitability and clouding transparency.

Ad-tech companies creating new and more effective selling / buying processes are burdened by the need to solve the above problems while at the same time facing intense competition and reduced VC investment.

Data and research companies are concerned that consumer distrust will lead to highly regulated government limitations around data use that will hurt potential earnings.

Advertisers are paying for unknown amounts of fraudulently delivered impressions. Even publishers who are good actors have some pages loaded by unrecognized non-human traffic (bots). Government regulation and consumer ad blocking would reduce supply and increase costs of advertising over time. Even old, trustworthy partners — the ad agencies – are called into question around the potential for “arbitraging” the buying and selling of media.

Agencies are trying to re-engineer their roles in the marketing mix now that technology has reduced their marketplace leverage. Advertisers like P&G and Kellogg’s are bringing the programmatic buying process in house. The ANA is undertaking a study of ad agency transparency. At the same time, agencies are fending off the profit-squeezing procurement departments of their clients.

The most interesting session at “The Reckoning” for me was the one entitled “The Opaque Stack: Does Complexity Break Trust and Transparency?” It hit me hard, as I had recently seen the Oscar-nominated movie “The Big Short.” I was disturbed by this cautionary tale of the damage done when short-term profits (in the financial services industry) were blindly created by leveraging complex technological processes, business formulas and algorithms.

The complexities developed and exploited in that industry required too much time, energy and smarts for the average consumer or even the expert businessperson to sit down and fully understand them. And those technologies are the ones that have migrated into our own ad industry through programmatic and big-data platforms.

Maintaining and increasing trust, and an attitude of accountability to customers, are not outdated and irrelevant in today’s digital advertising business. Let’s learn from the financial industry’s harmful impact on those who trusted it most, and make sure it doesn’t happen again.