Why every digital advertiser should demand transparency

The world of digital advertising has a history of opaqueness, stemming from the early days of ad networks. Ad networks acted as brokers between advertisers and publishers. Being in such a position allowed them to be as transparent or “non-transparent” as they wished.

This resulted in extremely high margins (50 percent to 60 percent or higher) and limited reporting available to either advertiser or publisher. So while ad networks helped in the execution of large-scale media buying, they lacked transparency and were considered “black boxes,” hindering marketers.

But everything changed with the advent of programmatic advertising.

One of the major breakthroughs was the division of the buy-side technology (for advertisers) and sell-side technology (for publishers).

Having different technology providers that focused on each side of the marketplace addressed the inherent conflict of interest in the ad network model. And since advertisers and publishers now had their own technology, they also had the ability to receive greater transparency from their technology partners, in all its various incarnations.

However, “transparency” itself is a vague word and deserves to be unpacked to better understand exactly what it means for marketers. In short, it means visibility. But visibility into what?

Here are some of the many forms of transparency that digital advertisers ought to demand:

1. Inventory availability

In the previous age of ad networks, it was sometimes impossible to get transparency into the websites where your ad campaigns would run. The ad networks were protective of their publisher relationships, and so they would obfuscate the actual publishers by bundling them into thematic groups like “automotive” or “sports” or “finance.”

Furthermore, it was challenging to get any data about the availability of impressions on specific placements.

From a technical perspective, this challenge was mostly solved with the introduction of real-time bidding (RTB) and programmatic advertising. The ability to see the exact domains on which your ads will run is possible, but not every ad tech platform or agency provides such information.

Where possible, you should seek access to this data, at the very least for planning purposes.

2. Targeting data

Using targeting data from third parties is a common tactic when using a programmatic buying platform like a DSP (demand-side platform). On the surface, however, there is not a great deal of transparency for such data.

For example, you may see a targeting segment labeled “New Parents.” But where was the data collected? How accurate is the label (i.e., was it declared or inferred)? When was it collected (i.e., how fresh is the data)? How much does it cost? And so on.

(For deeper insights on this, see my column on how to evaluate the quality of audience data.)

Of course, as a marketer, it’s possible to use verification tools to discover the accuracy of targeting data after the fact in post-campaign analysis. But this adds an extra burden of cost and time, and it’s also inherently reactive. Ideally, you want to have as much transparency at the outset as possible so that you can make informed decisions.

That said, when you use your own (first party) targeting data, you not only have answers to all of those questions, but you also incur no extra cost to use it.

3. Performance reporting

You must demand to know specifically where your ads are being shown. That’s another critical aspect of transparency. This was very opaque in the days of ad networks. But with programmatic buying technology, there is no reason you shouldn’t get extremely detailed reporting about where your ads are running (down to the placement) and how they are performing.

I was once explaining to a marketer the practice of looking for extraordinarily high CTR placements as a proxy for weeding out ad fraud. They asked, “What if my DSP doesn’t provide that kind of reporting?” To that I replied, “Run, fast!” Such reporting should be standard, but there are many companies in the ad tech world pretending to be DSPs.

If a vendor cannot — or will not — provide a detailed level of visibility into your campaigns, ideally as real-time as possible, that’s a major red flag. And you should seriously consider switching vendors.

There is no reason, in 2016, that you shouldn’t be able to get granular performance reporting from your ad tech vendors.

4. Platform fees

Knowing how much of your ad budget goes toward media and how much goes toward the vendors from which you are buying such media — whether a DSP or ad network — is a crucial aspect of transparency. As a marketer, you want to know how much of your ad budget goes toward “non-working” expenditures, so that it can be minimized or kept at a reasonable level.

If you don’t know what percentage of your ad dollars go toward media versus fees, you are at the mercy of your vendor. They could be taking anywhere from 20 percent to 40 percent of your ad spend as their margin. Maybe more. Unless you have this conversation with them, you won’t really know.

Ideally, you want to have this conversation at the outset, before signing your master service agreements (MSA). The Interactive Advertising Bureau (IAB) created a programmatic fee calculator to help give advertisers a better understanding of how much their ad budgets go to ad tech vendors.

5. Agency relationship

Agencies play a crucial role in the marketing world. While digital advertising ought to be a core function of modern marketing organizations, it’s natural for marketers to lean on agencies as a stopgap measure. In such cases, demanding transparency from agency partners is a must — especially in light of recent revelations about non-transparent practices.

Getting transparency from your agency means understanding exactly where they take their margins, where they might be acting as a principal with technology vendors (as opposed to acting as an agent), whether they have vested interests with vendors or where they might be receiving incentives (aka rebates, kickbacks and so forth).

To understand where there may be conflicts of interest, marketers must demand full disclosure from agencies around these questions. Last month, the Association of National Advertisers (ANA) released a set of recommendations (prescriptions, principles and processes) for advertisers, including a sample contract template. You can find those resources here.

Conclusion

Sophisticated marketers understand that transparency is a requirement in modern media buying. Without transparency, without visibility into key aspects of the media buying process, marketers put themselves in a vulnerable position. Not only do they risk being exploited, but they also forfeit the power to turn their digital advertising programs into a source of learning for their organizations.

Programmatic advertising has given unprecedented control to advertisers, empowering them with more data and transparency than ever before. However, it would be naive to trust that every ad tech company and agency believes in giving full transparency to their clients.

The solution: Marketers must demand transparency from their partners to get the visibility necessary to empower themselves and their organizations.