An Inside Look at Programmatic Transparency

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Transparency has long been a hot topic of conversation in the world of programmatic. According to eMarketer, more than 60% of US ad agency professionals are concerned with the quality and transparency of their inventory sources. With heavy investments in programmatic, advertisers are concerned with ad fraud and viewability as the top problems plaguing the ecosystem. Despite this, advertisers are allocating more than half of US digital display ad budgets to programmatic advertising.

ANA/Forrester fielded a study in February 2016 on programmatic buying to gauge overall sentiments of advertisers in the space. The study revealed that 33% of respondents turned a blind eye when it came to the actual transactions with intermediaries. In order to combat the anxieties of transparency, we want to urge marketers to take the time to build their programmatic knowledge and take greater accountability. Let’s begin by outlining the three different types of transparency in programmatic that advertisers and publishers alike should be cognizant of: intermediaries, environment and data.

Intermediaries: The True Cost of the Programmatic Supply Chain

With a host of intermediary involvement across the programmatic supply chain, there is more opportunity for ambiguity and subsequent bad actors. These bad actors flourish by maliciously taking advantage of both buyers and sellers with hidden fees, low quality traffic and misclassification of inventory. Unfortunately, the resulting opaqueness along with other variables (such as empty promises or distrust), have hindered complete adoption in mature and emerging programmatic markets.

The resolution is rather simple; a buyer needs to explicitly be in the know about where their ad is being served and shouldn’t be subjected to soft floor pricing. ‘Soft floor pricing’ is a threshold that refers to the potential missed opportunities that might occur when a buyer bids slightly less than the floor. With better understanding around programmatic vocabulary, advertisers can self-regulate their programmatic transactions in order to combat the bad actors that are permeating the space.

There are several intermediaries that play a role in the programmatic supply chain, including:

  • Demand-side platforms
  • Data management platforms
  • Data or targeting providers/platforms
  • Ad servers (both advertiser and publisher side)
  • Exchanges
  • Publisher
  • Verification
  • Ad blocking
  • Managed services via a marketing agency or solutions provider

As discussed in one of our recent blogs on the cost efficiencies of programmatic, there are several cost models:

  • CPM-based fees
  • Percent of media fees
  • Flat, fixed fees
  • Arbitrage

In most cases, the advertiser pays the majority of the fees, but there are instances in which the publisher pays the fees, or both the publisher and advertiser pay them. It’s common for intermediaries to only reveal the final price of the campaign, total margin and fees, but often closing or winning bid prices aren’t disclosed. In order to gather real-time insights for conversion and targeting optimization, advertisers need to fight for transparency around bidding. Having this data can help advertisers determine if creative or media needs to be optimized, such as increasing spending on publishers and creative variants that are performing well.

Environmental: Ad Viewability and Fraud

Environmental transparency is an issue that questions who sees your ad, to what extent of the ad was seen, how long the ad was viewed and where the ad was placed. When programmatic was first introduced, fraudulent or unviewable inventory was commonplace. Viewability, one of the biggest programmatic buzzwords, is the idea that advertisers should only be charged when their ad is actually seen.

Now, verification and brand safety tools have been made available for advertisers, publishers and ad servers. Standard bodies and holding companies, such as the IAB and MRC, have encouraged more clarity on guidelines for viewability, but there isn’t any conclusive consensus on how viewability is actually defined.

However, some advertisers are taking action by demanding that publishers comply with obligatory measurement of viewability-centric campaigns. Let’s consider an example from a publisher’s perspective; assuming a publisher does agree to the advertiser’s viewability standard, there is still uncertainty around the varying grading criteria from vendors. This example reinforces the importance of defining viewability standards as it pertains to each individual advertiser, which is why all parties involved need to have transparent conversations around this topic.

The programmatic space embodies adaptability and innovation, which is the hallmark of the advertising industry’s entire landscape. We have learned from this that the best transitions and adoption occur when all parties communicate and collaborate to reach the same objective – and the conversation about viewability is no exception.

Programmatic Transparency

For successful data-driven marketing, advertisers NEED access to all of the data they pay for in order to evaluate and determine their true return on investment. Just because an advertiser pays for data, doesn’t mean that it will be fully accessible to them. Publishers, for example, can leave out certain data sets that more transparent partners wouldn’t.

Regardless, if an advertiser uses a DSP or publisher tools to execute programmatic buys, the more information shared, the better. Data is collected and stored throughout the entirety of the consumer journey, and educated marketers need more than just cost per clicks, click-through rates and impressions. Instead, request site-level performance metrics, such as eCPM (cost for every 1,000 impressions, regardless of what buying method is used) and in-view impressions.

Lastly, an advertiser’s team needs to be equipped with analytical thinkers capable of knowing how data is calculated. Ultimately, data is useless if it’s the wrong data, which requires internal knowledge about how the algorithms are used behind the bidding process.

Final Notes: Getting Clarity on Programmatic Transparency

An advertiser’s brand should know the objective of a campaign, how success is defined and the ensuing metrics to evaluate it. Holistically, this means that an advertiser is responsible for determining KPIs, data, publishers and technologies used to buy, optimize and analyze a campaign. In order to achieve this, we believe that advertisers should follow these best practices.

  • Inquire about the media cost on an impression-by-impression basis, in addition to secondary costs that contribute to the overall price
  • Be strategic in choosing which ad formats, device types, sites and audiences you want to reach
  • Implement third party ad verification tools to ward off bot fraud and sourced traffic to devoid campaigns of ad fraud
  • Explore options and tools from fraud prevention and viewability measurement partners
  • Have dedicated in-house team members investigate partner contracts to govern how fraud and viewability practices are carried out

The fight for programmatic transparency has fueled advertisers to call for new digital media standards, but compliance shouldn’t fall solely on just the advertiser or publisher. These aforementioned considerations should be advocated for by all parties involved in order to sustain a transparent programmatic ecosystem.