What Ad/Fin’s closure signifies for transparency in digital advertisingComments Off on What Ad/Fin’s closure signifies for transparency in digital advertising
It emerged a couple of weeks ago that ad tech company Ad/Fin has folded. It launched in 2012 as a tool to benchmark pricing data in programmatic media and made a name for itself by partnering with the ANA to shine a light on non-transparent practices in the digital advertising industry. It struggled to generate a sustainable business model, reliant as it was on the data of the very agencies whom it was trying to expose, but was ultimately a victim of its own success: the advertising industry has of late started to clean itself up, rendering Ad/Fin’s offering obsolete.
Transparency has been a major issue in digital advertising
Since the emergence of the programmatic market, worth $60 billion in the US alone, market dynamics have often been awkward. Advertisers, agencies and ad tech providers have been vociferous in blaming one another for the issues – such as poor brand safety, fraud and wastage – that arise from a lack of transparency. No one really knew exactly how much money was being spent with each vendor, or how much was given to the publisher. The market was becoming increasingly complex, and it was felt that agencies were taking advantage of this complexity to exploit vendors. The result was a chronic lack of trust, largely of agencies.
What did Ad/Fin achieve?
Ad/Fin was established to try to address these issues. Its business model was based on auditing the breakdown of advertisers’ programmatic spend to provide an independent, unbiased view of the costs and performance of the market, with advertisers and other partners such as PwC and Accenture purchasing and reselling the technology.
In 2016 the ANA, in partnership with K2, released its seminal report on media transparency, creating waves across the industry with its claims that non-transparent practices were pervasive. The report led to a huge feeling of distrust in the industry, leading to a concerted effort by advertisers to take greater control of their digital advertising budgets. Some larger ones such as Vodafone and P&G announced that they would be taking their digital media buying in house so that they could negotiate their own contracts with DSPs.
Following the release of the K2 report, Ad/Fin teamed up with the ANA in May 2017 to create a study that exposed hidden costs in programmatic buying. The study was the result of analysis of over 16bn impressions from winning DSP bid transaction logs, which amplified conversations about the need to take control of contracts. However, the vast majority – 95% – of the transactions processed for the study were not bought by agency trading desks, despite the fact that they oversaw the majority of programmatic spend at the time. They were the least transparent entities and refused to participate, which they could do because it was they, not the advertisers on whose behalf they were acting, who owned the transaction data.
What is the state of transparency in digital advertising now?
There has been significant progress since the release of the K2 report in 2016, and Ad/Fin’s subsequent study with the ANA the following year. Standards have advanced: the ANA updated its guidelines in 2018 so that they were better aligned with the IAB’s definition of programmatic advertising, while six major ad exchanges signed a letter from the Trustworthy Accountability Group (TAG), vowing to make programmatic buying and selling more efficient, transparent and fair. The industry itself has also started to come together to clean up transparency and safety, insisting on more third-party accreditation and transparent contracts, and have started shifting budgets to more reputable publishers, using contractual obligations to ensure that ads appear as promised. There is also more emphasis on verified, viewable delivery in brand-safe environments – many prominent brands have been burned by brand safety scandals. Marketers accept that they need to take some of the responsibility in the creation of more transparency – prominently, P&G’s Chief Brand Officer Marc Prichard laid out his plan in a speech in April for a new supply chain with transparency at its heart.
What still needs to be done to drive more transparency?
All these measures fail to address the issue at the heart of the transparency challenge – that too often, programmatic campaigns simply don’t provide value, or can’t prove that they do. As digital media becomes more dominant, a lack of transparency enables productivity issues: ad practices that annoy consumers or violate their data and privacy rights and thereby contribute to ad blocking, and ads appearing alongside unacceptable content. In a survey of 5,000 marketers across 16 markets, 71% agreed that over the last five years it had become more difficult to measure the effectiveness of their digital media investments. In this AdWeek article, Nicholas Bidon points out that ‘marketers need to leave behind the poor proxies for success most often used to measure programmatic campaigns’, as they were designed to understand whether an ad had been delivered, and not whether the ad had delivered against success criteria. It is the effectiveness and the outcomes that really matter for the client – such as sales or purchase intent – that need to be measured. That will by default lead to transparency. We need to focus on the results rather than the technology, the data and even the reach.
There is a lot still to be done to make the digital advertising industry more transparent and to restore trust between the players. Marketers have an important role to play by having a clear sight of the right metrics and working with agencies to put the right motivating factors in place: a focus on rock-bottom pricing is not entirely without blame.
At ECI Media Management we are pioneers in programmatic audit, and can help advertisers to increase the transparency and effectiveness of their programmatic activity. We work analyse and scrutinise our clients’ programmatic activity in great detail to generate concreate action points, which have had proven effects on efficiency, effectiveness and quality. Please do to discover how we could help you drive transparency in your digital advertising.