Transparency in digital advertising – more than a buzzword
By Michael Greene, Director of Research, AudienceScience
In my role running Research at AudienceScience, I spend a lot of time talking to advertisers. While in most cases, their challenges, pain points, strategies, and goals broadly differ, the one term I am now consistently hearing out of the mouths of advertisers globally is “transparency.” From where I sit, “transparency” is the advertising buzzword of 2014 and advertisers are actively seeking how they can get more of it.
Not that advertisers asking for transparency is something new. Nearly all advertisers have some guarantee of transparency written into their agency contracts and smart advertisers have long known that transparency is essential to understanding what’s working, what isn’t, and how their organizations can improve their media spending.
But for many advertisers, gaining greater transparency has taken on a higher degree of urgency as advertisers’ sense that they are getting less of it than ever before. Why is that? The increasing role of digital advertising in the media mix is the primary driver. As advertisers invest more and more in digital media, the need to apply rigorous auditing and verification practices only increases. Unfortunately, traditional methods used to ensure advertising transparency and effectiveness don’t easily translate into the digital space. Why not?
Michael Greene will be a keynote speaker at the ACA’s executive forum: Where is your online ad money really going? Transparency, verification and auditing. The forum is taking place on June 11 in Toronto.
- Complex digital “supply chains” make it hard to understand where your dollar is going. It is impossible to have transparency without understanding who you are paying, how much you are paying them, and what you are paying them for. In traditional media, few third parties sit between the advertiser and the consumer (typically just the agency and the publisher/media owner), but in digital a complex chain of intermediaries makes it harder to actually understand where the advertiser’s dollar is going. In fact, a study by the Boston Consulting Group found that advertisers often deal with 20 intermediaries in order to run a digital ad.
- Arbitrage-based business models limit price transparency. While some components of your digital media buys charge transparent fees for their part in the process (e.g. ad serving fees), many media intermediaries rely on opaque, arbitrage-based pricing models. In these cases, intermediaries like agency trading desks and ad networks buy media from ad exchanges and resell it to AORs and advertisers at higher fixed-CPMs, with no transparency into the actual cost of media.
- Campaign execution is often rife with inefficiency due to technology limitations. In addition to fees paid to a complex web of intermediaries, digital advertisers also need to be wary of numerous inefficiencies that can seriously impact the effectiveness of their campaigns. From massive over-frequency, to bot traffic, to out-of-geo ad delivery, conventional digital ad serving technologies typically do little to protect advertisers from serving ad impressions that simply don’t meet the advertiser’s basic business rules.
Although digital has long been marketed to advertisers as unmatched in its accountability, measurability, and transparency, the experience of many digital advertisers today shows quite the opposite. If digital advertising is ever going to live up to expectations for advertisers, delivering full transparency would be a good place to start. However, the ecosystem today is not built for this critical advertiser need. Thankfully though, advertisers have the power to change this. As the source of every dollar spent in the digital advertising ecosystem, advertisers can create substantially greater efficiency by demanding full transparency, simplifying their supply chains by owning technology directly, and adopting auditing practices that look beyond just price to understand if ad impressions are truly meeting basic business requirements. Advertisers can get better digital advertising results: they just need to start by shaking up a broken ecosystem.
Michael is Director of Research and Marketing Strategy for AudienceScience, where he supports its global enterprise technology business and helps clients navigate the changing digital media buying landscape. He joined AudienceScience in October 2012 from Forrester Research. At Forrester, Michael led its sell-side ad technology and digital media research and conducted extensive research and forecasting on audience data management, programmatic buying, and ad technology. Prior to Forrester, Michael served in the Media and Marketing practice at Jupiter Research. Michael holds a degree in Government from Dartmouth College.