Can Programmatic Actually Be Transparent?
The digital content industry has taken its head out of the sand when it comes to the transparency issues in programmatic. Upheavals in the industry have once again kicked up this perennial hot button issue. But, as the buzzwords are bandied about, what’s often missing is clarity on what transparency actually means in programmatic ad trading. Writing exclusively for ExchangeWire, Rene Plug, chief strategy officer, Improve Digital asks: “What do you look for in transparent partners and how can you use this knowledge to your advantage?”
So, what does transparency actually mean?
Transparency isn’t just about hidden fees. The issue of transparency in ad tech relates to a range of business practices stemming from the early days of programmatic. For content providers that don’t rely on programmatic advertising income as their main source of revenue, the issue of ad tech transparency is going to have less impact on their business.
However, if you’re a content provider now trading a sizeable portion of your inventory programmatically, considering how your ad tech provider measures up on the transparency scale can certainly be worthwhile. While transparency can seem like a nebulous concept at first, it becomes clearer if you define it in terms of three key areas:
1. Business model transparency
2. Openness with data
3. Which side do you serve?
Beware of old addictions: business model transparency
This is the industry-old ‘non-disclosed fees’ issue. It’s rooted in ad tech providers that still apply business models that feed on the high take rates we used to see in the early days of programmatic, when the business was all about remnant inventory.
These legacy practices have left some large ad tech providers with entire businesses based on charging margins as high as 30%, and more. They remain dependent on content providers that are less discerning about what ad techs do with inventory they feel they can’t sell anyway. In a world where programmatic inventory is becoming increasingly premium, those kinds of take rates are unsustainable.
For these companies to overhaul their entire business model is a huge undertaking. And one they aren’t likely to engage in with investments that require a high rate of return. They are addicted to high margins, which can only appear justifiable when buried deep within a ‘confusopoly’ of fee structures.
Openness with data: have full access to insights
Data fuels revenue in the programmatic ecosystem. Being able to access and leverage the right data means the difference between possessing the most profitable yield optimisation strategy and a seemingly adequate strategy that leaves money on the table. There are plenty of intermediaries that will be more than willing to optimise that adequate strategy further and gain the fee that would otherwise flow to the content provider. An optimal yield strategy can only be based on deep insight into inputs and outputs. Your ad tech provider should facilitate that, and let you not only see, but also encourage you to look under the hood.
Giving you access under the hood means that your ad tech platform should have a user interface that discloses data at various stages of the process. For instance, when determining a floor price strategy, or when monitoring campaign performance. It should allow you to access information and perform complex analyses in real time. The most sophisticated systems will allow you to download all your data without restrictions. Data should be accessible easily, readily, and in full. If any of these three points is missing, it weakens the real value of your data.
But data is useless if you can’t interpret it. To do that, you should start bringing serious data analyst capabilities in-house. Being able to mine data programmatically opens the doors to considerable revenue returns for digital content providers. But to benefit, you will need to know how to analyse, refine, question, and build upon data. This means evolving your ad ops organisation from one focused on process and administration, to one focused on yield optimisation and data analytics.
How to do that? Well, just like a trustworthy ad tech platform can give you full access to your data, a trustworthy ad tech provider can help create a yield optimisation team, or create one for you that will work with your in-house teams.
Which side does your ad tech serve?
This is another debate as old as ad tech itself. But, in the end, an ad tech provider that integrates DSP and SSP technology into one solution will always have a conflict of interest. It’s a conflict the demand side tends to dominate, because it simply offers more extensive and profitable trade opportunities.
Ad techs can set up Chinese walls, but accountability is difficult when you control the entire value chain. Data can appear to match on the surface, but relevant data points can be selectively omitted. Does this mean that there are hidden fees and data is being misused? No. But, you’re left having to take someone’s word for it – and you should ask yourself whether your incentives are aligned.
Be very sceptical about transparency claims in walled gardens. A walled garden is closed off for a reason. For plenty of inventory (unsold, low-quality, questionable context, etc.) it might not matter that trading is fenced off; it can be sold cheaply with high margins. However, what is done with high-quality inventory from premium content providers doesn’t need to be hidden from the world, and most certainly not from you. Choose a platform that has only one interest: to act in your business’ best interest.
Final advice: educate, control, and check
Use these generic principles to find a partner you can trust and make sure that everybody’s incentives are aligned. Most of all, ensuring that your programmatic solution is working for you, and not you for it, is a three-step process: educate, control, and check.
1. Educate: understand the incentives going on in the ad tech ecosystem. Become aware of the fees being charged along the value chain. Ask your supply chain partners exactly what they’re charging. Talk to the demand side. Work with your technical demand partners to get a good understanding of who’s taking what margin.
2. Control: keep close control of your data. Track how deals performed in the past and monitor how they are flowing through your system. On the surface, it’s difficult – if not impossible – to see why a deal isn’t performing to expectation. It’s only when you have access to the details of the deal that you quickly find ways to solve issues and optimise deal performance.
3. Check: carry out a check now and implement a system of regular checks as part of your operations. Perform a check in-house, ask your ad tech provider to perform the check with you, or, if you’re really in doubt, ask a third independent party to carry out a transparency audit for you. Implement a system of regular checks every two years.
Ask the right questions
Ultimately, it’s up to you as a content provider to understand what’s happening in the industry, weigh your business needs, and ask your ad tech provider the right questions. What is your business model? How can I access my data? Are you focused on sell-side, buy-side, or both? By that same token, it’s up to those of us in ad tech to arm our customers with the knowledge they need to choose the solution that’s best for their business. This issue won’t be resolved by pointing fingers, but by every player in the industry taking responsibility in the value chain.