Transparency now a must for digital ad ecosystem

EARLIER this month, the Institute of Advertising Practitioners (IPA) and the Incorporated Society of British Advertisers (ISBA) in the UK published a joint call to their respective members to demand greater transparency within the advertising ecosystem when it came to providing accountable and credible data for the advertisers. While it seems like a very reasonable and sensible request, it has already ruffled a few feathers in some quarters and unnerved others who are not too keen on the notion of transparency.

That it took so long for the IPA and the ISBA to push for this, beggars belief.

In an increasingly complex and fragmented advertising ecosystem that has been dogged by accusations of opaqueness, ad fraud, poor viewability, the need for transparency and accountability has never been greater.

On the surface, the IPA/ISBA demands called for better standards when it comes to the use of audience data and how it is traded and that these are upheld by independent auditing, make sense. They noted that any proprietary data sets, like those held by the likes of Google and Facebook, should have the same levels of accountability as other industry-owned trading currencies. In addition, these should also “support the principles of a Joint Industry currency model as the best-in-class approach to providing objective and comparable audience data and metrics.”

To the uninitiated, this might sound like a load of gobbledegook but to an industry that is going through profound structural changes, any efforts aimed at introducing transparency to what is often a murky world where client’s money is being increasingly funnelled into digital advertising is welcome.

Their demands come against the backdrop of several high-profile measurement cock-ups involving Google and Facebook over the last 12 months which have only served to undermine confidence in digital advertising ecosystem.

The IPA/ISBA’s calls for transparency, however, could have gone a lot further. It could be argued, for example, that they should have cast their nets even wider and, perhaps, taken some direction from their US counterparts, the Association of National Advertisers (ANA). This time last year the ANA published a damning and report on the lack of transparency in the media buying industry that sent shockwaves through an industry that believed it was unshockable and, possibly, untouchable.

Written by the business intelligence firm K2 Intelligence and unimaginatively called An Independent Study of Media Transparency in the US Advertising Industry, the ANA’s interpretation of non-transparent business practices did embrace contentious issues, audience measurement and the quality of media that was being bought. But it also included equally contentious issues like rebates and discounts to media agencies and whether these are passed back to advertising clients; the underlying cost of media and any agency margins and mark-ups and the existence of any internal incentives offered to staff by an agency holding company to encourage them place ads with certain media.

Needless to say, most of these practices were found to be prevalent throughout the US industry – as they are in the UK and Ireland. And they have been for over 20 years.

What has changed over the past few years, however, is that more and more advertisers are funnelling their money into digital advertising. Unfortunately many of them are not looking under the hood when it comes to how and where their money is being spent. Very often, they don’t understand the complex supply chain that exists, particularly when it comes to programmatic advertising, which is accounting for a bigger chunk of their investment.

While programmatic advertising promised so much in terms of increased efficiencies and better real-time targeting, there is growing concerns that it is anything but efficient from an advertisers perspective.

A recent presentation by media consulting form Ebiquity at the annual conference of the World Advertisers Federation showed that for every $1 spent on programmatic advertising by a client, just 15 cents was actually spent on ads that were viewed by a real target audience in a safe environment. The remaining 85 cents were gobbled up by agency fees, trading desk margins, tech and data fees, money spent on non-viewable ads or lost to ad fraud. Meanwhile, only 40 cents of that $1 goes to the publisher. If this is the case, then it’s hardly an efficient way of spending a client’s money. In fact, some would say it’s downright scandalous.

None of this is helping the case for digital advertising and only serves to create an atmosphere of distrust. Coming at a time when ad blocking and ad fraud is a genuine concern for advertisers, the different players within the advertising ecosystem really need to get their act together.

Transparency and accountability should be the starting point.