Shawn Lim
Apr 15, 2024

Why does such a lack of transparency still exist in adtech?

Although many adtech players remain incentivised to keep the ecosystem opaque, new business models and auditing practices are challenging the status quo to demonstrate value for clients.

Why does such a lack of transparency still exist in adtech?

In recent weeks it has been discovered that ads from notable brands such as McDonald's, Disney, Microsoft, JPMorgan Chase, American Express, the New York Times, and Wall Street Journal were accidentally displayed on a made-for-advertising (MFA) website operated by Forbes that ran from 2017 to 2021 before it was discovered. All six holding companies, WPP, Omnicom, Publicis, Interpublic, Havas, and Dentsu, also purchased ad space on this platform. 

These MFA websites are nothing new, of course. Campaign previously reported that they have been allowed to exist for years within the digital ecosystem, usually created by bad actors to divert ad spending from bona fide publishers with some success. The Association for National Advertisers (ANA) in the US says these ad-rich content-poor MFA sites make up 15% of total ad spend.

While the involvement of a respected publisher like Forbes is surprising, the fact that nearly all agency networks paid for ad space on it is less surprising, given the very complexity of advertising holding companies' entrenched systems, processes, and behaviours that have allowed ongoing transparency issues in adtech to not only persist but at times put up unintentional barriers to change and innovation.

Campaign speaks to experts to discover how the competing interests and conflicting loyalties within large advertising networks, agencies and tech providers can exacerbate the lack of transparency. We also explore how the industry can foster a more ethical environment, and how industry leaders are crucial in facilitating these conversations.  

Why marketers and agencies play along in a flawed system

It's not surprising that some murkiness exists wherever complex and large-scale programmatic networks are involved.

Still, the lack of transparency around margin take rates, impression match rates, and unattributed ad spend (what the Incorporated Society of British Advertisers refers to as the 'unknown delta') is often connected with programmatic processes carried out by adtech companies. 

Michael Sweeney, head of marketing at Clearcode, tells Campaign that the main barrier to implementing meaningful change is the opaque way some adtech companies and other intermediaries have operated. 

"Transparency in programmatic advertising has been an issue for over a decade, and many companies have taken advantage of its complex, fragmented, and opaque nature and built thriving businesses," explains Sweeney. "For meaningful change to occur, everyone in the industry must get on board and fully commit to it. Otherwise, nothing will change." 

Agencies, meanwhile, caught up in their clients ongoing and urgent demands, have had to evolve and adapt, balancing existing resources and wise investments with new players and technologies in order to meet the demands of their clients. 

Being an intermediary means the agency is always accountable for multiple changes across various partners or disruptive technologies, notes Sonal Patel, vice president for APAC at Quantcast, which means an agency's investments into its own tech or service level stacks often follow client needs.  

"Procurement teams on the marketer side frequently do what is asked of them to bring down the perceived costs of marketing without considering the impact on the agency, and those fees are usually sunk into servicing the marketer and its media spend," explains Patel. 

"Marketers may not always understand the cost of service because agencies may plug the gap in other ways, and given this opaqueness, a lack of transparency persists. The most significant barrier is shared responsibility." 

She continues: "A fragmented agency ecosystem, multiple P&Ls within holding companies, regulatory complexity, and lack of standardisation all contribute to transparency issues. Tackling these requires will and commitment, starting from the highest levels of the agency organisation." 

In addition, Patel says marketers must meet the holding agency groups halfway in understanding that the complexity of defining, planning, building and executing multiple media mixes includes many complex workflows.  

She explains marketers need to see advertising as an investment and treat all components of the ad ecosystem similarly. An investment in time costs a little more at the starting point.  

"Similarly, marketers may not often realise how much direct and indirect services cost in their entirety, as agencies may usually agree to unfavourable terms to win the business," says Patel. 

"There is a shared responsibility to define deliverables, cost and what success looks like to build the right long-term plan. Only when both sides are genuine about cost and deliverability can agencies look to change the status quo." 

Avoiding competing interests and conflicting loyalties

An inherent tension exists between client-spend motivations and agency revenue models within advertising networks. Recognising these challenges, agencies see the changing landscape as native platforms become more sophisticated, lessening the need for additional efficiency-driven layers. This evolution has implications for transparency, as the traditional agency remuneration models, often commission-based, come into question. 

Arshad Ahamed, regional director of media and brand strategy at GrowthOps Asia, tells Campaign a shift towards fee-based agency remuneration model is suggested to bridge this gap.  

Such a model would better align agency incentives with client interests, fostering transparency.  

"Clients, on their part, need to recognise and fairly compensate the value added by agencies—their expertise and experience across various domains, networks, and budgets—thus incentivising agencies to be more transparent in their billings," explains Ahamed. 

Tripti Chaudhry, regional deputy head for publisher growth at Anymind Group, notes to Campaign that brands are increasing their understanding of the ad ech ecosystem, which is why there are growing calls for transparency today.  

She explains that one of the most efficient ways to align with the interest of being open is to follow a fixed purchase model, which solely depends on the client's KPIs and what is most suitable for them.  

"In addition, the more clients understand, the more questions they have and the more power they have in choosing what works for their campaigns. In this vein, I would say that education is the key element to supporting openness and honesty in the industry." 

However, the push for transparency in programmatic advertising has always been somewhat sensitive, mainly because of money, argues Sweeney, as companies do not want to introduce something if it means their bottom line will suffer.   

He notes that adtech companies and intermediaries have operated somewhat opaquely for years, hesitant to divulge their take rates, match rates, and so on. Since the push for transparency arose a few years ago, adtech companies have provided more transparency in their programmatic advertising operations.  

Still, Sweeney says the push needs to go further as an industry. 

"Adtech is essential to the programmatic advertising industry, but it needs to provide value to the end user," explains Sweeney. “Whenever we talk about transparency, we often highlight the value of adtech. Still, we also need to ensure that advertisers and publishers can audit their programmatic advertising operations just as they would audit their financial and accounting records." 

Fostering a more transparent culture

While there is a limit to what a single organisation can achieve, adtech vendors can play their part in fostering a more transparent and ethical environment by cultivating a culture of transparency. This includes educating clients, helping them make empowered decisions, and aligning internal incentive programs to ensure that dishonest behaviour is not rewarded.  

"To move the needle more on transparency, organisations must provide a safe and encouraging space for open discussions, process auditing and a culture of frank communication championed by an agnostic industry body or group of bodies that can bring marketers, agencies, ad networks and tech partners together," explains Patel. 

Ultimately, to deliver change around transparency, the company's culture and goals need to be focused on providing clients with value, not simply hitting sales and revenue goals. Companies must also be willing to allow their clients to audit their programmatic advertising operations, which is hard for a company to offer up because no one likes getting audited.  

"Industry leaders can significantly contribute to furthering this topic. However, actions speak louder than words," says Sweeney. “Companies can become more open and transparent with their clients and allow them to audit their programmatic advertising operations." 

In addition, Sweeney notes the role that language plays in the topic of transparency. It would be natural to assume that if something were considered ‘open’, such as the open internet, one would think there would be a high level of transparency.  

However, programmatic advertising lacks transparency, whether conducted on the open internet or inside a walled garden. For years, the term 'walled garden' has referred to ad spending with large tech companies, traditionally Google and Facebook, while the term 'open internet' used to refer to everyone else like publishers, agencies, advertisers and independent adtech companies.  

However, a new trend sees telcos, retailers, and streaming services becoming walled gardens. 

"It is not necessarily wrong to see an increase in walled gardens, but transparency has several challenges, as access to raw data is generally forbidden. But herein lies the opportunity for independent adtech companies and intermediaries," explains Sweeney. 

"By providing more transparency into their programmatic advertising operations and allowing their clients to conduct audits, they can better position themselves against the extensive walled gardens and offer their clients something that walled gardens are not willing to." 

Agreeing with Sweeney, Larraine Criss, chief operating officer at Preciso, adds: "Clear and consistent communication and language ensure that all stakeholders, from advertisers to publishers, share a common understanding of standardising key concepts and terminology definitions, ultimately contributing to a more transparent and trustworthy advertising environment."

However, Chaudhry argues that the terminology is complex and challenging to change, given that the industry is quite profound. To make any changes now would add further complexity to what is already a confusing lexicon, she says. 

She explains that the most effective approach right now is to simplify adtech understanding with the current terminology through educational systems.  

"To put a case into point, when I was undertaking university, there were no curricula around adtech. However, instead, the focus was on digital marketing as a whole, as academia was still looking to grasp adtech," says Chaudhry. 

"Now, most universities have proper modules on this, and things will be understood better over time because the foundational education of the next generation will be much better than when we were new to such terms and trying to learn about real-time bidding." 

What can the industry do?

It’s clear that it’s simply not enough for companies to say they're being more transparent; their clients need to be able to see proof of it.  The emergence of forensic adtech auditing tools and the introduction of advertising operation audits can help resolve many of these transparency issues and build more trust and accountability among companies.  

Ahamed notes forensic adtech, primarily used in combating fraud, aids in understanding budget allocations, authentic performance, and optimisation opportunities. These tools are instrumental in ensuring ad safety and effectively reducing fraudulent activities such as bot traffic and ad stacking. 

"Forensic adtech applied post-campaign can provide deep insights into audience engagement, budget allocation, and the value delivered by each component in the ad delivery chain," explains Ahamed. 

"This level of granular analysis aids in regulatory compliance and performance metrics, thus elevating the reputation of digital marketing. Publicising these advancements can help build trust and accountability in adtech practices, driving the industry forward collectively." 

Ideally, these tools and solutions are independent and have no conflict of interest with either party. 

Sweeney adds that even if an audit's results do not match what is being promised, it does not necessarily mean that something shady is going on—it could simply be a matter of the audit's methodology.  

"For the most part, conducting an audit into a company's programmatic advertising operations can start a conversation between a publisher, advertiser or agency and their tech partners," explains Sweeney. “The path to solving the transparency issues in adtech is one that everyone needs to walk down together—it should not be about one company catching out another." 

Source:
Campaign Asia

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