Are Ad-Tech Companies Pitching Solutions to Problems That Don’t Exist? One Exec Thinks So

MDC Media Partners and Assembly CEO on the messy world of digital transparency

Challenges in digital advertising are creating friction between agencies, vendors and brands.
Getty Images

Digital advertising may be plagued with issues like fraud, brand safety and viewability, but some agency execs say a new crop of tech companies are increasingly trying to capitalize on those problems and solve problems that don’t exist.

During an Advertising Week panel on Thursday, MDC Media Partners and Assembly CEO Martin Cass spoke with execs from ad-tech firms OpenX and AdRoll about challenges in digital transparency and how they affect the agency-client relationship. Over the past year, a number of ad verification and brand-safety software companies have seen an uptick in business from marketers concerned about where their ads are running and how well they are performing.

“We must have come through our doors two or three new solutions a week for a problem that we didn’t know we had and then you discover it really isn’t much of a problem,” Cass said. “There’s an enormous lack of trust because maybe three or four years ago, clients were starting to say, ‘There’s something going on. I don’t know what it is.’ Now, they know what it is or they think they know what it is that is creating a larger degree of angst, and that angst is manifesting itself in clients’ enlargement of their fees.”

Take fraud for example. Hackers’ techniques are becoming increasingly complex and evolving to rip off advertisers, making it hard for agencies to keep up.

“What’s the next thing that a bunch of hacks are doing out there to create fraud in the market?” Cass said. “It always gets down to how big is it, because in the end, you want to be roughly right, not precisely wrong.”

Cass, who previously was president of Dentsu’s Carat in the U.S., also pointed at the bigger holding companies, particularly WPP and Dentsu, as factors in clients’ lack of trust. When talking about the fees ad-tech companies typically charge for working with agencies, Cass suggested holding companies are pocketing larger media budgets through “arbitrage.”

“I don’t know what proportion of that goes through the top five holding companies, but until they get their act cleaned up, you aren’t going to get anywhere with that because that’s where in my part of the world, the trust problem is,” he said.

Cass also suggested the problem is more widespread than programmatic or digital ad budgets. Programmatic is forecast to be a $32 billion business in the U.S. this year, while advertisers are expected to spend a total of $83 billion on digital advertising.

As an example of how his agency is tackling fraud, Cass said MDC Media Partners and Assembly works with a company called AdFin that uses digital cookies to create trails that track how digital ads are purchased. The technology shows how much a publisher charged the agency and then shows how much the agency charged.

“When you get your agent, who is supposed to be managing your money for your best benefit, when they’re actually really acting like a bank on behalf of a holding company, that’s a problem, and I think programmatic and digital is the tip of the iceberg—wait until it gets to TV and people start digging into that,” Cass said. “You start to dig into these layers and that’s where in the agency business, clients are beginning to say, ‘Well, I don’t trust them,’ or ‘Maybe I’ll do it myself.’”

Brands are indeed handling more programmatic work in house and working with agencies less, said Scott Gifis, AdRoll’s vp of North America.

In response to Cass’ explanation of how holding companies are profiting from ad-tech fees, Gifis said, “We’re not seeing any of those trends, and a lot of it is because clients are starting to think about moving direct.”

Too many vendors

Jason Fairchild, CRO of OpenX, described one recent conversation with a demand-side platform that he said sums up the challenges with the flood of ad-tech companies vying for publishers’ business.

“I was talking to a DSP yesterday, and they literally work with 75 different exchanges,” he said. “There’s no way to make sense of that, and there’s no way those exchanges are curating that inventory, standing behind fraud and building trust into the ecosystem.”

Fairchild also urged publishers to “stop working with header-bidder companies that have five or 25 employees and do zero fraud detection.”

“[Ad-tech companies] think that they can drive more yield because it’s more demand, but it’s arbitrage players taking that inventory, re-selling it three times, sometimes mislabeling it,” he said. “The buyer thinks that they bought it cheap or they got a good deal, but really, they didn’t. They bought something at a flea market with low value.”

Fairchild didn’t name which companies are ripping off advertisers but said exchanges spike up bid prices, causing advertisers to pay $50 for a bid when buyers think the inventory should cost $2 or $3.

AdRoll’s Gifis added that the growing complexity in ad tech requires ad-tech companies to be more upfront with clients.

“There’s a general lack of trust that stems largely from potential lack of understanding,” he said. “They need partners who will show them all of this stuff—the good and the bad. In the past, our marketers wanted a very simple view of that world and today they want a much more detailed view of that world.”