The Brand-Led Push for Ad-Tech Transparency Is Now In Full Swing

Programmatic advertisers have a seemingly straightforward problem: They’ve been spending a dollar for as little as a quarter in value. Yet despite hemorrhaging ad spend, opaque supply chains and inertia have made for slow progress in accountability. Now, at last, brands are beginning to pay attention to where their programmatic dollars go. Firms focused on supply path optimization (SPO) have seen a surge of interest in recent months as marketers look to cut down on waste, fraud and service fees in the nearly $80 billion programmatic ad market. “Brands are now thinking about ad tech,” Derek Baker, consumer markets partner at PricewaterhouseCoopers, told Adweek. In an effort to consolidate ad buying, brands are increasingly looking to bring contracts in-house, he noted. Where does all the money go? Nearly every flavor of ad tech is heading in this direction, from demand-side and supply-side platforms to ad servers and verification companies. Per an Accenture survey, 69% of American and 74% of EU brands have completely or partially in-housed their programmatic operations. The hope is that greater control will breed greater accountability. Unlike most parts of the marketing business, where financial controls and regular audits exist to prevent waste and fraud, “in the context of programmatic, that doesn’t necessarily exist,” said Baker. ‘Trust but verify’ Last year, PwC found that just 26% of what marketers spend on programmatic ends up purchasing viewable ad impressions. That finding came as a follow-up to a much-vaunted 2020 report by PwC and ISBA, the U.K.’s main advertising body. The initial report showed that 15% of ad spend vanishes into an “unknown delta,” while only 51% lands in publishers’ pockets. Of that 51%, about half is wasted on outright fraud and non-viewable impressions, according to the follow-up analysis. The roots of the ongoing transparency push can be traced back to a 2017 study by AdFin and the Association of National Advertisers, according to Ravi Patel, director of consumer markets at PwC. Patel served as CEO of AdFin before it closed shop in 2019. The AdFin report’s revelations are routine today but were striking then: Complex supply chains, opaque fees and poor understanding were inhibiting efficient programmatic media buying. The report advocated a “trust but verify” approach for marketers, encouraging them to rigorously vet partnerships and ad buys. Transparency efforts were spurred on by the mid-2019 release of sellers.json, said Chris Kane, president of ad-tech consultancy Jounce Media. This technical innovation, created by the IAB Tech Lab, gave advertisers unprecedented insight into the supply chain—in ways prior tech, like ads.txt, could not. Crucially, sellers.json lets buyers distinguish between publishers and middlemen, helping SPO-minded advertisers cut down on needless intermediaries. “That was a spark that, all of a sudden, gave us the clarity we needed,” Kane said. “It rattled a bunch of buyers into realizing we were not buying what we thought we were buying.” Other ad-tech firms are angling to ride the transparency wave. Fiducia, a U.K.-based startup, is working with big names like McDonald's, Oracle, Nestlé and Xandr to apply distributed ledger technology (DLT)—the type of algorithms underpinning cryptocurrencies—to supply transparency. Advertisers who participated in Fiducia’s pilot program could reallocate up to 38% of ad spend, thanks to savings on non-viewable or fraudulent impressions, CEO Tim Brown told Adweek. Fiducia recently helped launch TAG TrustNet, an industry effort to standardize DLT for digital advertising. For all its promise, DLT is unlikely to solve ad tech’s transparency woes. Earlier this month, Integral Ad Science announced its acquisition of Amino Payments, a firm that had flirted with DLT solutions. But in the run-up to the IAS buyout, Amino had abandoned DLT in favor of a “reporting solution for identifying supply paths,” a source told Adweek. Smart vs. dumb money Not everyone taking full advantage of ad tech’s new tools. Kane described a growing bifurcation between “smart money” and “dumb money”—that is, marketers who are paying attention to transparency, and those who aren’t. “The smart money is getting smart pretty fast. And the dumb money is staying right where it was,” he said. “If you invest the time to become a smart marketer, you’re going to pretty radically outperform your competitors [instead of] just sloshing around." Tom Denford, CEO of media consultancy ID Comms, told Adweek that the drive for transparency should be understood in the context of a still-maturing industry. It doesn’t need to be that somebody necessarily loses; everything’s a bit more hybrid.Tom Denford, CEO, ID Comms In the early days, said Denford, programmatic simply came bundled into broader service packages offered by media agencies. Now, as advertisers reckon with the so-called programmatic fog, the industry is moving away from comprehensive packages. Momentum is now behind what Denford called “fragmentation of scope,” where media buyers parcel out individual advertising functions to different players, including in-house teams. “Think of media as this complex, big, long function. Then chop it up, and decide who is best served to do what,” he explained. However, Denford emphasized that increasing in-housing and fragmentation of scope need not be a zero-sum game. “It doesn’t need to be that somebody necessarily loses,” he said. “Everything’s a bit more hybrid.” In a note of optimism, Patel compared programmatic’s bumpy maturation process to that of TV marketing through the 1990s, which he described as similarly opaque with fat margins. But over time, advertisers began to demand transparency and exert downward pressure on margins. What were once 30-40% markups shrank into the single digits. Still, the economic disruption prompted by Covid-19 has shown that compressed margins can just as easily create new worries. Programmatic needs to cut the fat—but it has to do so without starving itself.