Tim Hussain is head of digital at Ebiquity. Ebiquity’s Media Value Measurement practice specialises in providing brands with tools and consultancy services to improve media performance.
There is no hotter topic right now in our industry than programmatic transparency. It has become the focus of debate this year following last year’s ANA media transparency initiative and Marc Pritchard’s famous description of the ‘crappy’ media supply-chain.
Last week Ebiquity published a new report on the economics of the US programmatic market (‘Seeing through the financial fog’), in association with the ANA, ACA and AdFin. The report shows in stark detail the true financial breakdown of the programmatic market, and the waterfall of charges incurred through a complex series of transactions. While a US study, the lessons apply everywhere.
The report was presented at the ANA Financial Management conference in San Diego, where the issue of programmatic transparency was front and centre of the debate.
Last week was also notable for the announcement by Havas of its Client Trading Solution, promising ‘full visibility of costs, investment outcomes and ROI.’ While it remains to be seen how this will work in practice, Havas’ intentions should be welcomed by advertisers as a step in the right direction.
This is much-needed. Programmatic delivery now dominates the online advertising market and will account for the majority of the UK online display advertising market this year. For several years advertisers have been encouraged to invest in programmatic without being made aware of the risks, and those days are coming to a close. The real issues of poor viewability, ad fraud and possible brand safety issues have now been fully exposed. Now the economics of programmatic are coming under scrutiny.
The global online advertising market is forecast to be worth $64 billion next year, according to media agency Zenith, but only 40 per cent of advertisers’ spend reaches the publisher according to WFA research and then roughly half of the rest is lost in viewability and invalid traffic, including ad fraud. The value loss to advertisers could equate to about $50billion.
Money is at the heart of the ills affecting programmatic. While brand safety has justifiably dominated the headlines, advertisers are now concerned to tackle the root cause of the industry’s problems, and that is the money-chain.
Advertisers should approach programmatic as with any other investment decisions, and it is not dissimilar to investing in the stock market. With massive choice and powerful vested interests, being armed with the right information is vital, and that information has to be independent. There is a reason why the financial world revolves around data, and analysts play a crucial role in investment management. They provide a rigorous and independent view for investment strategies.
Continuing the analogy, advertisers should emulate Warren Buffett, probably the most successful investor of all, who takes a neutral line on where to place his bet and only invests in what he can fully analyse and understand, rather than following the market into the new and shiny.
Advertisers should resist the temptation to invest in programmatic, just because it promises the Holy Grail of personalized messaging and targeting, without a full understanding of its mechanics, including the real money-flows and margins, and the right technology and data to produce the best business outcomes
Advertisers should be especially wary of vested interests, much as they would in the stock market, and they should understand how their trading partners make their money and be even more wary where these conflicts of interest exist.
Last week was also notable for the announcement of Google’s new free attribution service, which purports to help advertisers move beyond ‘last click’ as the primary means of allocation response. Any advances in the measurement of media should be viewed positively, but Google’s business model is built around advertising revenue and advertisers should recognise that their attribution solutions can never be wholly neutral. Investment advice should be impartial to be effective: caveat emptor is good advice in advertising as it is in the stock market.