The path to programmatic peace
On the heels of studies that highlight a lack of transparency in digital advertising, columnist Melody Gambino points to the way forward and how we can rebuild trust in the programmatic world.
Programmatic advertising already accounts for nearly 60 percent of US digital display ad spending, according to a recent eMarketer report. Also notable is the quick growth of programmatic advertising in video and mobile. Yet some serious questions remain about just how mature the programmatic market is and what its ultimate growth potential is, due to a number of stubbornly troublesome obstacles.
We’ve heard all about the three horsemen of the programmatic apocalypse: fraud, viewability and ad blocking. The industry is working hard to meet these challenges.
And while there is a lot of work to be done in terms of honing technology and processes, as well as architecting better user experiences, progress is being made, and there is a sense of optimism that we will rise to these challenges, if not conquer them.
A crumbling of transparency and trust
But another major challenge that needs to be met was brought to light recently by the Association of National Advertisers (ANA), which recently released a report that took on the issue of agency transparency in digital advertising. ANA Chairman Tony Pace framed the challenge in a letter to organization members, which consist primarily of major brand advertisers:
[blockquote]When the agency community concludes that there are issues involving non-transparent business practices, and that a fundamental disconnect exists in the advertiser/agency relationship, the ANA and the Board of Directors would be pleased to collaborate with them to develop specific, well-defined solutions.[/blockquote]
The report ruffled many feathers in the agency holding company world and sparked charges of unfair and non-transparent results by the ANA’s investigative audit company, K2, which Pace also countered in the same letter. He wrote:
[blockquote][T]o those who objected to the anonymity and confidentiality of the 150 sources interviewed by K2, let me emphasize that the participants included a significant number of current and former agency and agency holding company executives. Granting anonymity and confidentiality to sources is a standard investigative practice for assessing business conditions that K2 found essential in this case. There was palpable fear of reprisals and other repercussions across the media buying landscape among many who considered whether to participate.[/blockquote]
This firestorm between agencies and their clients speaks to a worrisome breakdown of trust and what marketers perceive is a disturbing lack of transparency on the part of their agency partners. In the era of cost-cutting and procurement officers, this dynamic shouldn’t be surprising; client-agency relationships have been marked by ever-shrinking agency margins over the years, and agencies are under growing pressure to maintain those margins.
One focus of this controversy has been the practices of agency holding company trading desks, which have been too opaque, according to their critics. Recent research from Grapeshot and Digiday, titled “State of the Industry” (SOTI), which surveyed 200 digital ad traders and agency folks, clearly revealed a lack of trust and transparency between trading desks and agency people within the same holding company walls.
The findings were striking, revealing the internal tensions at holding companies about best practices that maximize agency monetization while safeguarding client interests.
The road ahead
This takes us to our current inflection point. If the programmatic revolution is to fulfill its potential, the erosion of trust and transparency needs to be repaired.
The signs are good. While the dust-up over the ANA research understandably caused some hard feelings, I believe that the public airing of this particular set of dirty laundry will help rebuild trust among all of the constituents in the programmatic ecosystem.
The SOTI research revealed that tension within holding companies has bubbled back to the advertisers and that they are starting to ask more questions — tougher questions. They want to understand who’s getting pieces of their budgets, why, and what attribution can be reported back.
The ANA study was further proof that this interest in the agency way of business means that brand marketing teams are taking back the control instead of leaving the decision-making largely to the buying teams. They want to understand the value of the data partners they work with; they want to understand where the expertise and quality controls are.
They recognize the value of their first-party data, which they can leverage for better customer experiences in digital environments. Forward-thinking brands are starting relationships directly with tech companies, asking questions, and making an investment in their data-driven marketing strategy.
I’m encouraged by the findings and reactions to both of these studies. For far too long, brands have not been as actively engaged as they should have been, which has contributed to the strained relationships with their agency partners. These recent events are a good indication that both sides have acknowledged the challenges and are beginning to attempt to work through them.