The truth about transparency in digital advertising
As advertisers continue to wrestle with the issue of transparency, columnist Andrew Waber outlines the kinds of questions you should ask when vetting potential technology partners.
Look through the websites of technology providers throughout the advertising ecosystem, and you’re bound to see some variation of the word “transparent” as a key value proposition across many of them.
My employer, Nanigans, is no exception. It’s presently a hot term for online advertising in general, particularly in light of a report on the subject from the Association of National Advertisers (ANA) earlier this year.
But despite this seemingly industrywide alignment on messaging, there are widely disparate explanations for what transparency means for advertisers. A phrase like “cost transparency” can mean anything from a vendor-provided flat CPM paid on a daily basis to total visibility into individual ad CPMs.
In a sense, vendors are giving the answer they know marketers want to hear (“We provide transparency”), but they neglect to define the questions relating to the problems they are solving; to-wit:
- The ability to accurately and objectively measure the cost of advertising (media cost transparency)
- The ability to accurately and objectively measure the returns and performance of advertising spend (performance transparency)
- The ability to properly evaluate the value of a technology partner (pricing transparency)
As you’re going through the evaluation process, here are a few pointed questions you should ask each potential buy-side vendor to paint a meaningful picture of their transparency level.
1. Who actually buys the media? Us as a customer, or you as the technology partner?
This question gets at the heart of media cost transparency. Assuming you as the advertiser are purchasing the media through the vendor’s platform, the cost displayed should be the actual cost of the ad space.
On the other hand, if the partner is buying media on your behalf, they are incurring costs to do so and will take a margin on the CPM before passing the numbers back to you.
Particularly for analytically minded marketers, pure transparency here can make it much easier to evaluate different ad types, channels and target audiences over time.
2. How granular can I get on media costs and attribution?
Audience level? Placement level? Ad level? The level of detail in reporting speaks more to performance transparency. The ability to analyze costs and related actions at a placement and individual ad level makes it easier for you to test and pivot toward creative or other tactics that are having a positive impact on specific audiences.
It understandably becomes harder to reliably identify and key in on similar nuances when data is aggregated up to a platform or audience level, which is more of a summary in nature.
3. Will we have the ability to measure and act on incrementality?
A succinct definition of revenue incrementality comes from this column written by Sebastien Blanc back in 2014:
[blockquote]Incremental revenue is defined as revenue that would not have occurred without a specific campaign, everything else being equal. It is a view that is radically different and more reliable than last-click revenue.[/blockquote]
Under the umbrella of performance transparency, be sure to ask about a vendor’s approach to attribution and what you’re able to control and test against. Moving beyond solely last-click attribution and getting a comprehensive view of what actually drives revenue is a potential game-changer. The column quoted above has some nice tips for testing architectures in this vein.
If you’re a performance-focused advertiser, asking these kinds of questions during the vetting process of potential technology partners gets at the heart of what constitutes value-add transparency.
Even if you trust the vendor, having the ability to capture deep insights surrounding your advertising costs and performance is not just a “nice to have” — it makes performance tests easier to replicate and conduct properly, and to quickly make the changes needed to maximize returns over the long term.
For some additional perspective here, I recommend reading Ratko Vidakovic’s in-depth column from this past August, which focuses on transparency within an advertiser-agency relationship.