5 things we learned about ad transparency in 2014

In 2014, the digital advertising industry was abuzz with the word “transparency,” as clients started asking tougher questions about how their money is being spent.

This debate — not everyone agrees on what “transparency” means, for starters — has been forcing marketers to shift their priorities and suppliers to change their strategies. Some are exploring bringing display trading capabilities in-house, others are renegotiating contracts. Agency groups are offering flexible alternatives to the trading desk model, while others are simply asking for more transparency from their existing suppliers about how they make money and the ad buying tactics they’re using.

The result of all this has been there has been a more open debate about how media should be bought and sold in the future. Here are five key insights we gleaned about transparency in digital in 2014.

Transparency is needed in two distinct areas.
The transparency debate has covered two main areas: finances and operations. Clients are demanding more transparency into how trading desks make their money; arbitrage practices and undisclosed fees have led to advertiser distrust. Operationally, clients have been asking for greater visibility into where their ads are being served and how they’re being seen. Certain practices — like showing clients a cherry-picked selection of sites their ads appeared on and excluding poor-quality inventory — are coming under scrutiny.

“Firstly, this question has been to do with first-party data and how it’s used, whether it’s used for competitor targeting,” said Adriana Matyaskova, U.K. head of display at DigitasLBi. “The other aspect has essentially been around cost: how much of each pound I spend is really being used to buy my media? That’s a big question mark in the industry.”

Advertisers are, slowly, becoming more educated about programmatic.
Advertising trade bodies, like the WFA and ISBA, have done much more to educate the market this year than in previous years. The WFA’s guide to programmatic media, which included an advertiser survey, showed how frustrated agencies are about not having their questions answered around margins, data safety and technology taxes. U.K. trade body the ISBA also put out a similar guide, which suggests the industry is responding to the need for more education in this space.

New operating models are emerging as a result.
Some agencies are offering clients more control over data and decision making. Brands like Kimberly Clark have established their own trading desk, while P&G opted for a managed service. HP is taking on direct relationships with ad tech firms and looking for a trading desk that integrates with technology firms of its choosing and gives assurances about data protection.

Clients aren’t entirely without fault.
The debate about transparency brought up interesting responses from agencies and technology vendors about clients’ role in the problem. It became clear that clients’ procurement arms were under pressure to reduce costs, especially after the recession, which forced agencies to buy cheap, poor-quality inventory from fraudulent sites.

Agencies also argued that pressure on costs meant they were reluctant to disclose everything for fear of having their margins squeezed further. “I think there’s just been a nervousness historically [because agencies worry] transparency will lead to procurement people saying, ‘Right, I want it cheaper,'” said Katie Eyton, ‎executive director, head of operations at Manning Gottlieb OMD. “But to be good in this space requires a hell of a lot of investment.”

Tech companies are eager to use the transparency debate to their advantage.
Tech companies see the question of transparency as an opportunity to get more direct business from advertisers. Companies like AudienceScience have pivoted from an ad-network model to a managed service for clients to gain more ownership of this process themselves. That has got agencies worried.

“All [agencies] have a responsibility toward our clients,” said Stephen Beringer, chief growth officer at VivaKi, in Cannes this year. “Clients are getting very, very clever, and companies like Adobe are saying, ‘Let’s bypass media agencies, pull through Rubicon directly and screw all these guys in the middle.’ I find it very dangerous, as a strategy, to put a blanket over this business.”

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