Bridge the trust gap: Why ad exchanges need to be more like Amazon and Airbnb
Here’s some news that might surprise you: Americans have a high level of trust in most of the advertising they encounter. A survey by Marketing Sherpa found that 80 percent or more of U.S. internet users place faith in print and television ads that promote the various products and services they’re looking to purchase.
But there is a glaring caveat when it comes to digital advertising: Only 39 percent of those same respondents claimed to have any trust in banner ads. Likewise, only 39 percent said they found mobile ads credible.
Unfortunately, this atmosphere of distrust is neither baseless nor confined to the consumer. As The Times of London reported earlier this year, “Advertisements for hundreds of large companies, universities and charities, including Mercedes-Benz, Waitrose, and Marie Curie, appear on hate sites and YouTube videos created by supporters of terrorist groups such as Islamic State and Combat 18, a violent pro-Nazi faction.” When advertisers themselves find their ads placed on sites that promote pornography, hate speech, or fake news, they become rightfully wary of buying space from the same exchange ever again.
An advertising exchange is like any other internet marketplace in that it facilitates the trading of goods or services for payment between buyers and sellers. Studying how other online marketplaces have enforced quality, transparency, and transaction guidelines between buyers and sellers shows that those that do it correctly grow to scale. Indeed, by enforcing strict commercial practices, marketplaces not only conduct better business, but conduct more of it.
One model worth noting is the Amazon Marketplace. Sellers lose their privileges should they fail to meet highly specific criteria for their goods and services. If you’re a seller on Amazon, an order-defect rate of greater than one percent, a pre-fulfillment cancel rate of over 2.5 percent, or a late shipment rate of more than four percent can cost you access to Amazon’s platform. What emerges is a marketplace that promotes inventory quality by ensuring transparent and fluid transactions. No wonder that buyers and sellers use Amazon to do business with each other again and again.Airbnb has also cultivated trust between buyers and sellers on their platform through policies and practices that enforce quality. For example, by encouraging renters to describe their accommodations accurately and in detail, and promoting a feedback loop in which hosts and guests review each other within fourteen days of checkout, Airbnb’s marketplace is characterized by trustworthiness on a massive scale. As a result, the once-fledgling company is active in 34,000 cities in 191 countries and has over one million listings on its platform.
Like Amazon and Airbnb, operators of digital advertising exchanges need to place a premium on ad quality. That means eliminating hate speech, piracy, fake news, graphic violence, and other material objectionable to buyers and sellers.
As we have now seen in the case of YouTube, enforcing a safe, quality advertising marketplace isn’t just ethically responsible, it’s essential for sustaining business. Marketers must be guaranteed their brands are safe, or the entire digital advertising system will break down. Advertisers will reduce or eliminate their spend. Publishers will lose money. And consumers will have less choice in where they turn for their information and entertainment.
Exchanges have a responsibility in maintaining marketplace quality, but everyone in the digital advertising value chain needs to contribute. There are ample tools to ensure brand safety. For example, buyers can operate in white-listed environments, which means they can bid only on pre-approved domains that have passed quality stress tests.
We argue there is an opportunity for collaboration between responsible ad tech companies, industry groups, non-profits, and academic partners to create safe lists that marketers and agencies can adopt or adapt. This isn’t an easy task. Unlike television, radio, or print media–each governed by longstanding policies that ensure essential quality of ad content and placement–digital advertising has been lax at enforcing similar protocols. It’s time for the industry to come together and codify a broad, concrete set of community principles that bar hate speech, pornography, graphic violence, illegal activity, deceptive practices in commerce, and fake news from their platforms. The uniform adoption and enforcement of these policies is critical to long-term marketplace success.
In the end, ad exchanges can’t thrive on scale alone. Google’s AdX, while the largest of them all, hasn’t proven itself able to consistently foster trust between buyers and sellers. It wouldn’t come as a surprise if AdX was eventually overtaken by ad exchanges that oversee marketplace transactions along the lines of Amazon and Airbnb. By enacting guidelines that ensure quality, efficiency, and transparency between buyers and sellers, tomorrow’s most successful tech companies will be the ones who bridge the digital trust gap.