The ANA's media transparency redux and the need for more honesty
It’s déjà vu all over again — the Open Web Programmatic market is as impenetrable as ever.
You wait ages for a column about the shortcomings in online advertising, then two come along at once. Predictably, my recent Media Leader piece was not looked upon favourably by the people who benefit most from the imbalances in the online advertising market, so it’s timely that further evidence arrives today with the publication of the first stage of the US Association of National Advertisers (ANA) Programmatic Media Supply Chain Transparency Study.
The ANA speaks on behalf of their members, as the UK’s ISBA and other national associations have, and they have expressed dissatisfaction in how the online ad market is working. The people who actually fund the ad-supported market are not happy, and haven’t been for years.
Yes, there have been some attempts to rectify matters, but with little effect judging by plenty of evidence over time, and maybe the money has just been too damn good for some industry supply-side players to want true change.
Today’s ANA ‘First Look’ document pursues very similar themes to the original WFA report in 2014, not to mention subsequent studies by ISBA and PwC in 2020 and 2023. We have been here before. It’s déjà vu all over again.
How we got here
A lot of ink has been spilled but little has changed in nearly 10 years, and arguably matters have got worse as the Open Web has expanded dramatically and newer Walled Garden players such as TikTok enjoy massive public success but provide little insight into ad performance.
Helpfully, the new study by the ANA provides a great set of recommendations for advertisers as to how they make their investments be more effective, efficient and productive, even before some of the reasons for doing so are explored in the second phase later this year. Advertisers know what the obstacles are and don’t need to wait to start overcoming them.
Before we dive into the detail of the new study, this is the obligatory disclosure that I co-authored the RFP for it with the ANA team and Tom Triscari.
However, I had no involvement thereafter and can speak impartially about the results so far, which, unsurprisingly, demonstrate that the Open Web Programmatic market is as impenetrable as ever and thus it is hard for advertisers to track and measure money and data flows. The result is that the best planning and buying decisions still cannot be made and ineffectiveness, inefficiency and waste is inevitable. Plus ça change, etc.
Crucially, this also applies to ad exposure, an aspect unaddressed by previous studies. The ANA review is uniquely ambitious in trying to follow the breadcrumbs through the whole labyrinth and include aspects such as viewability and ad fraud into the whole value-chain.
The Programmatic Open Web only accounts for 17% of global digital ad spend (including paid Search) according to Jounce Media, but it’s $88 billion of spend that warrants close scrutiny throughout the dollar’s journey from advertiser to (sometimes) the public.
Perhaps unsurprisingly, this is also uniquely difficult to do, but it has to be done despite the gargantuan job it entails, against significant resistance.
So, to the ‘First Look’ of the ANA report, looking at the transactional side of where the data and money goes.
It’s a preliminary document without the full detail and the all-important qualitative aspects but it provides plenty of guidance from the analysis so far.
Advertisers are navigating a minefield
The study goals were simple. The primary objective was to make media more effective at driving brand growth by eliminating “wasteful and unproductive spending”.
This is the advertiser perspective and it means that someone, somewhere is going to lose revenue because they have wasteful and unproductive inventory. Others may gain because they deliver the opposite, but at the moment it’s hard for advertisers to make well-informed investment decisions because of the opacity of the supply-chain and the efforts by some to keep it that way.
The study aims to identify how to reward media inventory providers who deliver accountability and transparency of money and data with high quality audiences and strong ad exposure (viewability), minimised ad fraud and a clean, clear environment where attention is maximised.
This doesn’t seem too much to ask and applies to any vehicle in any medium, and always did. This isn’t digital vs something else.
In common with prior studies, several advertisers wanted to participate but couldn’t, owing to the familiar combination of legal and technical issues that have bedevilled previous attempts to investigate the market. Only one-third of interested advertisers (21) managed to navigate their way through the minefield. The study measured $123m in adspend, buying 35.5 billion impressions, measured on a ‘log level’ basis to maximise data-matching.
A larger sample would have been better but the fact that it proves so hard to see let alone cut the Gordian knot is a finding in itself.
In parallel, Kroll conducted 35 interviews among supply-chain practitioners to explain why the market works the way it does. These extracts are illuminating.
Agencies ‘not obliged’ to provide transparency in contracts
The report contains 7 specific recommendations for advertisers:
1. Take more active control and exercise tighter stewardship
This will ring bells with anyone who read the ANA’s recommendations in the 2016 Media Transparency report, but it applies even more now with Programmatic being so important, complex and opaque.
Advertisers should know as much about Programmatic as their agencies and adtech partners do. This isn’t that hard and there are plenty of independent experts out there to provide the expertise.
One key observation this time is that advertisers should know when their agency is working on their behalf as an agent or when it is acting as a principal on multi-client trading. In the latter instance, the agency or group is not obliged to provide transparency under most contracts and is not even obliged to act in the best interests of the individual advertisers. This is vital information.
The new study also observes that various stakeholders in client companies do not know what their agency obligations are and therefore don’t realise when the agency is not conforming to contract. More internal communication can fix this.
While media agencies undoubtedly contribute substantially to the process, nothing beats an informed client working in partnership with a great agency, supported by adtech partners committed to accountability and transparency.
2. Contract directly with your adtech partners (DSPs, SSPs, ad-verification vendors, ad-serving providers) with associated data access rights at log level
Roughly half of the brand-owners participating in the study have direct demand-side platform (DSP) data access, but this seldom flows downstream to supply-side platforms (SSPs) and other contributors, and those that do have access rights do not necessarily exercise them.
In the absence of direct contracts, advertisers should negotiate data access rights via their media agency and DSPs to the downstream adtech chain.
3. Prioritise value and effectiveness over cost
Many advertisers buy wasteful and ineffective media because it’s cheap, but worthless. Often this is due to pitch guarantees or savings targets; it’s a false economy but one that’s hard to break because of the difficulties of measuring value or effectiveness, so a circular reference.
This is a big one for Procurement. “Value” is sought over cost, but defining what value means is crucial to knowing when the price is right. Low cost-per-thousands (CPMs) are very rarely the answer.
As the report says “not all impressions are equal” and “value” means nothing until it is qualified.
Value comes from buying from reliable sources where real audiences reside, with high viewability and attention levels in a clean, clear environment, and this is a big part of the solution, but this cannot be achieved at unrealistically low CPMs.
The value that good agencies add is doing precisely this at competitive rates. It’s good planning and buying, isn’t it?
Not covered in the study is the question of impressions as a currency. As this is the industry-adopted trading unit, impressions are sometimes treated equally and are easily manufactured. They are not an audience and not always attached to enough data to act as a proxy audience. They are often fake.
Advertisers should ensure that impressions are qualified by data to represent real audiences. This is supposed to be a fundamental aspect of Programmatic, but it isn’t systematically applied.
4. Reduce the number of websites used and cut off the ‘long tail’
The study found that the average number of websites used during the trial was 44,000 (similar to the ISBA findings). This is simply far too much to monitor, manage, control and measure. Automation can only go so far, especially when programmed by humans.
Advertisers should identify those domains that really matter to them and shorten their inventory choices dramatically.
Equally they should operate ‘inclusion’ rather than ‘exclusion’ lists to ensure manageability and help brand safety.
Let’s remember that Programmatic traders are juggling Open Web and Walled Gardens, with multiple apps, data that is different everywhere, analytics galore, not to mention the panoply of other daily tasks, and even have to go home at nights.
For some, the job is simply too big and anything that streamlines it will justify the upfront effort. Headcounts are constrained by overall agency profitability targets, even if Programmatic is a major source of profit thanks to the additional, often obscured, revenue streams.
Agency leaders need to increase resource to improve on the inputs that enable the highly profitable outputs and, yes, I do know how hard this is.
5. Omit or reduce ‘Made for Advertising’ websites
Made for Advertising (MFA) is the lowest form of advertising (think toe fungus and cheap funerals), and it works on a salami-sliced arbitrage basis.
It also disfigures countless websites, harms the user experience and alienates the public.
The study found that 15% of budget for study participants was directed to MFA sites, delivering 21% of impressions (so it’s cheap). This is startling and probably a function of low CPM-chasing and/or revenue arbitrage. It’s certainly not a good thing.
Most self-respecting brands should avoid it like the plague and may not even know they are advertising in it. It may be useful for some brands, but the internet would be a better place without it.
6. Reduce your carbon footprint and make sustainability a metric
Much Programmatic is inherently wasteful in environmental terms, and reducing the number of websites and MFA used can greatly reduce non-eco-friendly operations.
7. Use log-level data
The famous ISBA/PwC study of 2020 that identified a 15% loss of visibility in the supply-chain (the ‘delta”) has now been addressed and log-level reporting, as used in the new ANA study, reduces the gap to virtually zero, according to the report. Better tracking and matching can’t be bad, can it?
Trust has been discarded
So, good, actionable recommendations that address the (surely) unquestionable issues that have led the advertiser trade associations to conduct multiple studies.
However, we’ve been chasing media transparency for a long time now and while it was always going to be a marathon, the finish line seems to continually move back, for bad and sometimes good reasons. The new ANA study inevitably treads familiar ground for the simple reason that so little progress has been made in addressing the problems.
Transparency is good but what advertisers really need is honesty.
We know that trust is hard to earn and quickly lost, and it relies on openness and straight-dealing. These virtues seem to have been discarded as the market shifted from being demand-side-led to one where the sell-side dominates. Even media agencies became sell-side players when they earned more money from media vendors than from their clients (been there, done that, not proud).
Last week an article in AdAge explored the ways that agencies of different kinds are reducing their internal costs through offshoring but charging clients the same as if their teams in, say, India cost the same as the US. This isn’t the only ruse around but it’s a reflection of today’s market.
The usual groans of “clients are squeezing us so hard that we’ve got to find other ways to make money” is used to justify this kind of behaviour and some of it may be contractually allowable or at least not entirely dis-allowable . Yet, Brian Wieser in Madison and Wall is the latest analyst to point out that the media agencies in the Holding Companies disproportionately fund the other parts of the group and are constantly under pressure to find ever more enterprising ways to keep their margins up.
What should happen next
So the cat and mouse game continues.
It may be an old-fashioned value, but honesty goes a long way and if an agency isn’t honest, what is it? I think you can work that out for yourselves.
Maybe a media agency group (as opposed to an independent) should break the mould and say, Hey, we are genuinely transparent and here’s how we make our money. What you see is what you get and here’s how you should compare us with our peers.
Wouldn’t it also be good if the industry at large held its hands up and said, Yes, reports by ISBA and the ANA hold a mirror up to an industry that is not healthy when the people funding it (the advertisers) cannot even work out what their money has bought, or even gone. Let’s call a truce and start again”?
Yes, I know it’s naïve and unrealistic with too much money depending on opacity and complexity. But maybe there is a commercial advantage out there for someone prepared to break the mould. Maybe honesty really is the best policy.
Nick Manning is the co-founder of Manning Gottlieb Media (now MGOMD) and was CSO at Ebiquity for over a decade. He now owns a mentoring business, Encyclomedia, offering strategic advice to companies in the media and advertising industry, and is non-executive chair of Media Marketing Compliance. He writes for The Media Leader each month — read his column here.