Last week saw this year’s edition of the Financial Management conference held annually by the US Association of National Advertisers (ANA) in San Diego. The surprisingly cloudy skies in California matched the advertisers’ mood at the conference in the wake of recent high-profile issues affecting the advertising market.

The lack of transparency in programmatic advertising emerged as the biggest of these, and the record turn-out of over 700 delegates also provided evidence of the increased focus for advertisers on addressing market issues through the active management of finance and contracts.

The conference coincided with the release of new research from Ebiquity and AdFin (in association with the ANA and its Canadian equivalent) which exposes the true economics of programmatic. The research was presented by Andrew Altersohn, AdFin’s CEO, to a packed hall.

The report is entitled ‘Seeing Through the Programmatic Fog’ and the early morning mists in San Diego provided a suitable backdrop for a study into the opaque finances of a market which is growing exponentially despite advertisers’ lack of visibility over their investments.

The report outlines the financial waterfall in the programmatic market and shows that on average only 58% of advertisers’ money actually buys media. The remaining 42% is spent on data, fees and support services. This is clearly not satisfactory but appears to be better than the 60% value loss estimated by the World Federation of Advertisers in 2014.

So have matters improved? This does not seem to be the case, as the Ebiquity/AdFin study was only able to report on those programmatic trades where the advertiser has the right to require their trading partners (media agencies, trading desks, and demand-side platforms) to provide the relevant and granular data on winning bids.

The majority of advertisers who wished to participate in the study were prevented from doing so by a range of roadblocks which frustrated their objectives and their need for greater transparency.

The majority of advertisers found themselves, sometimes unwittingly, locked into ‘undisclosed’ deals where transparency is limited, and data access is denied to them. In such trades, there is a highly restricted ability for advertisers to know whether or where their ads are appearing, who may be seeing them and whether they are being ‘seen’ by bots. Without this information, it is virtually impossible to know whether online advertising is proving effective.

The most important section of the report provides a playbook for advertisers to overcome these obstacles and achieve a far higher level of ‘working’ media, efficiency and effectiveness.

The key aspects of the playbook provide a best-practice guide for advertisers to make programmatic work for them. Advertisers should:

  • Clarify when their media trading partners are operating in an ‘agent’ capacity, or as principal to the transactions. If they are acting as principals, advertisers should put checks and balances in place to ensure they receive the benefits of group trades without loss of transparency.
  • Always be clear that they are working on a ‘disclosed’ basis, with access to the granular, log-level detail they need to assess delivery and performance.
  • Have a clear policy on the management of data and technology, and an active policy on in-sourcing and/or managing the relevant resources externally.

The most important aspect for advertisers to achieve media transparency in all channels is to negotiate the right contracts with all their media partners.

At the San Diego conference, Ebiquity and Reed Smith co-presented the top-level highlights of the ANA’s template Master Services Agreement, launched in 2016 (see photo above). This reflects the roadmap for transparency authored by Ebiquity and FirmDecisions for the ANA as an integral part of the ANA’s media transparency initiative.

The contract template provides advertisers with the language they need to negotiate the relevant level of transparency and includes the all-important clauses that provide the data ownership and access rights that are critical in programmatic.

The conference discussed at length the pros and cons of advertisers insourcing programmatic. This may be the right route for some, but the majority who do not can benefit from the advantages of programmatic by following the eleven-point plan and the contractual guidelines presented in San Diego.

Fog can get in the way of a clear path. Advertisers can help clarify their own way ahead by adopting a progressive approach to contract management and a programmatic playbook that helps them navigate through a complex market to the sunnier uplands where better performance can be found.