Endlessly debating the transparency of programmatic won’t rebuild trust

Comparing programmatic with the supply chains of automotive manufacturers isn't going to get us where we need to be: back in the consumer's good books. PwC's Ben Shepherd explains.

There is no issue with more heat in the advertising industry right now than transparency. It’s hot locally. It’s hot globally. It’s being discussed daily in boardrooms and the media.

So, I was somewhat surprised to see an op-ed on Mumbrella questioning the motives behind “the programmatic witch hunt” the same week the World Federation of Advertisers released data that should have sent yet another shockwave through the industry.

Toby Hemming wrote a defence of what he called “mar-tech” companies and their margins and business model, arguing that “unless we expect Samsung, Apple or indeed any successful business to start providing a detailed breakdown of their profit margins on the price tags of their products, we might want to cut the programmatic industry a break.”

Toby Hemming: Defended programmatic

The logic of the article was that businesses, media or otherwise, shouldn’t be expected to provide supply chain transparency around costs and margin.

The problem with this assertion is never before has there been such discomfort and concern from advertisers around the broad area of programmatic and what value each layer of the supply chain adds beyond additional cost.

The challenge for the industry – of which both Toby and I are part of – is that we seem to be heading towards a situation where trust has eroded to such a level around digital generally that we can’t go one week without another headline that makes the situation worse.

When the WFA asked its members – the largest advertisers around the globe – their number one concern presently, 47% said transparency. It was far and away the largest concern across the board.

Transparency is 47% of advertisers’ number one concern

Transparency is not a new issue but it has magnified in recent years, with the WFA identifying the below triggers:

  • A significant increase in the volumes of media being bought on an undisclosed basis and only limited numbers of contracts permitting this.
  • A move towards free space and a decrease in cash rebates being returned.
  • An increase in uncertainty surrounding audit rights and rights to media cost data access.
  • The evolution of ad tech and programmatic has added much complexity. ‘Following the money’ becomes increasingly challenging.

Hemming argues that “working in media is about adding value” and that “each stage of creating, producing and planning a marketing campaign is part of a long chain of investments from advertisers, all designed to eventually make more money than they cost.”

No argument here. But looking at the below do we feel advertisers – the companies and individuals that pay our bills and sustain our industry – feel they are seeing added value and that these investments are generating more money than they cost?

According to the WFA, the below is where advertisers are sitting when it comes to their feelings around transparency and more broadly – the value we as an industry are creating for them.

  • 53% have inserted specific financial audit rights into contracts in the last 12 months, with 29% intending to in the next 12 months.
  • 29% have inserted clauses to clarify and clearly define agency or principle at law positions into contracts, with a further 29% planning to add in next 12 months.
  • 50% plan to improve internal resources in the areas of media and programmatic in the next 12 months.
  • 41% plan to conduct a programmatic review in the next 12 months.
  • 47% have added specific clauses around return of incentives/rebates in last 12 months, with 26% planning to in next 12 months.

These are significantly concerning statistics and not at all demonstrative of a customer base who feel at ease with the current dynamic of digital advertising.

The premise of so much of today’s modern adtech, martech and programmatic is that it provides advertisers with never-before-seen speed and precision around how to read customer signals and turn these into actions.

Shepherd: We can’t go one week without another bad headline 

However, when it comes to our customers and the clear signals they are sending, we seem totally oblivious. Comparing the current state of digital and programmatic with the supply chains of industries such as automotive and technology manufacturing is an example of this.

Finding a way forward out of this dilemma is incumbent on all of us. A good start would be to cease the straw man arguments around transparency of margin and commence meaningful, candid and honest discussions with clients around these areas of concern.

After all, we are in the business of connecting with customers – but right now it feels like we might be losing that connection with our own.

Ben Shepherd is a director at PwC’s CMO Advisory


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