The programmatic witch hunt is confusing transparency with business
There's no denying that digital transparency is an important issue in our increasingly fake world. However, when it comes to programmatic, many critics seem to be confusing transparency with good business sense, writes Bold Media's Toby Hemming.
It seems that it is all the rage to have an opinion about digital transparency these days. Without pointing fingers, it appears that commentators on both sides of the digital fence are continually waxing lyrical about the imminent cliff digital media may, or may not be, hurtling towards.
But as an interested observer, it has struck me 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.
Is it time to cut programmatic a break?
The current conversation around programmatic transparency has taken a wrong turn. It’s gone from helpfully pushing for transparent trading, to spitefully suggesting transparent business models. If martech companies caved to these demands, they would likely be the only private industry in the world to do so.
Clearly, transparency is a good thing. Programmatic traders should be clear with clients about what media they buy, and why they buy it. They should be open about what exchanges they use, and how effective their methods are. When it comes to publishers, inventory, targeting and engagement, they should be open with agencies and advertisers. This approach creates a better environment for everyone involved. On this front, the industry can still improve.
But lately, the conversation around transparency has morphed into something unexpected. It’s become a call for selected businesses to be publicly transparent with how they make money. This is something a smart company would simply never do.
Working in media is about adding value. 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.
Forgive the lesson in capitalism, but I fail to see why the programmatic industry should be asked to exist outside the same rules as everyone else.
Look at car manufacturing. At every step of the supply chain, from steel mine, to assembly plant, to car dealership, each supplier marks up the price of their skills and service to cover their costs and make money from the efficiency and quality they bring to the production process.
Would you ask a car manufacturer to explain why they mark up their prices?
The cost most people pay for phones or cars is less than it would cost for the average individual to buy the raw materials and personally make the product. Electronics companies, car companies, nearly all companies, add value to the world in this way. They make specialist products available to the market at a price that represents value to consumers.
Any brand marketer who has brought their programmatic trading operations in-house would probably agree to the value of having a martech provider doing the heavy lifting for you.
And just like any manufacturer might have special technology that allows them to make certain material much cheaper than its competitors, I’m sure the same exists in programmatic trading. As long as the net result is still a quality product or outcome for the customer, no harm no foul.
It’s this competitive edge that pundits and grandstanders are trying to take away from programmatic businesses. Rather than celebrate the ingenuity required to bring in campaign results on a budget, they want martech providers to explain themselves. It’s puzzling.
Unless we’re all expecting manufacturers to start breaking down their manufacturing and distribution costs on the retail price tag, asking the same of programmatic businesses might be a bit much.
I agree entirely that transparency and honesty is an essential commodity in media trading, but we should focus on the kind of transparency that adds value and proves ROI. Asking for total transparency and singling out certain businesses and undermines the entire industry. Where would it stop?
Toby Hemming is managing director at Bold Media
Couldn’t agree more, but it seems that every Advertiser has a stance on improving transparency because they have to have one, not because they have a deep and sincere drive to better the industry.
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Finally someone talking sense. Couldn’t agree more. Well done; and great read!
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The following quote encapsulates the article.
“The cost most people pay for phones or cars is less than it would cost for the average individual to buy the raw materials and personally make the product.”
Yes, because the average individual is expert in making phones and cars.
What a load of bollocks.
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Umm, listed companies do talk margin in the form of EBIT. Regardless, I think this is a one-sided argument. The concern is the fees you are taking from a media spend. If you list your fees out in the following way.
X (actual media $ the publisher will see) + Y (tech) + (plus anything else you think will add value to the marketer) = Total Spend, then the marketer can decide if they want to use any part of what is in that equation. Remember it is the marketers money or their shareholders, so they can decide what brings in the appropriate ROI. Not you.
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I had to read this twice to make sure it wasn’t parody. Good luck having this discussion with clients.
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Naive point of view here.
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I think this is a well argued counter to the media transparency debate. But it misses two crucial points.
First, the context of media fees, surcommission, value banks and so on pre-date programmatic. So programmatic entered into an already suspicious and pretty negative environment and made things worse. But clients were already highly suspect about what was being charged for what.
Second, it’s fair to push back on pundits who critiique the fees and lack of transparency of programmatic. But they really are only reflecting the general perception of all advertisers and marketers – except those who work in media agencies. In 2016 I completed a massive survey of more than 250 Australian advertising clients and we used trade off analysis to look at the major drivers of their media buying preferences. “Get What You Pay For” was the most important factor. Not CPM. Not ROI. Not even value. Just get what you pay for.
This is a well written and thought through opinion but its not going to change the way that clients think. Not one jot. And to continue to push back against client discomfort with transparency and commissions is to miss the central point of the debate and of marketing itself, the customer is always right.
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Although I agree with most of your points, It only makes sense if the end user (eg clients) understand who you are… are you an agency, or martech, or a media supplier (eg have your own audience)?
The issue is that you have agencies pretending to be martech, while martech are pretending to be agencies &/or media suppliers.
To start with let’s be clear on who we are.
I’m an Agency – Then you must disclose your fees versus your external hard media or martech/data costs, this disclosure is what makes you an “agency”
I’m in Martech – Be clear to clients that you are not an agency or a media supplier, and be transparent about your own tech and data costs (not margin) versus the media costs.
I’m a Media supplier – Value your audience and don’t disclose your margins
I’m a Trading Desk – You are not real, you’re just an agency that has mashed-up martech/data/media supply as one number so you don’t have to disclose your fees.
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Couldn’t agree more that this would be a hard conversation to have to a client to doesn’t fully understand. This is where you should be educating your clients, then you’ll discover that this is quite an easy discussion to have once the client has been educated.
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