Cleaning Up the Programmatic Supply Chain Starts with Transparency

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At our last AppNexus Summit, we pulled together experts from across the buy-side to discuss arguably one of the biggest issues facing programmatic advertising today: the murky supply chain. Between the core pieces of ad tech required to buy programmatically, data management platforms, and the various managed services available, the IAB identifies eight different types of companies that can take bites out of the money an advertiser puts in.

With so many intermediaries, advertisers don’t know how much of their spend is going to fees and how much is going to publishers. Worse still, every hop along the programmatic chain is another chance for bad actors to siphon off more money by selling fraudulent impressions.

So, what can we do? As they say, sunshine is the best disinfectant. We need to shine a light on the programmatic supply chain and give advertisers transparency to solve the dual problems of fraud and “the ad tech tax.”

The supply chain problem

 

As Art Muldoon, co-founder and CEO of Accordant Media, pointed out to start off our panel, we’re firmly in an era of people-based marketing. Advertisers want to deliver a consistent, tailored experience to each member of their audience. But the digital media environment is anything but consistent. It’s fractured, with users splitting their time across different platforms, channels, and devices.

As such, programmatic advertising and ad tech have also developed into fractured industries, with many different providers arising to help brands reach audiences in every way possible. Each of them fits into this complex supply chain somehow, with varying degrees of awareness of how each fits in to different programmatic purchases. The issue is that with so much money on the line and such a range of sophistication amongst advertisers, it’s both easy and profitable to rip people off.

One way that happens is through the charging of non-transparent fees. Marketers pay agencies up front, who in turn pay media buyers, exchanges, and other ad tech providers, with the money slowly but surely making its way to publishers. By the end, the marketers and other players close to the beginning of the chain have little insight into how much money is actually buying impressions and how much is going to fees. That makes it nearly impossible for marketers to fairly evaluate the partners they work with, which is why we’ve seen prominent brands like Procter & Gamble reduce their digital ad spend in recent years.

The messy supply chain also creates opportunities for fraud – and unfortunately, lots of it. A study commissioned by WPP estimates that in 2017, fraud cost digital marketers over $16 billion. Ad fraud generally amounts to a bad actor selling fake inventory masquerading as the real thing. Domain spoofing, for example, is a method by which illegitimate publishers, networks, or exchanges falsely present traffic as having come from a more reputable publisher. Selling fake impressions powered by bot traffic is another common tactic. On our panel, [m]Platform Digital Investment Lead Sarah Warner mentioned her firsthand experience with these practices, noting that it’s common to see publisher inventory on exchanges she knows the publisher has no relationship with.

 

The only solution: Illuminate the supply chain

 

According to panel member Will Luttrell, the only way to combat the dual issues of fraud and non-transparent fees is to give marketers a clear “dollar in, dollar out” view of where they money they spend on programmatic Is going. As the CEO and founder of Amino Payments, he’s made a big bet on that concept, as his company aims to use blockchain technology to give marketers an exact breakdown of where their budgets go and how much gets to publishers.

Will points out that the only way to identify and avoid fraudsters is to see how they get paid. Until we know for sure which middlemen are routing ad dollars to false impressions, advertisers will continue to bite on the seemingly great deals for premium inventory that fraudsters dangle in front of them.

Similarly, advertisers can’t fairly evaluate the exchanges and ad tech partners they do business with if they don’t know how much of their budget goes to fees, and more importantly, what exactly the companies charging those fees are providing. As Will notes, this isn’t about shaming ad tech providers over their fees or casting judgment on the value they provide – it’s simply about equipping marketers and advertisers to make the best decisions possible for their business. If they can’t do that, then how can we expect programmatic to continue growing?

 

The time to start is now

 

We agree wholeheartedly that the programmatic supply chain needs greater transparency. That’s why last week, we announced a new transparency partnership with Adobe. Advertisers using the Adobe Advertising Cloud on the AppNexus marketplace will get full visibility into who’s receiving fees from them, how much those fees are, and how much of their spend in turn reaches end publishers. If you’d like to learn more, we recommend you contact us here or get in touch with your account manager.

Filed under AppNexus Updates.

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