Programmatic remains murky but transparency costs extra, ANA report finds

The Association of National Advertisers is releasing the second part of its report on the programmatic digital media buying supply chain that paints a picture of a murky system many marketers don’t understand, largely because they haven’t tried hard enough.

The second phase of the ANA effort was led by Richard Plansky, regional managing director of Kroll in North America, who while at K2 investigations led a 2016 ANA probe into rebates and other transparency problems in marketer-media agency relationships. Unlike that report, which ultimately prompted a federal investigation, there’s relatively little finger-pointing or indication of potential wrongdoing this time around.

But the Kroll report does point out that many marketers have little visibility into contract terms or who gets paid how much for what beyond their initial trading partner in a complex chain, be that an agency or a demand-side platform (DSP). The report, which is based on interviews with 25 confidential sources across all parts of the industry, does include a list of questions marketers can ask regularly of partners in the supply chain to improve transparency and performance.

Complete transparency comes at a cost that many marketers either can’t afford or don’t want to pay for, according to the report. For example, visibility into volume discounts that agencies receive from DSPs may be impossible because they’re spread across multiple clients, Plansky said. Often, agencies are acting as principals in those transactions and then reselling media to clients, a practice that’s common and legal, but which marketers may not always be aware of, Plansky said.

Related: Programmatic questions marketers should be asking

Transparency costs extra

One thing many marketers have demanded—full access to log files detailing exactly where and when their ads run on digital platforms—is harder to achieve than it sounds, according to the report. Just one campaign can generate millions of lines of code, and each link in a supply chain that includes agencies, DSPs, data management platforms, SSPs and publishers often formats data differently. So the marketer needs a system that can reconcile disparate data sets, then have someone qualified to analyze it, which they often don’t have, according to the report.

“There’s generally consensus among our sources that, theoretically, it is possible to get all the data you need to achieve full transparency for your programmatic media spend,” Plansky said. “But in practice, there are human problems that prevent that from happening.”

That includes marketers being unwilling to pay the extra costs of getting or understanding the data, or even of shouldering the responsibility of having it, which means they can no longer “blame the agency,” according to the report.

Lou Paskalis, former Bank of America media executive and now CEO of AJL Advisory and chief marketing officer of Ad Fontes Media, who was involved with the ANA study, said that while it may be impractical for marketers to track all the log files in-house, he recommends doing what Bank of America did in hiring outside consulting for that.

Listen: How the ANA planned to investigate  programmatic media buying

How one large advertiser does it

While it all may sound difficult, it’s not impossible, said a person familiar with one large advertiser that didn’t participate in the ANA study because the company had already gone through an extensive process to ensure transparency in its programmatic supply chain years earlier.

That effort was led by a data scientist working with a marketing procurement person with help from a programmatic supply chain consultancy, this person said. One key to getting transparency was simply meeting with all the SSPs in the industry and demanding they provide disclosure regarding what they pay publishers and how much they mark it up. The company stopped doing business through SSPs that wouldn’t provide those disclosures, and every publisher it wanted to do business with ultimately could be accessed through ones that would, the person said.

Another key is establishing a relatively restrictive inclusion list, which can be rather small, since this person estimated that half the audience the marketer wanted to reach can generally be found through 10 or 20 publishers.

Targeting undisclosed SSP contracts

Enforcing limited inclusion lists, in part by checking log files, is one key to managing programmatic properly, Paskalis said, as it weeding out SSPs that don’t disclose what they’re making on transactions.

“There should not be opaque contracts between SSPs and publishers,” Paskalis said. “Everybody needs to make money, and I want that. But if I don’t know how much money is being made and what’s going on, that’s a problem.”

Paskalis believes the ANA should argue strongly for an end to non-disclosed SSP-publisher contracts. “I think it will take an annual contract cycle that says we won’t do business with anyone who has a non-disclosure agreement between the publisher and SSP,” he said.

Marketers need to change

Overall, the Kroll study found “information asymmetry” and “misaligned incentives” at the heart of much of the problems in programmatic buying, much like the first part of the ANA study cited. It did not delve specifically into one key piece of prior reporting—that low-quality “made for advertising” sites made up a surprising portion of the buys for many campaigns, but did note that a key to better performance is enforcing more restrictive inclusion lists of what sites can be purchased.

The information asymmetry often owes to marketers not having media people well enough versed in digital media to understand what’s going on in programmatic buying.

Within companies, procurement and finance executives are often the ones making the deals that marketers execute. When invoices come in, they’re often evaluated by finance or procurement people but not the marketers, according to the report.

Misaligned incentives often boil down to marketers seeking the lowest CPMs because it’s a metric that’s easier to track and show to bosses than those demonstrating ad effectiveness, according to the report. Some agency respondents noted that goals often conflict within a client company.

Too much or too little verification?

The study found spending often comes on redundant services performed at multiple points in the supply chain—for example, SSPs factoring the cost of ad verification companies into their fee, while the marketer or agency pays for its own ad verification. Not only does this add to costs, but it also slows down ad serving with additional data tags. One SSP tech lead said costs could be lower if they didn’t need to pay for ad verification that marketers ultimately do on their own.

Fraud was not a focus of the study, Plansky said. And not everyone in the industry believes anyone should pay for the fraud detection portion of ad verification from the major providers, because of doubts about how well it actually works.

Augustine Fou, principal of FouAnalytics, posted on LinkedIn this week in a “Programmatic Has Been Problematic from the Start” post that his research suggests fraudsters have learned to readily bypass the sophisticated invalid traffic detection (SIVT) systems of the major firms and that more than 90% of the digital inventory sold programmatically is fraudulent.

Paskalis, however, said he has found value in SIVT monitoring and doesn’t believe using multiple vendors is necessarily redundant. During his time at Bank of America, he used DoubleVerify, IAS and Oracle’s Moat, because all three worked somewhat differently and caught different problems.