The importance of asking the right questions when buying
By encouraging adtech partners to publicly self-declare details about their business models, we can inspire further disclosure and greater levels of transparency, writes the IAB's Tim Elkington
Whenever we buy anything, we usually want to know what we’re getting. Whether it’s a house, a car, or groceries, we have to ask the right questions in order to get the right answers. Is there any damp? Is there a full service history? Is this coffee Fairtrade? These things reassure us about our purchase and help us understand what we’re buying.
The same is true when advertisers and agency buyers approach online advertising. What am I buying, and is it good value?
The digital advertising value chain is complex and the lack of transparency within some parts of the industry gives rise to terms like the ‘tech tax’ which characterises ad tech intermediaries as taking a margin but without offering any value to the advertiser.
The bundling of all companies between buyer and seller as a ‘tax’ is misleading and does not help the advertiser to gain a true understanding of the value and return on investment from their advertising budget. For example, if 10 pence of an advertising pound is used for a data integration that improves the relevance of the ad, making it twice as effective, this may be one of the most valuable parts of the spend.
It’s important for advertisers that they’re able to understand the contribution towards effectiveness that each partner plays - or does not play - within the campaign. Companies who are less effective can then be dialled down within the media mix, or potentially eliminated entirely.
In speaking to our members, it became clear that equipping buyers with a set of common questions to help understand the roles that intermediaries play would be useful. What is their business model? What is their attitude towards data and privacy?
These questions won’t necessarily resolve the value added by each partner in the chain to the overall campaign, but they are a vital first step as once you fully understand the role of each element of the supply chain you can then move on to interrogate the value that each adds.
So, to try and address this challenge, IAB members from different parts of the industry worked together to produce 20 common questions that can be asked of digital advertising businesses. The aim is to equip brands and agencies with the answers they need to help them understand more about the companies’ business models and provide an indication of their attitude towards transparency.
The questions cover three main areas - Pricing, Placement and Data Usage - and include questions like “What is your business model and how do you make money?” and “What brand safety measures do you use?” or “Under GDPR, what legal basis are you providing your services under?”
It is our hope that encouraging supply partners to publicly self-declare details about their business models, policies and processes, will inspire further disclosure and greater levels of transparency. If we make this the norm, then accusations of murky business practices and obfuscation will become a thing of the past.
Addressing transparency within a value chain is not easy. Even reaching a conceptual definition of what should be explored is hard when boundaries are subjective and you are operating in a complicated, multi-stakeholder environment.
In the past, this challenge may have inhibited trade organisations such as the IAB from attempting to make forward progress; without sight of a potential perfect solution, the first steps weren’t taken. But more recently, we’ve recognised that some of the answer is better than no answer whatsoever.
Do these questions go far enough? I am sure some people will think not. That transparency cannot be solved by a self-declared list of questions. But that was never our objective. This is not a silver bullet or cure for issues around transparency, but we think the Transparency FAQs are a useful first step forward.
When Pritchard, Weed and the wider marketing industry call for greater transparency they desire a greater understanding of the value chain, which provides transparency of role, transparency of measurement and performance and ultimately agency and autonomy to choose those partners that deliver the greatest value for their brands.
The Transparency FAQ attempts to answer the first part of this problem; what does this company do, within which part of the value chain do they sit, and how does their business model contribute towards our campaign success?
How might this initiative evolve in the future? Our first objective is to get as many of our members to complete the questionnaire as possible. Once that is achieved, this will be a significant repository of insight into the digital advertising value chain.
The next step could be to look at independent verification of these answers. At launch, the pragmatic and efficient approach was to start with self-disclosure. We recognise however that independent verification of the responses (such as those that are currently available through JICWEBS) would add an additional layer of assurance for brands.
The Transparency FAQs is a voluntary initiative that we hope ad tech companies will embrace as it will help buyers understand the landscape more easily. The answers to the FAQs will enable buyers to evaluate their purchase as they would with anything else they buy, by ensuring the value chain answers the right questions.
By Tim Elkington, chief digital officer, IAB UK.