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"Mind-boggling": the industry reacts to ISBA/PwC report

08 May 2020  |  Michaela Jefferson 
"Mind-boggling": the industry reacts to ISBA/PwC report

ISBA, the industry body representing advertisers, and consultancy PwC have finally released their long awaited report on the programmatic ad market - and for the first time advertisers have quantified the end-to-end value of its supply chains.

Two years late, which in itself points to the complexity of the numerous supply chains and the difficulty of tracking money and data within the system, the report unveiled some alarming figures.

In a study of the "premium parts of the programmatic market", including fifteen major advertisers, 300 distinct supply chains and 12 premium publishers, just 51% of advertiser spend on digital inventory was going to the working media.

Meanwhile, 15% of marketing spend was disappearing into an "unknown delta", and was unattributable anywhere in the supply chain.

In response to the report's findings, the market was warned that if it could not deliver standards and transparency, advertisers may take their money elsewhere and the Competition and Markets Authority might even intervene.

“We desperately need to see a common set of standards adopted and more openness in this market, so that every penny spent is accounted for," said Graeme Adams, head of media at BT Group.

"If this happens, we’ll invest more in the channel; if not, we will cut back and reshape our trading approaches,"

It was difficult to get other brands to go on the record with their thoughts on the report's findings, however Jan Gooding, the former marketing boss of the likes of Aviva, British Gas and BT, told Mediatel News that she was "delighted" to see the results - "less because of what it contained, but more because it quantifies the problem we have long known was there."

"No brand owner will be able to tolerate a 15% ‘black hole’ in their spend," Gooding said.

"Quite apart from being wasteful it demonstrates a concerning lack of control. Brand reputation is at stake and careful thought should always be given to where money is being spent."

Gooding added that every CMO should be concerned about the findings, and that the report provides "the basis upon which to finally get stuck in and sort it out".

Concerns about the nature of transparency and value in the programmatic supply chain have circulated for as long as the market has existed. Four years ago, Mediatel News revealed that in worst-case scenarios, the Guardian only ever secured 30p in every pound spent when it purchased its own ad inventory.

According to Nick Hewat, commercial director at Guardian News & Media, the ISBA/PwC report - being a joint effort between advertisers, agencies, vendors and publishers - is a "really important moment for the industry".

“We as publishers have been talking about the opaque nature of adtech for a long time and I’m really pleased that this work has been done.”

However, the question now is what happens next.

“It’s a brilliant opportunity to make sure we weed out people who aren’t adding value for the price that they charge, or people who are still [using] slightly dubious practices," he said, adding that if the industry doesn't work to fix provide transparency, there is a "danger" that advertisers will move their money elsewhere.

“What [the report] does underline is that the ecosystem is hugely confused and complex, and some of the players in it are probably taking money out of the system but not offering great value.”

Naturally, for Hewat, the immediate answer for advertisers is to engage in direct conversations with publishers, rather than relying entirely on automation when buying inventory.

“We would argue that this has highlighted the shortcomings of the open marketplace approach to buy," he said, adding that advertisers who instead come to publishers direct with some form of private deal will be able to reach the audience they want with more money and less risk.

“I think that’s the question: how do you balance up the industrialisation of this industry and the automation that’s required with the need to make sure you’re infront of the right audiences in a brand safe, premium way," he said.

"That’s the distinction here and that’s where we have to work towards - [where] you can still have that automation, but you’ve also got that certainty and transparency. I hope this is the start point for that.

“I think good will come of this, I really do.”

The Ozone Project - which counts The Guardian, News UK, The Telegraph and Reach among its founding members - was launched to help tackle this very problem; pooling online ad inventory to make it easier for advertisers to buy premium publisher audiences with a single buying point.

Commenting on the report, Damon Reeve, CEO at The Ozone Project, said he also saw the study as the "first step in a positive trend". However, he said the study highlights two "major concerns" beyond the reported results.

"Firstly, if the best matched data yielded a 15% ‘unknown delta’, just how big might the ‘unknown delta’ be in the 88% of inventory that couldn’t be audited?" Reeve asked. The study was only able to track 31m of 267m ad impressions, with the rest unable to be mapped due to low data quality.

"The lack of integrity in data for a £100bn global industry is perplexing."

The second concern Reeve identified is the "clear confusion" over who has the authority to share information, evidenced by the challenges the study faced in accessing the right data.

"In order to solve these issues, publishers and advertisers must be regarded as the principals or controllers of this data, with all other parties being agents or processors. Confusion regarding access to data simply muddies the chain and in itself becomes a major problem," he said.

"Overall, the need for greater transparency from an advertiser and publisher perspective is unquestionable, and it’s why we’re seeing both parties take a variety of their own measures to address this - Ozone being one example of that."

Elsewhere, Stephen Broderick, CEO of compliance specialist FirmDecisions, despite applauding the study, suggests that advertisers should be looking beyond the transaction level, and instead looking at the transparency of trading practices and agency group contracts.

"The elongated, and still relatively opaque, supply chain provides parties with a vested interest the opportunity to become a part of it, often without advertisers knowing," Broderick said.

"Essentially, what the ISBA study reiterates, is that the same challenges exist three years on from our similar study with the ANA. Contracts did not, and still do not, enable a transparent ecosystem to exist. A concerted and coordinated industry effort to drive transparency is required, and we welcome this - underpinned by transparent contracts which cover all trades in the supply chain."

Lost value

However, while there is clear progress needed in the transactional transparency of the market, some experts have argued that there are more practical starting points for brands to unlock value in programmatic - particularly when research has shown that digital display currently delivers one of the lowest ROIs of any media channel.

Christian Polman, chief strategy officer at Ebiquity, said: "Through hundreds of digital assignments, and by analysing over €3 billion in digital spend, we have learned that while disclosure and transparency can help advertisers to achieve greater control, in and of themselves they don’t guarantee that programmatic media buying will deliver better results.

"If the end goal for brands is to drive greater business performance and higher ROI, then brands shouldn’t lose sight of the fact that a lot of value is lost on the other end of the programmatic supply chain."

According to Polman, brands should be looking at optimising the format, context, audience and creative execution of their programmatic campaigns to maximise attention and engagement, as well as monitoring viewability, brand safety, fraud and non-human traffic.

"Ultimately brands should take a holistic approach to improving the value they get from their programmatic media," he said.

Meanwhile, for the Guardian's Hewat, one of the most stark numbers to emerge from the report is that the UK advertisers tracked by the study - all major names, including HSBC, Unilever and Disney - appeared on an average of 40,524 websites during Q1 2020 - a "mind-boggling number".

One brand's ads appeared on over 150,000 sites, including a Nepalese calendar site.

“Whichever brand that is – how on earth did you appear there?” Hewat said. “I hope that these are the questions that are going to be asked."

Advertisers need to reevaluate the KPIs they are giving their agencies, he added, because KPIs that skew towards cheap and efficient often lead to advertisers ended up in places they don't expect via the open marketplace.

“Advertisers should ask to be told exactly where their ad ran and [to be given] a list of the sites and the percentage of money that went against them. That would be interesting.”

Hewat added: “It strikes me that the digital advertising industry is more interested in being efficient than it is in being effective. This is a good example of that.”

“[The Guardian is] expensive, but of great quality. My competitive set should not include a Nepalese calendar.”


Join us on May 14 for the Future of Media Trading - a free streamed event that will discuss these issues in more detail.

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22 May 2020 

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