Writing exclusively for ExchangeWire ahead of ATS London 2019, Ashley MacKenzie (pictured below), CEO and founder, Fenestra, discusses the current drawbacks associated with the programmatic supply chain, and how proper management and disclosure of these processes can grow the market for all participants.
Programmatic advertising gets a great deal of coverage, but remains difficult to describe and explain to the uninitiated. In days gone by, a media buyer would phone a media owner on behalf of their client, the advertiser, and book a known piece of media, for a specific slot, at an agreed cost. The media would run, it was physically checked, the agency would get their fee and invoices and payments would flow.
Imagine the conversation between the media buyer and the media owner for a programmatic trade. On the call, they won’t tell each other who they are. They know they want to sell and buy an impression to an ad unit, but they don’t necessarily know what type, where or when it will run, or at what price. It’s unclear who receives what share of the spend, and for the media owner some other party that isn’t on the call will pay them an unknown amount of money, further down the line. Go figure!
Though some of this must come with automation, there is no doubt that programmatic advertising today is unnecessarily opaque, complex, and inefficient. Indeed, it’s hard to imagine advising a client based on the data currently available.
Complexity abounds. The extraordinary technical innovation in the Open Real Time Bidding (oRTB) marketplace itself has opened a Pandora’s box of commercial opportunities that both good actors and bad actors exploit. There are amazing new technologies to buy effectively, sell internationally, measure delivery, optimise yield, track context, and monetise apps, but each innovator manipulates commercial, technical, and legal, elements to capture value they create. Bad actors, of course, hide in the depths of this real-time global interconnection, sucking value like parasites from a suffering host.
Opacity takes several guises that stem from neither the advertiser nor the publisher being connected to the ultimate counter-party at the point of transaction, as a result of complex and obfuscated supply-chain design. Even the media buying industry’s lexicon has changed to accommodate opacity – we have substituted the phrases ‘Buyer’ and ‘Seller’, which imply a terminal point, to ‘Demand’ and ‘Supply’, that allow for infinite circularity and intermediation.
The concern with opaque financial and trading practices within media buying and programmatic in particular are well documented. Undisclosed fees, deliberate discrepancies and hidden arbitrage are now a major revenue stream for some. However there is also deliberate opacity around the resulting data, with access to information often a disturbingly murky topic of discussion seemingly used to create cloudy barriers that can be hard to penetrate.
Complexity and opacity feed inefficiency. If you can’t measure the total supply chain cost, then you can’t manage it nor optimise. If you don’t know the true costs involved in programmatic media buying and selling, then it becomes impossible to quantify and compare the value of it. Furthermore if there are excessive margins, material discrepancies and unused services then it becomes impossible to value the services actually performed by the great players in the business. Consequently, the advertiser see’s low performance and effectiveness for the media investment they have made. The publisher see’s lower revenue and missed commercial opportunities.
An inefficient market is bad news for everyone.
Fenestra, and our partners, are on the journey to solving this challenge. Accountability within, and disclosure of, programmatic data contemporaneously is critical to understanding the total supply chain cost and assess conversion of spend to buying audiences (a.k.a. working media conversion) correctly in a programmatic market. When working media is right, the entire supply-chain is right. Our role at Fenestra is to help our partners solve this problem.
Fenestra records, verifies and optimises granular financial transactions disclosed through the programmatic supply-chain. We utilise a private and permissioned blockchain – Hyperledger Fabric – to provide clients with an immutable audit trail and secured access to underlying data.
Much of our work is rooted in the data. Inefficiencies and non-transparency can exist at an individual vendor level but also in the flow of transactions between parties to a transaction and across the entire path that a transaction takes. Our clients unlock material value in tracking even non-deliberate discrepancies cross-platform and unravelling these draining inefficiencies.
You get working media right by knowing your supply-chain inside and out.
Four Health Media, one of the early adopters of Fenestra for Advertisers, run programmatic campaigns for Johnson & Johnson’s Nicorette using Fenestra, and the results are compelling.
Richard Springham, Deputy Managing Director, talks a little about the learnings from the campaign and future plans. “We identified up to 49% performance improvements through Fenestra on the Nicorette campaign. Working with Fenestra provided us with greater access to data and richer, more timely analysis. It meant we had deeper insights into the supply paths we were using which allowed us to keep our hand on the tiller and continuously improve campaign performance. There are particular nuances in the health and pharma sector that have to date hindered the uptake of programmatic advertising. However working with Fenestra’s platform has tackled these challenges and allows Four Health to move forward with additional investments and also give our clients greater confidence to invest more in the programmatic marketplace.”
As a consequence of these early results, Four Health and Fenestra have recently expanded their partnership, and Four Health will build Fenestra into future planning as it looks to build out its market leading service to health clients across Q419 and into 2020.
In the near term advertisers, publishers and their technology partners now ask searching questions of each other in the hunt for greater performance and more revenue. Through this work, advertisers and publishers gain a better understanding of their suppliers, the value they generate and build trust with folk they partner with. Thus transparency makes the programmatic marketplace more easily understood, transparent, and efficient.
Inevitably, advertisers see better performance from their media investments, and publishers get their fair share of the budget. These direct benefits are reflected indirectly across the industry as we create an ecosystem of trust where the actions of participants are clear and aligned. In our world, there is nothing to fear from the UK’s Competition and Markets Authority, Australia’s ACCC or the myriad of other regulators now diving into the digital ad market.
Like Four Health, the consequent increase in performance encourages more advertisers to invest more of their marketing budgets into programmatic. As a result, quality publishers will see a greater return from their efforts and can create more content and better experiences for the audience, which in turn creates better environments to advertise into.
More investment and better performance is good for the industry. It will grow the market. It will encourage advertisers to deploy their budgets in the open-market rather than with walled gardens. It will accelerate the reach and penetration of programmatic and automated trading practices into other forms of media as they become connected and addressable, be that TV, OOH or radio.
In a verified world, advertisers and publishers win big but so do technology suppliers. Suppliers who independently demonstrate that the total cost of their supply path is clean, clear and good value will take a greater proportion of the budget for themselves. Indeed TAGs Principles for a Better Programmatic Market, to which many CEO’s like Michael Barrett (Rubicon Project), Tim Cadogan (OpenX), Andrew Casale (Index Exchange) and Rajeev Goel (Pubmatic) are signatories, portends this future calling for a “Fully Auditable Supply Chain”.
Good actors have nothing to fear from transparency and everything to gain.