The holy trinity of digital advertising
We can make the digital advertising landscape a much better place for everyone through transparency, control and activation, writes Tom Triscari, CEO of Yieldr.
Every day that goes by we see yet another article on programmatic transparency, or another perspective on the lack of transparency in the display ad world. Tons of talk, little action. When we put the topic of transparency under the microscope, we see the interlocking relationship between cost transparency, the nascent desire of advertisers to take control their media spending and the latent advertiser need to activate mounds of their first-party data to optimise performance and boost return on assets.
Benny Arbel from MyThings wrote a thoughtful post a few weeks ago on transparency. He talked about “how far we have come” as if the industry has really moved the needle at all. I see the “slowly but surely” evolution toward harmless transparency moving much faster than his post indicated because advertisers are increasingly looking at the cost/benefit of building in-house programmatic assets.
Meanwhile, it is becoming increasingly necessary for advertisers and their colleagues in the finance department to understand display costs in much more detail. This requires total transparency. In fact, the only way an advertiser is to be 100% certain it is getting total and absolute transparency is to own the process.
Around the same time Arbel voiced his opinion in favour of total transparency, Paul Rostkowski at Varick hit the nail on the head by commenting that advertisers are shifting towards full transparency into mark-ups on media but that “it will take a few vendors to blaze the trail for widespread adoption of all-encompassing transparency.”
Revealing the true cost of display advertising
In February, Kence Anderson of Apptimyze wrote about the massive opportunity behind true and total transparency. Most resounding about Anderson’s thinking is the problem statement he reveals: “Will new business models compensate vendors for their services while providing full transparency and data intelligence?”
The answer is an absolute yes. Moreover, these models will likely turn out to be the most valuable in the programmatic space precisely because the market opportunity is truly massive and growing every day.
More recently, AudienceScience research found that only “24% of an advertiser’s budget is spent on ads matching the consumer target, environment and frequency, or working media…the 24% is an average, so some advertisers may be paying up to 80% of their budget to middleman fees.”
We all know the trouble with using averages in a non-transparent world is that a buyer never knows on which part of the spectrum he/she falls. While some may argue that advertisers ultimately want ROI and don’t care how the budget gets divided, this type of thinking is short sighted because big data is forcing advertisers to understand all the minute details of media spend.
The new advertiser need and norm is not just performance (e.g. ROI, ROAS, etc), but performance and transparency. This indicates advertisers will increasingly not accept any trade-off between the two objectives. Any belief that promotes the idea of a trade-off is simply wrong because more transparency will lead to better performance when done correctly.
Taking Control and Going In House
Over the past few months, the topic of transparency has started to converge with a related advertiser trend around taking programmatic display in house as opposed to continued spending via agency trading desks.
Advertisers clearly want more control and understanding of their display spend, but this outcome is not possible until the fundamental need of total cost and media transparency is solved with new solutions already available for advertisers to test out.
Joanna O’Connell pointed this out in a piece a few weeks ago titled “Why I worry for agencies“. Her thoughts highlight the advertiser mindset and the real probability of shifting investment away from paying agencies for programmatic thought leadership toward total in-house control where the advertiser becomes fully responsible for owning their programmatic data, discipline and thought leadership.
In April we saw a big signal to the market when Tesco acquired Sociomantic via Dunnhumby. This very smart long-view move is likely a good indication of things to come across all industries that are investing in display ads, which is pretty much every industry.
Activating Dormant Data
Underlying these two related themes is a third, all-encompassing theme: the advertiser needs to activate its own first-party data into both lower and upper funnel campaigns. Much of this data is dormant which is why most advertisers are data rich and information poor. In fact, this is one of the big engagement waves that many consulting firms are riding today.
As the trend matures from early adopters to hockey stick growth, more advertisers are finding new ways to activate their data and create real value from it. This desire for more data uses creates a new job for advertisers, and one that is going to get really big as Internet of Things (IoT) monetisation expands.
The job is going to become increasingly complex, intertwined with business rules and data strategy, seamlessly oscillating back and forth from a user-centric approach to a product-centric approach.
It’s hard to imagine advertisers truly capturing the profound competitive advantages of activating more data into their programmatic strategy without a parallel in-house ad tech solution. The first to market with this approach will very likely possess a trump card for the long term.
It should be very clear to all industry participants that new data activation will push programmatic much faster and generate much better performance for advertisers, while the advertiser gets to see the real cost of every impression. More importantly, the advertiser gets real insight into the machinery and all the inner workings that make programmatic scalable.
The new programmatic norm
All of these foundational starting points will lead to deeper trust, co-education and mutual competence between ad-tech vendors who supply in-house software solutions and the advertiser who pushes the buttons.
From this bedrock, advertisers gain a platform of control which allows them to create a true programmatic discipline and move all decision making under their watch, thus aligning display spend with core strategy.
Finally, when the ad-tech vendor and advertiser are perfectly aligned, it completely opens up the potential to activate all the rich dormant data coming online over the next 5-10 years (and then some).
Advertisers end up gaining much more valuable information for better and quicker in-house decision making, which in turn opens the doors to more display spend, more efficiency and much less time trying to justify that spend.