Will the ISBA report be a bellwether for the maturity of programmatic?

Looking at the ISBA report, published yesterday, left me with neck ache.

The reason for this pain was due to the constant nodding of my head it caused! Yet, looking through my Linkedin feed, so many people are surprised or angry that the report highlight that 15% each pound spent just disappeared!

It breaks my heart to see that publishers fail to earn the full values that they have been allocated. Particularly because, as a consumer, I firmly believe in the value exchange of quality journalism and information being accessed for free at the point of use, funded by but not controlled by advertising. 

However, the conclusions, insight, implication / recommendations in the report covered topics I have encountered, learnt, addressed and at times (at least in the short term, where possible) resolved over the last decade servicing Demand Side Platform (DSP) and Supply Side Platforms (SSPs) clients. The reality is that the participants in the sample group are all first class organisations. Therefore, I dislike use of the term ‘middlemen’ whilst additionally I doubt that there is malpractice, yet it does concern me as to what the results would be once lower quality vendors are included. However, let me be clear if you employ a vendor you understand and appreciate that they offer you a clear value exchange that you respect.

Let us not forget that the adoption of RTB powered adtech by Advertisers and Publishers was incredibly fast. Sales to both sets of clients were fueled and closed by offering the feature requests required and resolving the objections raised. This enabled both sets of end-users at either sides of the supply chain to get on-board the train, yet issues of course remain that prevent end to end auditing and no auditing has been yet able to catch up. 

In previous roles I have held, our teams would quickly resolve a matter for the client, or with the client for us, so we moved on. Yet on occasion it would leave me scratching my head as problems causing the issues highlighted in the report were just pushed into the long grass for another day. I could infuriate colleagues by suggesting that there should be a better way as it will all have to come to light one day, so if you are one of those people reading now, I am sorry.

Yet, I am not that sorry as it appears that this day may have arrived, if it has really arrived.  Those questions resurface once more and may well be at the forefront of conversations as people try to digest the data used in the study in order to improve the maturing Industry. The story looks scary when shown like this in the FT, as highlighted by TrustX President David Kohl, but the solutions used are part of the bedrock that has enabled us to get to where we are today. 

Maybe, with greater insight, accentuated importance and the involvement of key players from all parts of the chain we can discuss how and why certain processes exist before inviting proposals to standardize and redeploy. However, this is not a new issue, Ebquity, ANA and ACA found similar results in 2017 to which people got upset and swiftly went back to the status quo. 

Matching up the data is the final task once you have been able to obtain the data. Often, when and why one company has non-matching contractual terms with its partners become hurdles with legal reasons cited as to why you cannot look into fixing all of the issues. The report highlights this as ‘Chicken and Egg permissioning’, a new acronym (CEPS) for us all to enjoy.

I was surprised that experienced and esteemed consultants such as those at PWC missed discrepancies from the ‘unknown delta’ list. When it goes wrong the discrepant delta is split by either party losing the maximum value for advertiser/publisher. Kudos to Ari Paparo of Beeswax for highlighting the missing discrepancy factor so clearly in his excellent Twitter review of the report

Given Ari has explained discrepancies, I will take the pretty mundane example of currency exchange from the list of 'unknown delta' of 15% and shine a bit of light on how this works. First of all, there is no widely set method, agreed best practice or legal requirement within the whole chain of programmatic supply/demand for how to convert currency. As a end user (pub reporting eCPM for sold inventory/price floors or buyer bidding/buying) you may have demanded/expected that you can input pricing in your local currency as this is how the campaign was sold/agreed. Yet, as RTB auctions are almost always in USD, Japan excluded, to get to your currency, say GBP for both publisher and advertiser in the report in question then at least two sets of currency conversion will be taking place by either one vendor or multiple vendors.

To do this, some partners work on a live feed. These could be the market value (ie xe.com) or the currency rate of their specific bank/supplier, which alone would make the numbers different per vendor. Others take a daily rate and update by API based on yesterday's numbers. Another method used by companies involved in the chain is to take a monthly average to avoid the movements per minute/hour/day. Furthermore, an adtech vendor may apply a buy side rate and a sell side rate, operating like a bureau de change, to manage their currency hedge regardless of the applied rate method outlined in the previous sentences. The key point to understand as a reader is that regardless of the complexity of methodology used, partners infrequently share the data of the exchange rate with both sides of their partnerships making matching of data hard to complete in order to compare.

All companies in the chain, particularly those at either sides, regardless of data comparison challenges, need to look in the mirror to ask themselves, Carrie Bradshaw style, once we choose a new partner, do we ever audit what they do and why they do it?

The reality is that once a transaction is complete and the reports are given they are only checked for billing purposes, maybe in a advertiser audit for an agency, or within a publisher review for the board. Rarely are answers required down the line as reaction to the ISBA report highlights.

Therefore, if it is a surprise that spend or revenue is lost, then please recognize that this is partially because whilst RTB powered adtech transactions were sold as being easy to get live, for all the talk of transparency, no one is actually checking the data they create with their partners. During the course of my work, I frequently hear advertisers and publishers say "I can't get hold of that data in the UI of my adtech vendor". Hell, the vendors are paid up to 30% of your spend/revenue, you need to get return on your investment. So if that is the case, until contracts are standardized, inform your partner that if you cannot obtain the data your activity creates at will you shall take your business elsewhere. Until the Industry makes hiding data from the clients who create it standard by either best practice or law then end users should take advantage of the non-standardization of contracts.

Request more. Ask for data in the formats you need to compare. Ask to see the data down the line too. Compare it with partners you trade with on the opposite side of the equation. Personally, I have never had a problem with trying to do this for a client whilst working at an adtech vendor, although because I know, I then inform in advance that it will throw up difficult explanations, missing margins and possibly be incomplete at conclusion, just as this study contacted by PWC, AOP and ISBA has also shown.

If you work for an advertiser, agency or publisher and are aware of Supply Path Optimization (SPO), then you already understand that the value of $$$ spent on infrastructure of the services your request/response use are substantial enough that reducing those costs have created an sub-industry of technical services from the likes of Cignal.io, Iponweb and Ntoggle, who were acquired for $38.5M by the Rubicon Project in 2017.

The takeaway should be this, the unknown delta is the quick-fix part that has helped us to scale programmatic at speed. It allows you to transact in ￡ or € without ever thinking about OpenRTB auctions actually in $. That general audits fail to collect crucial relevant intermediary data points from companies employed by advertisers questions whether those audits are fit for purpose and should they need to be redesigned to look at the actual flows? If we need to collectively open the box, then advertiser and publisher end users need to expect that required features may come with a price tag or that flat rates replace % based tech fees and in return you may need to audit your partners and your partners' partners whilst live to ensure your give/receive maximum value.

At that point, the value of a media buying or selling adtech vendor will be much greater understood. Regardless of how they collect a margin or manage a (currency/discrepancy) risk, the value of these ‘middlemen’ will need to stand up to scrutiny like never before.

Unless of course, (staring pensively into the distance, Carrie Bradshaw style...) you could describe the data flow, document value obtained and extracted for advertiser, publisher and everyone in-between because there is a gap in the market for a tool like that!

Thanks for reading. As an Independent adtech consultant, if you would like a call to discuss the issues raised in this post, my inbox is open.