A dataxu Issue Briefing What We Talk About When We Talk About Transparency

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1 A dataxu Issue Briefing What We Talk About When We Talk About Transparency dataxu.com

2 Table of contents I. A note from dataxu s CEO on transparency II. What we talk about when we talk about transparency III. Price transparency IV. Media transparency V. Tactic transparency VI. Management transparency VII. Key takeaways 2 dataxu

3 I. A note from dataxu s CEO on transparency K2 s Independent Study of Media Transparency in the U.S. Advertising Industry, prepared for the Association of National Advertisers, was released on June 7, Although the complete report is 62 pages long, the results summarized in the report s conclusion are straightforward and concise: non-transparent business practices were found to be pervasive in the U.S. mediabuying marketplace. At dataxu, trust is one of our fundamental core values. We consider ourselves a true partner to both agencies and advertisers alike. dataxu is a pure buy-side player, meaning that we do not own any media of our own, and do not participate in any rebates or media incentive programs. commitment to fair and honest interactions with all of our customers and partners. This white paper covers four key areas of transparency that advertisers and agencies alike should consider: 1. Price Transparency 2. Media Transparency 3. Tactic Transparency 4. Management Transparency Should you have specific questions regarding dataxu s approach to transparency, feel free to us at marketing@dataxu.com. I anticipate a slew of questions and debates emerging following the release of K2 s report: Did advertisers squeeze agency fees to the point where fees alone failed to cover operating costs (much less produce an actual profit) for agencies? Should advertisers increase auditing in the future to look for suspect partner transactions and practices? How might neutral technology platforms independent of the media buyer and seller help ensure transparency? Within today s increasingly complex media landscape, I believe that the third question might be the most pressing. Agencies have a right to earn fair compensation, but the ANA report underscores the fact that it s increasingly untenable for an advertiser to rely on an agency or media company for that matter to play the role of independent referee and player in the game for advertisers spend. Mike Baker dataxu CEO and Co-Founder In software, we call this separation of concerns, and it s a tenet of quality system architecture. It s time for the media industry to also embrace this sound principle in a complex, tech-first world. Although this white paper does not answer all topics raised within the K2 report, it outlines dataxu s approach to transparency and underscores our dataxu 3

4 II. What we talk about when we talk about transparency Transparency comes in four forms Programmatic marketing, and the media and ad technology companies that enable it, offers a number of value propositions to marketers including cost efficiency, operational scale, a consolidated view of customer touch points, and increased transparency. This last promise is our focus here, because while the others are more self-explanatory, transparency has become a malleable term that media and ad technology companies use to convey a relatively broad set of promises. This ambiguity makes discussions of transparency more complicated than they need to be. To reduce confusion and help you better understand the real meaning of transparency, we ve broken it down into four specific types. Our hope is that this will make it easier for you to understand what your media and ad technology vendors are really offering, and empower you to ask the right questions to get the most out of your digital media budgets. Here are the four types of transparency: PRICE TACTIC MANAGEMENT MEDIA 4 dataxu

5 III. Price transparency What it is Buyers having a clear understanding of the price and quantity of what they buy (impressions, data, etc.). This model gives agency teams the best view into their media budget s end-to-end economics, and it allows them to determine the percent of their budget that becomes working media. What BS smells like Fixed CPM campaigns from vendors who claim to offer the benefits of programmatic marketing. True DSPs or programmatic ad tech companies should expect to bill on a dynamic CPM (dcpm) basis, and as an agency you should require it on behalf of your clients. If you re buying media from a programmatic partner, but you re being billed on a fixed CPM basis, something is wrong. How to require it What it is not Refuse fixed CPM pricing models outside your guaranteed, upfront, single-publisher buys. Agency teams should understand that a fixed CPM billing model has no place in programmatic because it misaligns the incentives between the agency and its vendor. Transparent dcpm models keep all parties incentives aligned. Arbitrage. Agency teams who buy media in a dynamic, auction environment should capture efficiency gains in the form of extra impressions whenever there are market price fluctuations in their favor. However, if your media or ad tech partner bills on a fixed CPM basis, they re incentivized to backfill the campaign with much cheaper inventory to capture extra margin. dataxu 5

6 IV. Media transparency What it is Full domain or site-level reporting that includes impression, click, and action counts. Many ad networks and ad tech companies obfuscate the media they are buying on behalf of their agency customers. Why? It s much easier for these companies to hide cookie bombing and other margin-rich performance tactics when they re not held accountable with media transparency. What BS smells like An agency team asks for a domain report, and their vendor sends them a pair of designer jeans instead. (True story.) Ad networks or ad tech companies who claim to be DSPs will show their true colors when you request transparency in this area. Some will outright refuse to provide domain reporting, while others will require the request pre-launch, or they ll charge you extra for it. How to require it Demand domain reporting that includes the volume of impressions served, which should align with your 3rd-party ad server counts. Agency teams should expect site-level transparency as a core benefit of programmatic marketing. In a positive case, it offers a great opportunity to learn which types of sites are the best performers on your campaign. In a more negative view, it also offers a critical safeguard against dishonest ad tech tactics. What it is not Bundled, opaque premium media packages. Some ad networks and ad tech companies close deals by flashing some premium publisher logos, but they actually end up delivering the majority of the campaign impressions on cheaper media. This is particularly common, and profitable, when those ad networks and ad tech companies are billing their customers a high fixed CPM under the guise of premium media. 6 dataxu

7 V. Tactic transparency What it is Clear understanding of which tactics, such as Retargeting or Prospecting, are spending, performing, and scaling. Agency teams with tactic transparency not only know that their campaign is performing, but why it is performing. This level of transparency is critical for transferring insights and using your digital media as an extension of market research. What BS smells like Artificial intelligence. If Prospecting rivals Retargeting in CPA performance, it should be a red flag to any agency team. The same is true for an ad tech vendor which claims that a tactical mix is required; for example, if you ask that a partner use only Prospecting tactics, or only Retargeting, so they can fit into the strategic setup of your overall media plan. A good DSP or other ad tech company should be able to deliver a campaign using any tactical mix, as long as the performance benchmarks are adjusted appropriately. How to require it Use your 3rd-party ad server tags to enforce the granularity you hope to see in campaign reporting and management. Granular tags and placement groupings will quickly expose any media partner or ad tech vendor who tries to spend 90% of their campaign budget cookie-bombing the Retargeting user pool. You will see it exposed in the lopsided spend, impressions, and frequency that each placement group records in your 3rd-party ad server reporting. Providing your vendors with just one set of tags is an invitation for ad tech trickery. What it is not A black box. Some media vendors and ad tech companies will present an opaque offering in which they promise to simply get results, but the agency team never gets to know exactly how those results were achieved. This black box approach doesn t scale, and it siloes potentially valuable performance insights that you could apply elsewhere. dataxu 7

8 VI. Management transparency What it is Confirmation that the agency team s campaign setup and targeting requirements are being met. For example, some campaigns require that 100% of the impressions be served within certain DMAs, or that Retargeting represent no more than 10% of the campaign s budget. Unfortunately, if ignoring the rules will boost campaign performance, the typical performancebased media contract leaves ad tech and media companies highly incentivized to cheat. What BS smells like Vendors claiming that increased transparency will somehow hurt campaign performance. The campaign s tagging setup and regular reporting have no impact on performance, plain and simple. Transparency-focused campaign setups with separate tags, frequency caps, and budget guidelines for each tactic will offer you additional insight across your media plan, as long as you enforce the same requirements with all your vendors. How to require it Clients should ask their ad tech and media vendors to demonstrate how they re adhering to campaign setup requirements. True programmatic marketing platforms will have a user interface they can show you to confirm their campaign setup and help you understand how they are supporting your requirements. If one of your ad tech or media vendors has no way to confirm that they re adhering to requirements such as frequency caps, or audience exclusions, you should be suspicious of how effectively they re being met. There s great incentive to cheat, and the industry is crowded with fake DSPs and disguised ad networks looking to mislead agency media buyers. What it is not Smoke and mirrors. In a highly competitive, me-too industry, ad tech and media vendors will sell features and functions they don t have if it helps them close an IO. This could mean, for example, that a DSP sells you a video campaign even though their platform doesn t even offer video-buying functionality. Without management transparency, you would never know that the DSP s team was logging into another platform or farming out that portion of the IO in order to fulfill the video component. 8 dataxu

9 V. Key takeaways Price Agency teams should require dynamic CPM billing models from any media or ad tech vendors claiming to offer programmatic or DSP capabilities. Fixed CPM billing models misalign the incentives between you and your ad tech or media vendors, sacrificing your efficiency for their arbitrage margin opportunity. Tactic Agency teams should use their 3rd-party ad server trafficking setup to enable clear reporting of spend, impressions and actions by tactic. This way, you ll learn more about how and why your campaigns are working, and it ll be much more difficult for your vendors to hide shady ad tech performance tricks. Media Agency teams should require full domain transparency, because media or ad tech vendors who refuse or resist media transparency have something to hide (most likely it s the fact that they re farming out impressions to cheap, unnamed sources). Management Agency teams should require satisfactory confirmation that their campaign setup and delivery requirements are being met. If your vendor can t show you a user interface of some kind, you re probably not working with a real DSP or programmatic marketing company. dataxu 9

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12 dataxu helps marketing professionals use data to improve their advertising. Our software empowers you to connect with real people across all channels, including TV, capturing consumers attention when and where it matters most. With 14 offices around the world, we re here to help power your business forward. Discover what you + our software can do at dataxu.com 281 Summer Street, 4 th Floor, Boston, MA Boston - New York - Chicago - San Francisco - LA - Berlin - Cologne - London - Madrid - Milan - Paris - Singapore - Sydney - Bengaluru CS- TRANSPARENCYMB- 002