Perspectives on Media Transparency from All Sides, Part 1 [INSIGHT]

Perspectives on Media Transparency from All SidesIn the past two decades, inventions and innovations have shifted how we consume media. From print to television to desktops to mobile, we’re now connected to publishers, advertisers and one another in an instant, from any place in the world. Just in the past four years, digital engagement by consumers has more than doubled, led primarily by the massive growth in mobile. Digital advertising has followed the same pattern, hitting a record-high total of $60 billion in 2015. Today, it is growing six times faster than traditional advertising and is expected to overtake TV advertising spend in 2016.

This pace of change isn’t going to slow any time soon. The explosion in digital media and advertising has translated to more automation, more data and more opportunities. The digital landscape is growing, innovating, maturing, blending and replacing traditional media.

At the same time, concerns about online ad fraud, invalid traffic, lack of programmatic transparency and overall brand safety continue to rise from all sides of the industry. With a fast-paced, increasingly automated environment, marketers, media agencies, technology companies and publishers all need to build more accountability and foster trust to secure a strong industry with long-term market appeal.

For AAM’s 2016 Guide to Media Transparency, we talked to leaders from all sides of the industry to answer that question and many others that stem from it. Over the next few weeks, we’ll release sections of the guide that will delve into these topics, share, and outline questions to ask your industry partners. The collection will give you the practical advice needed to be confident that your organization is transacting with trust.

In this first section, we set the stage with overviews of the four main industry issues: programmatic advertising, ad fraud, viewability and ad blocking. Let’s take a look.

Programmatic Advertising: Technology Takes Control

Programmatic media buying has revolutionized advertising, bringing efficiencies, cost savings and audience targeting. It’s also expanding to more traditional media. Time Inc. was the first to pioneer print programmatic. McClatchy, for example, has an in-house programmatic team and also works with the Local Media Consortium for programmatic selling.

“It’s one of the fastest growing revenue categories for us,” explained Dan Schaub, corporate director of audience development at McClatchy. “We’re always looking for services, solutions and features that make it easier to meet needs of retailers and advertisers.”

But while automation brings efficiencies, it’s a complicated process that happens quickly and involves many third parties. When ads are sold and bought in milliseconds, how can each side of the industry better understand what they’re getting? Part 2 of the guide looks behind the scenes of what really happens in the programmatic environment.

U.S. programmatic digital display ad spending grew to $15.4 billion in 2015, accounting for the majority of display ad spending.

Ad Fraud and Piracy: The Cost of Online Corruption

Because the programmatic environment is automated and complex, there are ways for the systems to be tricked and fraudsters to creep in with falsified traffic and inventory.

The IAB and EY recently released a study that detailed the cost of corruption to the digital ad industry. The combined impact of ad fraud, invalid traffic, infringed content and malvertising cost the U.S. advertising industry $8.2 billion each year, lowering ROI for advertisers and revenues for publishers. Industry organizations such as AAM, IAB, MRC and TAG are working on a number of projects to fight fraudulent traffic, piracy and malware.

“This should not be something that becomes a point of difference from one player to another,” said Joe Barone, managing partner at GroupM. “We should all be doing this together as an industry solution. Those pirates can survive without our (one player’s) money, but not without everybody’s money.”

In Part 3 of the guide, we look closer at the industry’s game plan for fighting back against fraud, how the various initiatives fit together and what you should know about them.

What’s included in the $8.2 billion: $4.6 billion on invalid traffic, $2.4 billion on infringed content, and $1.1 billion on malware.

Bringing Clarity to Viewability Measurements

The transition to viewability transactions was a major industry initiative focus over the past few years. As viewability becomes the currency, what does that mean for the overall state of media transparency?

“We’ve seen definite increases in viewability rates,” Barone said. “Publishers are redesigning sites to optimize viewability, and reconciling on viewability numbers. Viewability has moved into the mobile space with in-app ads. There has been tremendous progress in viewability. I think you’d be  on an island as a publisher if you’re not transacting—or at least reconciling—with viewable impressions.”

The conversation about viewability has progressed from the perspective of Cynthia Young, head of audience at The Globe and Mail, as well.

“The MRC has made statements about what is viewability, what does it look like on display, what does it look like on video,” Young said. “We actually have numbers against those pieces so we’ve really come far in the conversation. When we think about our agencies and the terminology used by the junior planners and buyers, they are becoming much more accustomed to asking the questions so it’s obviously becoming a part of what we do.”

What’s next for viewability? There is still work to be done in eliminating non-viewable inventory, defining the digital GRP for cross-media comparability, and creating mobile viewability guidelines. Part 4 takes a deeper look.

90 percent of responders in a recent ANA survey said they are not fully confident that their digital working media meets industry viewability standards.

Ad Blocking and Beyond

While ad blocking is not a new concept, it’s becoming mainstream. Intrusive ads that eat into users’ data plans, increase load times and bring up privacy concerns have caused nearly 200 million users to install ad blockers. According to a 2015 PageFair report, U.S. ad blocking grew by 48 percent to reach 45 million active users in 12 months up to June 2015.

“Ad blocking actually offers the industry an opportunity to get its act together,” explained Ted Boyd, CEO of Sandbox Advertising. “We would have continued going down very bad governance pathways if we hadn’t been told that people are now voting with their eyes and saying, ‘We would rather have an experience without ads at all than to be forced to deal with an ever expanding array of ads that whistle, squeak and take forever to load.’”

Publishers and advertisers are taking different approaches to address the issue. At McClatchy, the team focuses on consumer and advertiser feedback to develop products with the user at the center of the design. Schaub explained: “For us, it’s more about the consumer experience and trying to truly understand what consumers want. As we customize products for consumers—a morning briefing, an afternoon recap—we ask what do they want for content? How do they want to connect with us?”  

Part 5 gives more examples of how publishers and advertisers are stepping up to take on ad blocking.

Ad blocking’s estimated cost to publishers was $22 billion during 2015.

The Takeaways

All of these issues have a major effect on digital advertising. The good news is that the industry is vibrant and growing, and smart people are working to clean up the issues, improve fundamental business practices and educate the next generation of media professionals. And as an organization that represents all sides of the industry, AAM helps provide information to help work on those solutions.

The subsequent sections of the guide will dive deeper into each issue discussed here. But throughout the series, keep in mind these 10 steps to media transparency that ultimately lead to a transaction built on trust.

1. Follow industry standards.

Standards set by organizations like AAM, IAB, MRC and TAG help create a common language to measure and monetize media. It’s as simple as knowing that the metrics reported match the metrics in your ad delivery system.

2. Work with premium publishers.

Premium publishers stand for quality and trust. Young explained The Globe and Mail’s perspective: “We don’t allow a lot of the lower level CPMs coming in that would allow us to make a couple of extra bucks here and there off the ad exchange. And we don’t allow just anybody to advertise on the homepage.”

3. Know your media partners.

Young explained: “With things like fraud and piracy, our publisher says it best, ‘Choose your dance partners wisely.’ If people want to make money off of us publishers, including people who may not be all that good, why do we allow them to access our inventory?”

4. Ask questions.

And also be prepared to answer them. “Clients should ask their agencies questions such as: ‘What sorts of places should our brand be exposed in via the programmatic space?’ If the answer is even vaguely hesitant, I would push pretty hard on that,” Boyd said. “We as agencies should expect our clients to push us to deliver on those questions, challenges and insights because that drives better outcomes and may frankly better relationships.”

5. Follow the money trail.

Transparency means knowing where the money is going and consequently, where ads are going to run. “If you follow the money, you will always understand where your ad is going to be. If the money becomes opaque at a certain point, then you’re probably into some gray or potentially dangerous territory,” said Boyd.

6. Ask your audience what they want.

Similarly, ask advertisers what they want. Then design rich user experiences based off that information. “We are constantly looking at the user experience for each of our platforms,” Schaub said. “We make a prototype and then take that prototype to market—our readers or business partners—to see if that helps them and delivers what they need. It’s about making sure the company is innovative and the user is at the center of the design process.”

7. Focus on education.

Understanding internal processes and how to apply industry best practices helps solve issues like fraud, malware, piracy and transparency. “We think this kind of education builds trust and builds a client base informed and equipped to partner with us to resolve problems with publishers,” Barone said. “If our clients are educated and our account teams are educated and we can put pressure on publishers, that education helped build that transparency.”

8. Get certified.

Work with certified companies. Certifications prove that technologies are functioning as they should. Boyd said: “I really like to think that we’re going to have an ecosystem where, unless you’re certified or are known to be of character, you’re not going to be able to participate or at a minimum advertisers and their agencies will be able to make an informed choice.”

9. Collaborate.

In an increasingly automated environment, it’s important to communicate with business partners and consumers to understand issues. “Stay close to each other. Work every day to have deeper understanding of how consumers use our products and what advertisers need and then connect the dots,” Schaub said.

10. Be transparent.

Because transparency builds trust, and trust builds a healthier media ecosystem. “It doesn’t matter if you’re an agency, advertiser, publisher, ad tech player or analytics or research house, all of us have challenges in terms of understanding how to build an ecosystem that is as close to perfect as possible,” Boyd said. “Full disclosure in an honest, transparent and timely way will build trust among all players and ultimately an environment where we can transact with trust.”

In Part 2, we look behind the scenes of what really happens in an RTB environment.