Media Management

The ANA Programmatic Study: How Procurement can provide the answers

Pivotal role of Marketing Procurement

Today, the complexity of the programmatic supply-chain is worse than ever and it requires the forensic skills and contractual expertise of Marketing Procurement to unlock the potential of data-led audience targeting that improves relevance, the original promise of programmatic.

By Nick Manning

The long-standing subject of media transparency bubbled back to the surface at this year’s Cannes Lions Festival, with the release of the latest study into the opacity and complexity of the online advertising market.

The US Association of National Advertisers (ANA) announced the top-line findings of their ‘Programmatic Media Supply Chain Transparency Study’. This has taken 18 months so far and has encountered numerous roadblocks, in common with previous studies of its kind.

The study included data from 21 advertisers but 46 others who wanted to take part were prevented from doing so by contractual barriers that prevented data-sharing. This in itself is a finding; advertisers do not typically have access to the full data of their programmatic campaigns, rendering tracking, measuring and reporting all but impossible.

This is not new, and it is notable that the problem of data access has now adversely affected several such studies, dating back nearly 10 years.

The Programmatic market, worth some $88 billion globally this year, remains impenetrable. Lack of data access is cited as a major handicap to making effective investments and cutting wastage.

While the full results will only be released later this year, the ANA’s ‘First Look’ report features several recommended actions that advertisers should take now to improve their understanding and control of the Open Web programmatic market.

These are detailed below, but it is increasingly clear that Procurement has a vital role to play in helping cut through the opacity and taking up the ANA’s recommendations.

The most important starting-point is that this is a supply-side problem. Programmatic trading techniques were introduced by publishers to sell long-tail and remnant inventory automatically. There was plenty of it, much of it of virtually no value, and it refreshes constantly.

The introduction of automated trading spawned the ad tech industry and before long, the media agencies formed ‘trade desks’ to handle the deal-flow and earn additional revenues from the publishers and ad tech intermediaries. Programmatic spawned a new generation of companies in the supply-chain that enabled the automated deal-flow and, supposedly, added plenty of value.

Advertisers were generally under-informed on how this worked originally and only gradually became aware via their trade bodies.

This was part of a bigger movement in the shift from the advertising industry being demand-side-led to being dominated by the supply-side, with Google and Facebook the driving forces originally, now joined by Instagram, Amazon, TikTok and the stronger Open Web players.

Study after study shows that roughly 50% of advertisers’ budget is eaten up by transactional costs before an ad even appears, and before problems of low viewability, ad fraud and poor targeting erode what remains.

Today, the complexity of the programmatic supply-chain is worse than ever and it requires the forensic skills and contractual expertise of Procurement to unlock the potential of data-led audience targeting that improves relevance, the original promise of programmatic.

Taking the recommendations in the ANA study, let’s examine how Procurement can resolve these issues:

1. Taking responsibility.

This is the vital first step and if this doesn’t happen, nor will the rest.

As with any other purchasing decision, corporates should know as much about the market they are investing in as the supply-side does. This answers the problem of ‘information asymmetry’ referred to in the ANA study.

Procurement should provide more active control of the buying process, from end to end, including the all-important ad exposure metrics, not just the financial and transactional daisy-chain.

This involves both being an expert in the market and working hand-in-glove with the chosen agency, ad tech partners and independent consultants who should be selected for their willingness to provide open access.

2. Have direct access contracts with all primary supply-chain partners.

This requires Procurement to source and negotiate the right partners, contracts and audit rights from A to Z, across the whole supply-chain.

      3. Ensure contractual clarity and transparency, with associated audit rights.

One reason that two-thirds of advertisers who wanted to take part in the ANA study couldn’t, was because of data road-blocks that they didn’t know about.

Procurement should know when their agency is acting as a direct agent on the client’s behalf and when it is acting as principal on behalf of multiple clients. In the former instance the agency is obliged to provide transparency, in the latter they are not.

The right kind of contracts can address these issues, aided by media services template agreements from the ANA and other advertiser associations.

4. Understand the relationship between cost and value.

The programmatic market is comfortably the most variable media channel where there is very little correlation between these items.

‘Cost’ should always be qualified as a ‘cost-per’ and should not default to a cost-per-impression, as all impressions are unequal. The qualitative factors of viewability and invalid traffic should always be factored in.

‘Value’ should be defined by the target business metric used by the advertiser, and can cover many bases, including cost-per-lead and other performance-related metrics.

In programmatic, low-cost buys are routinely worthless and attract both media cost but always transactional costs on top, doubling the true cost.

Procurement is uniquely equipped to deal with the intricacies of these calculations and weave them into contractual wording with providers who are committed to working in a transparent manner.

5. Data forms are crucial.

One recurring theme from previous studies was the sheer impossibility of tracking data through the whole supply-chain such that the true delivery pattern could be accurately mapped (applying to trillions of data points).

New techniques for mapping data are available to advertisers to access ‘log-level’ data which enables better data-matching.

Procurement should source the right partners to track data on this basis and embed the use of it with their partners, and in contract and audit clauses.

6. Reducing the ‘long-tail’.

The ANA study revealed that the average participating advertiser used 44,000 websites. This is clearly wrong and evidence that the much-touted targeting capabilities of programmatic are not being applied. The carbon footprint of such profligacy is off-the-scale. Tracking and measuring this volume of ads is impossible and brand safety is at risk.

Procurement should work with their own colleagues and external partners to reduce the number of sites used to focus on reaching the required audience where they are most easily accessed at scale. This can normally be achieved on hundreds, not thousands, of sites.

7. Use inclusion, not exclusion, lists.

The domains used should be chosen for their ability to deliver the right audience in a clear, clean environment of proven value, good viewability, low fraud and high attention.

This should be agreed with Procurement’s fellow internal stakeholders and their external partners, then monitored by Procurement to ensure adherence.

8. Reduce ‘Made for Advertising’ (MFA) websites.

The cluster of ad sites at the bottom of many webpages that are purely there as salami-slicing arbitrage opportunities for publishers to earn revenues, but they are extremely poor environments for advertisers (beyond a few who are purely there for incredibly cheap ads units for performance purposes).

The ANA study shows that the volume of money going into these MFA sites is growing and exceeded 15% of the budgets under study.

Most advertisers should not appear among this kind of content at all unless there is a specific KPI that is delivered there. Procurement should ensure that contracts exclude or limit such sites and allow audits of their use.

9. Apply quality metrics throughout.

Procurement is the art of buying high quality product at competitive cost, but in programmatic this doesn’t seem to apply, usually because advertisers can’t measure the quality of what they are buying.

Procurement should contractually ensure that quality metrics are mandatory throughout their supply-chains, that viewability and ad fraud metrics are listed as thresholds that are accountable (and payable), with checks and balances to suit.

10. Include sustainability. The current practices in programmatic trading are extremely un-eco-friendly, especially in terms of the long-tail and MFA site usage. This can be addressed by Procurement within the above actions.

Some of this may look daunting. There are relationships to manage both internally and with a range of external parties. It is worth remembering that the commercial partners of most advertisers are in some way the beneficiaries of the current supply-side led system and the advertiser is dealing with third parties who may not welcome change.

Procurement is uniquely well-placed to challenge the status quo, and address these imbalances by building relationships with external parties who are committed to accountability and transparency, and who are willing to enshrine them in binding agreements that can be verified.

It’s all doable, and Procurement has the opportunity to work with partners, internally and externally, to make it happen.

Nick Manning is  is the Founder of Encyclomedia International, Non-Exec Vice Chairman, Media Marketing Compliance and Co Founder of Manning Gottlieb OMD