Written by Alexis Hochleutner, Answer Consultant
The future of advertising technology hangs in the balance between corporate policy, government regulation, and consumer trust. The programmatic advertising market is still young; change has been and will continue to be the only constant. However, as a former equity investor, I know that while past performance is not indicative of future results, a digital marketer can learn a lot from a more mature market (like the stock market).
The Investor’s Guide to Optimizing Media Spend
As an advertising executive, you're essentially an investor in a brand's media spend. You strategically allocate these funds across various channels and partners, tracking standard metrics to maximize return on ad spend (ROAS). This process mirrors how equity investors operate in the stock market, where the future value of a stock is uncertain, but the price is more transparent due to standardized financial reporting laws in the U.S. In the financial world, the Efficient Market Hypothesis (EMH) posits that all available information is already reflected in stock prices. This means that no investor can consistently outperform the market purely through information-based strategies; higher returns typically come with higher risks. When a market is considered "efficient," all data and information are publicly available and transparent, leaving no room for arbitrage based on information alone.
Navigating Information Asymmetry in Media Buying
In digital marketing, achieving an efficient market is far more challenging than in the stock market. Unlike the transparency in stock prices, the valuation of an ad impression isn't publicly accessible and lacks a unified standard for measurement across all media channels. This complexity is further compounded by user privacy regulations, which fragment data and make it difficult to measure and verify ad performance uniformly.
For example, if you purchase display ads through platforms like Amazon, The Trade Desk, and Google, each will provide different levels of data access for the same inventory sources. While verification partners can utilize the open measurement SDK to assess viewability and brand safety, they can only do so with publishers who comply with the standard. Moreover, running the same media across multiple demand-side platforms (DSPs) complicates performance comparison due to varying data access and metrics.
This lack of uniformity creates information asymmetry, leading to market inefficiency and potential vulnerabilities to manipulation and fraud. To mitigate these issues, it's crucial for those managing ad spend to prioritize investments in media that adhere to industry-wide measurement transparency standards, such as the IAB open measurement SDK. This approach helps reduce information asymmetry, a move toward a more efficient digital advertising market.
Empowering Advertisers with Accurate Verification
Verification partners like IAS, MOAT, and DoubleVerify emerged to address the issue of publishers and tech platforms "grading their own homework." Third-party verification provides independent assessments of ad metrics. However, discrepancies across channels, publishers, and platforms still exist due to differences in measurement methodologies and the data available to each verification company. In a competitive measurement market, these variations are inevitable, resulting in no single source of truth for impression-level valuation.
To more accurately track where your media dollars are going, supply chain transparency is crucial. By identifying key players such as DSPs (Demand-Side Platforms), SSPs (Supply-Side Platforms), and ad exchanges, advertisers can better attribute funds wasted on fraud, low viewability, and brand safety issues across different tech partners and channels. Industry bodies like the IAB Tech Lab and pre-bid.org have developed technical specifications to standardize data access, such as the IAB Tech Lab's standards for exposing and validating supply chains.
Accessing the full supply chain object allows buyers to attribute their ad spend to complete, valid, and authorized supply chains. This greater transparency helps "follow the money," identifying unauthorized sellers, hidden costs, and operational inefficiencies. By uncovering these issues, advertisers can optimize their return on ad spend and improve the effectiveness of their campaigns.
Why Aren’t Industry Solutions Being Widely Adopted?
Adoption of IAB supply chain standards is very low, especially when it comes to app and CTV inventory. Adoption comes at a cost to publishers, who are already facing shrinking margins. There is no enforcement mechanism to ensure these specifications are used universally, leading to growing market inefficiency and opportunity for entities to sell misrepresented or low quality media. Even worse, it leaves openings for fraud. And while DSPs can enforce supply chain standard adoption, they lose reach to the competition.
The first step to adoption of supply chain standards is for media buyers to direct media dollars toward partners who have adopted industry standards and offer transparency into their supply chain.
Privacy Regulations: The New Challenge for Digital Marketers
The programmatic display market now faces growing privacy regulations, prompting companies to protect their audience data more fiercely. The result is even higher marketing operations costs and increased market inefficiencies. Identity partners are emerging as yet another currency in display advertising. However, verifying the authenticity of what you are buying remains a challenge. The industry will need consensus and adoption of cost efficient solutions.
Unlocking Effective Strategies for Advertisers: Maximizing ROI
Know Your Partners
Building trust with partners is crucial for making data-driven decisions, especially in the absence of cookie data.
Invest in partners who offer full supply chain transparency. Understand exactly how your media dollars are distributed—how much goes to which publishers and platforms, and who else is being paid.
Transparency offers a clearer picture of your media, tech, and data costs, enabling more efficient allocation.
Collaborative Defense: Sharing Threats & Suspicious Activity
Fraud protection should be a collaborative effort, not a zero-sum game. When one partner is defrauded, it exposes everyone. When it comes to identifying fraudulent or misrepresented impressions, there is no clear taxonomy to share information. Formalizing information sharing with partners on fraud, theft, abuse, or suspicious activity helps protect partner trust and supports sustainability of the entire ecosystem.
Spend WIth Those Deploying Industry Measurement Standards
Direct media dollars to those partners willing to participate in industry-developed measurement standards, such as the IAB Tech Lab’s Open Measurement SDK as well as supply chain object.
These standards provide the necessary transparency to ensure consistent measurement across platforms.
Act Now: Redefine Your Media Strategy in a Cookie-reduced Future
As governments & corporations battle for consumer trust, now is the time to align on transparency & trust standards with your partners. Clearly communicate how you want to work with them moving forward and what data you expect to receive. By adopting these strategies, you can ensure unbiased media protection, compare performance accurately, and make the most effective use of your media dollars.