If the programmatic media supply chain had a theme song, it might as well be “Oops! … I Did It Again.”
The online ad industry has been susceptible to manipulation by bad actors and plagued by opacity pretty much since its inception.
In June, the Association of National Advertisers (ANA) released its latest research into the state of programmatic transparency and found it lacking. According to the report, advertisers are wasting roughly $20 billion a year on inefficient buying practices and low-quality programmatic media, including made-for-advertising websites.
But while some of the blame for this muddy mess is the result of technical complexity, many of the wounds are self-inflicted.
Programmatic transparency is achievable in theory, but elusive in practice, said Sherine Ebadi, managing director of forensic investigations and intelligence at risk management services provider Kroll. The company helped the ANA conduct interviews for its transparency report and a subsequent addendum published in August.
“We saw many different intentional barriers to transparency, man-made problems, if you will,” Ebadi said. “Full transparency costs money, takes time and requires resources. You need to audit log files, look at contracts, maybe renegotiate contracts with downstream partners, and this is an unrealistic burden for many advertisers.”
Ebadi spoke with AdExchanger.
(But first, a few fascinating facts: Before joining Kroll in 2019, Ebadi was a special agent with the FBI for more than 10 years, focusing on fraud and corruption. She was the lead case agent during the Paul Manafort investigation and subsequent trial, and she was called in earlier this year by the attorney representing Britney Spears to corroborate claims that Spears’ father routinely spied on her.)
AdExchanger: On the surface, Britney Spears and log-level data don’t have a lot in common. Are there certain investigative principles you apply regardless of the case?
SHERINE EBADI: In any good investigation, there are common threads to the approach, and they transcend industry, topic and type of crime.
First, you need to understand the nuances, or you won’t be able to properly investigate. And programmatic is a great example. I didn’t start out with expertise in programmatic, and we had to take the time to learn exactly how it operates. If you don’t understand what “normal” is, it’s really hard to understand what the anomalies are.
Simple questions are often the best questions, too, because they highlight inconsistencies that people with experience take for granted.
If you’re involved in something too deeply, you probably don’t ask questions anymore because, even if you’re frustrated, as were a lot of the people we interviewed in the programmatic industry, you accept the situation as “just the way things have always been.”
But if your remit is to have curiosity, you can ask why things are the way they are and start to move beyond the status quo.
What happens when buyers confuse cost efficiency with value?
Say we’re talking about buying jeans rather than buying impressions.
If I have $100, I can either buy one pair of Levi’s or many pairs of a cheaper brand of jeans. If my goal is to buy high-quality, comfortable jeans, it makes sense to spend my whole budget on one pair of Levi’s. But if my goal is to buy as many pairs of jeans as possible, I’m incentivized to buy more jeans that might be of lower quality and not fit as well.
When low-cost CPMs are the goal, it might seem like you’re getting more for less. But what you’re really getting is less for less.
You also found from talking to media buyers that advertisers are often paying for verification services twice – once directly and again through their SSP – without even realizing it.
Some advertisers purposely spend on what might seem like redundant services because they want two different independent ad verification companies looking at their campaigns. But if you’re not doing it on purpose, how do you know if it’s worth it? You don’t even know what it’s costing you.
You also found that the simplest path from advertiser to publisher isn’t always the best or most efficient path, depending on the campaign. How so?
That point came up consistently. It’s something we heard from virtually everyone in the ecosystem. There are exceptions, of course, but in general advertisers don’t understand all the different buying pathways or what the pros and cons are of each.
But people in the ad tech ecosystem or agency partners often do. They know which levers to pull. For example, an advertiser working only with a DSP eliminates middlemen fees, but the CPMs are often a lot higher in publisher direct deals.
It’s important to talk to people who understand those nuances. You don’t have to be an expert yourself in order to ask the right questions.
What sort of questions?
Advertisers need to ask their agencies who their technology partners are and why they’re using them. We found cases where agencies were using three different DSPs, all of which were competing for the same inventory.
And to the extent that they have the contractual right to do so, advertisers should also find out the take rates for each partner and whether they’re providing a necessary function for the success of a campaign.
Advertisers should also ask whether their KPIs match their actual goals. Is it really your ultimate goal to buy as many pairs of cheap jeans – or impressions – as possible at the lowest possible cost?
What about the power of good old FOFO, the fear of finding out?
Brands continue to spend more and more on programmatic media every year despite an obvious lack of transparency. It’s a whole lot easier to feign ignorance and keep on doing what you’re doing than to address issues.
You’ve seen a lot of twisted behavior and turned over a lot of rocks in your career. Where does the programmatic advertising ecosystem fall on the dysfunction spectrum compared to other industries?
I’ll answer that by changing “where” to “why.” I think you might see a high degree of nontransparent behavior in this ecosystem because it’s unregulated. There have been attempts to self-regulate, but there is no regulation requiring people to be transparent – and why would you just volunteer to do it if it might take time and potentially eat into your margin? There’s also very little accountability.
But a lack of transparency doesn’t necessarily mean that companies are acting nefariously or that there’s some grand conspiracy to defraud advertisers. What it does mean is that opaque industries are fertile ground for bad actors because they can get away with it.
Bad actors hide in the dark corners, which is why it’s important to start shining flashlights around and holding people accountable.
This interview has been lightly edited and condensed.
