1. The programmatic witch hunt is confusing transparency with business

    August 18, 2017 by admin

     

    It seems that it is all the rage to have an opinion about digital transparency these days. Without pointing fingers, it appears that commentators on both sides of the digital fence are continually waxing lyrical about the imminent cliff digital media may, or may not be, hurtling towards.

    But as an interested observer, it has struck me that unless we expect Samsung, Apple or indeed any successful business to start providing a detailed breakdown of their profit margins on the price tags of their products, we might want to cut the programmatic industry a break.

    The current conversation around programmatic transparency has taken a wrong turn. It’s gone from helpfully pushing for transparent trading, to spitefully suggesting transparent business models. If martech companies caved to these demands, they would likely be the only private industry in the world to do so.

    Clearly, transparency is a good thing. Programmatic traders should be clear with clients about what media they buy, and why they buy it. They should be open about what exchanges they use, and how effective their methods are. When it comes to publishers, inventory, targeting and engagement, they should be open with agencies and advertisers. This approach creates a better environment for everyone involved. On this front, the industry can still improve.

    But lately, the conversation around transparency has morphed into something unexpected. It’s become a call for selected businesses to be publicly transparent with how they make money. This is something a smart company would simply never do.

    Working in media is about adding value. Each stage of creating, producing and planning a marketing campaign is part of a long chain of investments from advertisers, all designed to eventually make more money than they cost.

    Forgive the lesson in capitalism, but I fail to see why the programmatic industry should be asked to exist outside the same rules as everyone else.

    Look at car manufacturing. At every step of the supply chain, from steel mine, to assembly plant, to car dealership, each supplier marks up the price of their skills and service to cover their costs and make money from the efficiency and quality they bring to the production process.

    Would you ask a car manufacturer to explain why they mark up their prices?

    The cost most people pay for phones or cars is less than it would cost for the average individual to buy the raw materials and personally make the product. Electronics companies, car companies, nearly all companies, add value to the world in this way. They make specialist products available to the market at a price that represents value to consumers.

    Any brand marketer who has brought their programmatic trading operations in-house would probably agree to the value of having a martech provider doing the heavy lifting for you.

    And just like any manufacturer might have special technology that allows them to make certain material much cheaper than its competitors, I’m sure the same exists in programmatic trading. As long as the net result is still a quality product or outcome for the customer, no harm no foul.

    It’s this competitive edge that pundits and grandstanders are trying to take away from programmatic businesses. Rather than celebrate the ingenuity required to bring in campaign results on a budget, they want martech providers to explain themselves. It’s puzzling.

    Unless we’re all expecting manufacturers to start breaking down their manufacturing and distribution costs on the retail price tag, asking the same of programmatic businesses might be a bit much.

    I agree entirely that transparency and honesty is an essential commodity in media trading, but we should focus on the kind of transparency that adds value and proves ROI. Asking for total transparency and singling out certain businesses and undermines the entire industry. Where would it stop?

    This article originally appeared on Mumbrella.