Admedo chief calls for “wholesale clean-up” of programmatic advertising industry.
Nick Moutter, chief executive officer and founder of programmatic platform Admedo, has called for the establishment of a new regulatory body to investigate “suspect, damaging and potentially criminal” practices currently being employed within the programmatic industry.
Speaking to The Drum, Moutter said: “Programmatic as an industry has many issues, but the main one is transparency: transparency around margins, transparency about the relationships between agencies and trading desks and DSPs, transparency around some of the M&A activity we’re seeing. Some of the stuff going on is deeply suspect to say the least and advertisers and publishers are suffering as a result.”
Moutter believes that, in many cases, programmatic advertisers and publishers are currently being forced down particular technology routes that contain layers of undisclosed fees and do not offer either party value for money.
He said: “You have certain tech providers who sit on both sides of the fence with a buy-side solution and supply-side solution. When you work with them, they take an undisclosed margin on the buy side and an undisclosed margin on the supply side - a fairly classic case of double-dipping. What’s more, those providers then use their exchange to weight bids towards buying their own inventory rather than giving the customer an impartial view across the market.
“We’ve also seen certain DSPs, who claimed to be charging clients an undisclosed low margin, go to IPO and be revealed to be operating on margins in excess of 50 per cent getting hidden in the CPM as tech fee. It’s ridiculous and practices like that are actively damaging the perception of programmatic industry and, I believe, holding it back.
Lack of regulator expertise
“This isn’t being regulated properly at the moment and I’m not sure any of the existing financial authorities have the expertise or teeth to tackle these issues as it stands. A new industry body needs to be created. There have to be some sort of standards in place whereby trading desks, agencies and DSPs are audited to determine whether their margins are disclosed factual to their customers.”
Moutter recommends that advertisers consolidate their technology partners into two distinct solutions on the buy-side and the supply-side: “You shouldn’t have to work with a separate DSP, a separate DMP and DCO solution, a separate ad server and so on, incurring layers of costs as you go. On each side you need a consolidated solution, where the margins are transparent and you actually can see the return on your marketing dollar.
“A lot of agencies have worked hard to mystify programmatic for clients, but the truth is it’s not rocket science. Many of the middle-men could be cut out of the process quite easily. Why shouldn’t a DSP, for example, offer account management service for advertisers? Advertisers and publishers need to work more closely together, giving advertisers more control of their marketing spend and publishers more control over their inventory. In a particular well known case, a publisher bought its own inventory through a trading desk to see what they would receive on the other end - it turned out it was only 15% of the budget put in.
“It’s time for advertisers to ask their agencies what percentage of their programmatic ad spend is actually being taken by the agency and the agency’s DSP etc.
As more and more categories of advertising – TV, outdoor, radio, etc - move to being sold programmatically, this issue is only going to become more important.”
5 Steps To Programmatic Success, Admedo’s ebook providing an introduction to programmatic advertising for mid-market companies, produced in partnership with The Drum, finishing with a five-point guide to making a successful move into the sector, is available to download here.