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Topics include: Direct to consumer / E-commerce / Data & privacy / Martech

2019 will be like entering the ‘transparency land’

Come hither 'transparency land'

I’m not a great one for crystal ball-gazing so I’ll try and keep this objective. The direction of travel is well established – ‘Transparency Land’ here we come!

We have seen a continuous increase in the emphasis by advertisers on transparency within their media trading across 2018. Whether it is Central Communications Services directly remunerating MGMOMD for transparency in-trading, Vodafone in-housing programmatic or the now perennial ‘Mediapalooza’ – there is an undeniable momentum among advertisers to demand transparency, take control of their media supply chains and get their hands dirty.

Transparency pays

We’re seeing some movement with partners starting to listen to their customers and adopt new working practices because, make no mistake, transparency pays. Harvard Business School published Bhavya Mohan, Ryan Buell and Leslie John study and results on the value of transparency in ‘Lifting the Veil: The Benefits of Cost Transparency’ (September 11, 2016 Last revised: 6 Nov 2017). In six separate laboratory and complimentary real-world studies, the academics tested the effect of companies’ voluntary disclosure of the costs to produce a given product (ie cost transparency) to other supply chain participants. Company A not only knows the price it is being charged, but also gets to know the price its supplier – Company B – is in turn paying for its inputs, and so on. Variants of the experiments took place and demonstrated three key findings:

• “Under both conservative and liberal assumptions…the cost transparency treatment had a significant positive effect on sales.” In fact, the trials identified between 22% and 44% increased sales.

• “Cost transparency in particular, as opposed to other forms of transparency such as the mere provision of information on production processes (operational transparency), is particularly potent in boosting purchase interest.”

• “Cost transparency boosts purchase interest only when voluntarily instated by the firm, as opposed to involuntarily (eg as required by law)”.

In simple terms, voluntary transparency leads to trust, which leads to higher sales.

Transparency equals trust

Brainlabs, meanwhile, argues smart independent technology solutions “makes trust unnecessary”. I’m not convinced. If bid caching teaches us anything, it’s that technologists will always move faster and be more sophisticated than their customers. Who audits the algorithm? Do we really believe that 3ve is the last major adtech fraud? Doing business with ethical, trustworthy people aligned with your goals and values must always be the north star when considering any relationship.

Transparency is good for business. Blockchain technologies deliver independently verifiable transparency to a supply chain and, therefore, more trust. Blockchains create an immutable record of a transaction, locked by the network itself through the smart marriage of encryption and a consensus mechanism. They produce a single source of truth that, literally, the participants agree upon and therefore trust. The technology offers an elegant solution to, arguably, our industries biggest problem.

Iain Jacob, former Publicis Media EMEA chief executive officer wrote in November that: “Trust is not an issue. It is the issue. This is existential and has to be addressed immediately”. For this succinctly-put reason, we believe the issue will accelerate in 2019 and will reach a crescendo with the first enterprise grade adoptions of blockchain by major brands and their principal agencies as they seek to assuage the fears of their clients and rebuild trust in their relationships. You heard me right – network agencies will lead, not follow, in 2019.

At Fenestra, we’re in market with clients trialing our programmatic transparency protocol, powered by the unique transparency ID (UTID) and expect to roll-out fast. Complying with OpenRTB framework, our transparency protocol is simple and easy to implement with impression-level reconciliation then storage of data #hashes on the Fenestra blockchain network to deliver consensus and immutability.

Star Trek this is not – these are all easy to predict – we’re doing it already. A recent programmatic display campaign Fenestra tracked saw an advertiser buy impressions from a single domain via 11 different supply routes with a 300% spread in price between the cheapest and most expensive SSP. Perhaps worse, the domain received 24% of total budget in aggregate and was clearly questionable despite the reputable sources delivering the inventory to auction.

For bad actors, hiding in dark parts of the forest using slick confidentiality agreements and arbitrage to pump swollen margins, I have one final prediction – in 2019, corporate entities in the advertising industry will be charged in the United States by the Department of Justice with crimes such as wire fraud, and a similar investigation will open in UK led by the Serious Fraud Office.

To see Fenestra speak further on this topic, register to attend The Drum's UK Predicitions event on 23 January 2019 in London.

Ashley MacKenzie, founder and chief executive, Fenestra



Twitter: FenestraTech

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