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Why the digital advertising industry needs to focus on value chain optimization

Defining and measuring transparency and value

ISBA’s Programmatic Supply Chain Transparency Study provided the digital advertising industry with an impetus to unite and put in place practices to improve transparency across both the supply and demand chains. By design, the study didn’t define and standardize programmatic buying standards, measurement, and value – rather it provided a much-needed platform for the industry to build upon.

As a result of the report, supply path optimization (SPO) and demand path optimization (DPO) are now ubiquitous, which is a step in the right direction but there is more we can do to improve the understanding of not just the pricing of media, but the value.

It’s time for all stakeholders to come together and create a responsible media value chain that incorporates content quality, transparency, and data responsibility from the very start – a supply chain that is good for consumers and good for business. We’re on the edge of the next revolution of technology that begins and ends with transparency and value.

Defining and measuring transparency and value

Oscar Wilde famously defined a cynic as someone who “knows the price of everything and the value of nothing” – a definition which is particularly fitting in the context of the digital advertising industry today. The hurdle we face is creating true transparency, as without transparency you cannot define value or build trust.

The challenge we face is, transparency means different things to different people, and evolves over time. Industry standards such as IAB UK’s Gold Standard and open-source initiatives like Prebid.js are just two initiatives which have been designed to create an open, collaborative and inspectable marketplace with transparency baked in from the start.

Right now, we need to focus on developing a consistent way of measuring and reporting on how media investments are being allocated all the way through the supply chain. This requires adoption and effort from both the buy side and the sell side. Yes, this will require investment, resources, and time – but we cannot lose sight of the fact that the end goal is to re-build trust, which will benefit everyone.

Armed with the knowledge we have today, we need to collectively evolve SPO and DPO to look at the value each transaction provides for all parties in the chain. This will build trust in programmatic as a buying mechanism, in its vendors, and its emerging channels – especially in-app and connected TV (CTV).

The challenge of measuring value is that not everyone defines value in the same way and it’s almost impossible to come up with a definition that suits everyone from publishers to ad tech companies to agencies and brands. What we need to do is create a framework within which SPO and DPO can be used as business intelligence tools that can be transposed onto any calculation of value. This will mean that publishers can use the data from SPO and DPO to, for example, measure yield, or subscriber growth; brands can measure sales, or customer loyalty; and agencies can measure advertising effectiveness.

Actionable next steps

Measuring and aligning value across the whole programmatic chain is, at the moment, impossible, but we can do more.

First and foremost, there must be collaboration between all parties involved in programmatic and an agreed goal. Then, we need to make sure that the solutions we develop work for everyone, not just those with the loudest voices, the most money, or the most resources.

The new pipes that are built must be addressable and they must provide commonality across all channels – and as far as it's possible cater to potential new channels. There must also be real accountability for providing and proving value – and a standardized taxonomy and process of unifying data. As we develop new ways of stitching data together, we also need to focus on developing tools that enable us to understand the data and provide automated insights and optimization capabilities.

From here we can evolve further and look at the value of each audience segment, not just each link in the chain. This will open up more opportunities for both publishers and media buyers to optimize campaigns and improve upon their respective goals.

If we can get value chain optimization right we will make further progress towards competing with the walled gardens, making sure that a ‘high quality’ open internet is available for everyone. With the demise of the cookie in 2023, we expect lots of innovation around measurement but, in contrast to a decade ago, this innovation will be built with more understanding and knowledge around how to extract the most out of digital advertising.

If we get this right and move away from single relationships to industry relationships with transparency as our true differentiator to the walled gardens, consumers and publishers will see a real change in the value they get from advertisers. For consumers this will be more relevant, informative, welcomed ads; for publishers this will be better monetization, user experiences, and bigger addressable audiences.

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