Six key steps toward building trust in programmatic advertising

By John Murphy, Head of Marketplace Quality, OpenX

Programmatic advertising is a $45 billion industry, and it’s poised to become the primary way in which a majority of all advertising is globally traded. However, as a recent CMO Council report found, seven in ten CMOs still have significant trust concerns about the quality of programmatic advertising.

The sheer number of technology providers in the market today have further complicated the media supply path, causing unnecessary friction and duplication that has opened the door for even greater quality concerns.

From ad fraud to domain counterfeiting, and unclear billing arrangements to non-transparent auction mechanics, the threats facing advertisers can seem overwhelming. The good news, however, is that there is a better way forward. By working together, buyers, sellers and the technology partners that support them can tackle these challenges head on to build the high quality, well-lit marketplace necessary to build lasting trust in the value of digital advertising.

Here are six key steps buyers can take to build trust in the value of programmatic advertising and the steps each buyer can take to overcome them:

Proactively monitor against every fraud tactic.

Nearly 15-20% of ad spend on low quality exchanges is projected to be lost to fraud, including bots, domain counterfeiting (spoofing), and unauthorized domain reselling. By requiring exchange partners scan all inventory for fraud ahead of time, instead of resorting to random samplings that allow billions of fraudulent impressions to slip through, buyers can help mitigate the risk.

Additionally, to counter the risks from domain counterfeiting, buyers should build relationships with technology partners that are highly ranked in ads.txt, pushing their DSPs to buy only from authorized sellers listed in a publisher’s ads.txt file when available. Being selective when it comes to partners is instrumental in building buyer trust in programmatic overall.

Know what you’re paying for.

Fees have been a hot topic in recent months, especially among buyers. The fees charged by exchanges to a buyer ultimately result in a dollar-for-dollar reduction in a brand’s buying power, but the fix here is simple. Buyers should only work with providers that offer clear fee arrangements for the transaction. Period.

Beyond unclear fee structures, some exchanges incentivize the re-allocation of spend to their own platform through rebates or “kickbacks”. This practice directly reduces the buying power of every advertising dollar spent, degrading confidence in the overall marketplace. Contractual agreements to bar DSPs from accepting any financial incentive from an exchange in return for a shift in spend is a necessity, and will help maximize the impact of a buyer’s actual spend.

Be mindful of the end result — and adjust accordingly.

Ads that appear around offensive or harmful content, or in conjunction with too many other ads, put brand reputation at risk and degrade the user experience. Partner with exchanges that have strict quality standards and have made the necessary investments to curate and cultivate the highest quality inventory available.

Once buyers have solved for brand safety, they must consider the overall ad experience for the end consumer. To ensure an optimal user experience, buyers should require exchange partners to have clear protocols on the number of ads they will allow per page. A maximum benchmark of six ads or fewer per page makes for a better consumer experience with your ad campaigns.

Maintain close relationships with trusted sellers to minimize arbitrage.

The unintended consequences of unauthorized reselling of publisher inventory have allowed bad actors to take advantage of the distance between buyers and sellers. This growing distance has sparked a rise in domain counterfeiting, unauthorized resale, and arbitraging of inventory. Buyers should require that their exchanges have a maximum “two hop” relationship with the inventory they are selling. Direct publisher relationships are preferred; however, in some cases working with an authorized reseller may be necessary. Any further separation (three or four hops) increases the risk of fraud and should be avoided.

Optimize bid strategy with clear understanding of auction mechanics

Auction transparency continues to make the headlines as some exchanges, who are taking advantage of market confusion to capture more revenue, were caught deploying non-transparent “shadow” first-price auctions. The “first-pricing” of what buyers believe to be a second-price auction reduces a DSP’s ability to tune their bidding strategies and results in a buyer paying 3 to 4 times what they expected for a given impression. Clear and transparent signals, such as use of the OpenRTB protocols for auction type and final auction decisioning, keep partners honest. If the rules of the auction are not clear, buyers should refuse to participate through that exchange.

With the 100% shift to first-price auctions by some exchanges, buyers should seek out partners that offer both first and second price auctions to retain maximum control of the buying process. And remember to inspect your spend data closely, with particular attention to your “paid to bid” ratio for the higher dollar bid amounts.

Validate technology partners based on third-party industry standards.

In recent weeks, several technology companies have come to market with “fraud free guarantees” yet some have failed to make the necessary investments to fight the fraud arms race. Often the “guarantee” offered is only honored if the exchange is “caught” dealing in fraud. Instead of relying on the word of technology providers, buyers can take a major bite out of ad fraud by partnering only with companies that have embraced independent third-party verification. The Trustworthy Accountability Group (TAG), established by the IAB, is a good example. TAG offers a clear benchmark to help buyers select technology partners that have actually met the highest quality standards through a rigorous certification process in four key areas. Only a handful of companies in the world have met these standards.

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