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Ad Exchanger exclusive interview: It's springtime for transparency, the value of programmatic will be reset

2017.04.21

The transparency issue has been the hot topic in digital advertising since 2016. In 2017, the topic gained more traction as the digital marketing sphere in the West began to address the transparency issue seriously. Meanwhile, what is the level of transparency in China’s advertising industry and what exactly are the pain points? Is there anything that the tech vendors should do? With these topics in mind, the ad tech editorial team speaks to iPinYou CEO Grace Huang.

 

“The past year has been a sensitive period in terms of building a ‘trust relationship’ with brand marketers across the digital advertising industry in China. It is also a time when the traditional media strikes back. TV, print media, OOH have come out in full force to emphasise that they are more ‘transparent’ than digital media. It is no doubt that the transparency issue has been the focus point for the digital marketing industry, and it is definitely a guiding principle for iPinYou as an ad tech platform,” Grace Huang said.

 

Whether the traditional media would be able to make a comeback or not was dependent on market validation. But Huang believed that 2017 will be the year when the value of programmatic advertising gets a reboot as the market matures and the ‘black box’ will be unveiled under the demand of marketers from big brands.

 

Complicated and disarrayed ad tech ecosystem

 

The very basis of programmatic advertising is about improving the efficiency and control process of digital ad serving through technical and procedural methods.

 

However, the digital advertising market became mixed up in recent years due to the presence of certain rogue players. A number of ad tech companies operate under the premise of ‘programmatic buying’ even though what they offer is far from the standards.

 

On the other hand, many ad tech companies run into conflicts of interest by wearing many hats as a publisher, agency or even a data firm. The possibilities seem to be endless. “It is just like financial planners should not get into stock buying, a technincal company should just remain as one and not anything else,” said Huang.

 

Two challenges in implementing transparency

 

Huang believed that there are two obstacles that hinder transprency in programmatic advertising:

 

  • 1: Lack of consensus from brand marketers

What are the principles behind programmatic ad serving? What are the roles of ad tech vendors? How does one platform measure up against the other? Brand marketers have not had a good grasp of the issues concerned for a long time, leading to an incomprehensive strategy planning in programmatic buying.

 

The problem is compounded by the complexity in technical issues, leading to a huge disparity between the various platforms as well as information assemetry in the market. This inevitably confuses the brand marketers, the very people deciding the allocations in adspend.

 

Citing an example, Huang said iPinYou operates under the belieft that digital advertising should be 100% programmatic. However, many brand marketers thought otherwise as they believed that programmatic advertising should only be executed whenever necessary. “If programmatic only accounts for 1% of the budget, then when can we begin to talk about transparency?” she said.

 

  • 2: Performance guaranteed inertial model

 

Over the years, guaranteed performance is often taken as a given in digital media buying whether in direct buying or DSP programmatic buying by brand marketers, media agencies or ad tech vendors. There will be results after ad serving as long as the ad tech vendors give their word. However, the fact of the matter is the whole process of ad serving is usually cloaked in darkness.

 

Under this model, brand marketers are likely to be passive buyers who just have to accept the results at hand. They would not know how to improve the ad serving process; when the results are not up to their expectations, the marketers feel that it is reasonable to lower the fees of the ad vendors. Therefore, it seems that the ad vendors have indeed over promised and some many have resorted to fraudulent tactics to reach the targets set by their clients.

 

The analogy can be seen in stock markets where the big players hand over their funds to the investment companies and only pay attention to the final profitability report rather than scrutinizing over the details. There is no denial that such attitude carries some risk. So, it becomes more apparent that brand marketers should not only demand results but more control and understanding over the process.

 

Where is the motivation for transparency?

 

Following the example from the ad industry in the West, the call for tranparency in the China ad market should be driven by the big brands.

 

Huang expressed her belief that the transparency issue is equally demanding on the brand marketers. They need to spend more time and energy to be more involved in strategy planning and implementation. What they should do is to take a lot at their own internal resources and plans in order to set achievable goals and strategies. From the implementation point of view, brands and media agencies must know the comparison between the different tech platforms, how best to tap into these different systems and understand the the value the technical suites can bring to their campaigns.

 

Meanwhile, the final data report may show that transparency needs a higher cost and may even result in lower traffic. However, brand marketers must keep in mind that transparency is not simply to lower cost or to achieve better KPIs. Rather, the very intention of transparency is to give brands more control and real results. It is when brand marketers have a good graps of brand safety and real results that they will start to have a more concrete demand for transparency. This is also a sign that the market has matured.

 

Huang revealed that the international brands that she has worked with displayed a higher level of maturity and a stronger push for transparency besides being able to look at the performance of each platform objectively. However, brands across the industry have varied understanding of the transparency issue and do not what are the measures to take and results to be expected. Many of the clients are already on the path towards transparency, but the effort lacks a consensus for the effect to reverberate across the market.

 

Value proposition for ad vendors under the wave of transparency

 

Speaking on the brand safety scandal that hit Google recently, Huang opined that the issue came up due to the blind trust that brands place on publishers. Under the media selling and buying relationship, publishers may run into viewability and brand safety issues in their attempt to protect their own profits. As all the different parties are each set out for their own interests, it is most crucial that there should be a tech vendor that acts out on the interest of the brand during the media buying process.

 

Huang maintained that the value proposition of iPinYou is that it is centred on the interest of the brand and its platform is open to the marketers. The company has spent tens of millions since October 2015 to upgrade its platform under its transparency drive.

 

“From the surface, each company would have its own platform and system. But if you scrutinize further, the quality can be disparaging. The biggest difference between iPinYou’s system and the others fall into two factors. First, different design initiation—whether to be transparency or not, these are completely different undertakings. iPinYou has an open approach towards the brand marketers, they are given a direct hand to operate the system. Under the new system, the fee charges, traffic sources, audience data, backend technology, third-party data sources, third-party traffic and third-party monitoring and verification are completely transparent to the brands.”

 

Second, different capabilities offered by the technical system. Since 2013, iPinYou’s technical offerings not only include RTB serving, but also guaranteed buy and preferred deals. “If we don’t have the technical capabilities, the overlaying factors and combination of these buying models may sound too good to be true. For our new system in particular, iPinYou is going all out to fight fraud and we have made signification investment into developing the bidding system. Whether it is the professionalism displayed by our team, or the traffic quality and our expertise in fighting fraud, iPinYou is a reliable name in this field.”

 

Meanwhile, Huang was glad that the upgrading of iPinYou’s technical suite was aligned with the huge growth of interest in transparency following the reckoning in the European and US ad markets. The next step for iPinYou is to leverage on the open system of iPinYou to raise the awareness among brand marketers. It is important to get all the parties in the ecosystem involved, from brands, media agencies, publishers, third-party monitoring and verification vendors, in order to break the existing model and make a bigger push for transparency.

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