The Trouble With Transparency

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glasses_smallDM CONFIDENTIAL – If you took a poll of advertisers and asked them one thing they would like to change about the performance-based marketing industry, a large number, especially those with any degree of brand sensitivity, would say they want to see greater transparency.

It’s a debate as old as almost all of performance marketing. What transparency is the right level? It’s a problem as old as Internet advertising, not created by the cpa space and not perfected by it either. Banner networks have, for more than a decade, battled the threat that an advertiser will find one of their ads running on a site that offends them.

Most ad networks, certainly the better ones, do try to prevent advertisers from running on properties they would not approve. But it’s all too easy for something to go wrong.

The classic scenario goes something like this. You have budget on a decent CPM campaign. On the inventory you have currently, you will not have enough impressions to finish the budget. If you don’t finish the budget, you might not get the same allocation in the future, if any.

So, under pressure, you farm out the campaign to a new publisher or even a boutique sounding network that you haven’t heard of before. That publisher, or group of publishers, could not be happier to have this campaign — it’s their highest grossing campaign, and in order to keep their publishers happy or just to realize as much as possible from it, they take some liberties of their own, because they know they might not get this campaign ever again.

We’ve written in the past about all the crap you might find if you surf the long tail of web traffic — the fan pages, lyric sites, tier 3 casual game sites, cheat codes and more. It’s hard to monetize the long tail of potentially high traffic but little to no intent sites. You either have to have massive scale, massive data, or both (like Facebook).

For the rest, monetization comes form overloading the page, from stacking ad upon ad and daisy chaining as many ad networks together as possible. Go to one, and you’ll often see ads that just don’t look like they belong — branded video ads or narrowly targeted campaigns that somehow ended up on the least narrowly focused sites.

It all comes back to the notion that making money is tough, and it’s not that companies are always willing to try to cheat, but they know that if they were to be completely transparent with the advertiser, they wouldn’t make as much money. That advertiser would go to someone else who would tell them what they wanted to hear.

The performance marketing space faces very similar challenges. In the display world, more and more advertisers are demanding a greater level of transparency not upfront through site lists but by making sure their ads contain a snippet of code that can report back to them if an ad appears on undesirable content.

Let’s assume the advertiser in these cases is not someone with the core competencies to manage the campaign end-to-end. They are very happy farming out the ad dollars to networks. How might that network feel if the advertiser were a performance-based advertiser, one with the ability to manage multiple publisher relationships?

This is an advertiser who doesn’t just design creative and assist in placement; it is their business, their product. The networks would be very hesitant to assist in greater transparency because they would be empowering the advertiser to ultimately circumvent them.

Thinking about the largest ad businesses, all of them manage to offer some sense of transparency without actually being transparent. Google is the best example. They offer increasing controls, but they built their network business by sharing very little. You didn’t get to see which sites in advance, and they didn’t offer a breakdown of the sites.

Companies like this break down traffic by source, but they don’t share the name. The more the network does, the less they have to worry about sharing the name. A network, like an exchange, adds some layers of efficiencies and reach that would dissuade someone from trying to manage all those relationships on their own.

As long as the controls are in place, they are ok letting the network do its thing. If, on the other hand, the network doesn’t do enough, e.g., it works with a small number of advertisers each capable of managing the publisher relationships on their own; if this same network also works with only a handful of meaningful traffic sources, we end up with a situation of transparency friction.

Transparency friction is what we face constantly in performance marketing, and it isn’t just the result of the limited number of meaningful advertisers. It’s the result of so many of those advertisers thinking they can do more on their own. Yes, there is “Scenario A” which we cover frequently, whereby affiliates run ads and landing pages that advertisers wouldn’t approve. It’s the classic differentiation issue.

“Scenario B” involves affiliates running ads and pages that would get approved, but they would be hesitant to share because they know several of the advertisers would think they could do it themselves. This is a tough problem that is only going to get more difficult, and we are seeing it play out in many areas, one being the marketing of education.

While not final, there will be changes in the way that marketers can promote campaigns for the for-profit schools. The proposed changes would hold the schools more accountable for what their affiliates run. It’s not a completely fair standard to set, but if made final, we will now see schools requiring transparency to a degree never seen before.

Some will do this manually; others will look to a technology solution. Some of the suggested solutions out there now would have anyone who makes their own landing page install code that would allow the advertiser to in effect see the pages. If a form is submitted, they would capture what the page looked like. It’s good for the advertiser but certainly threatening for the generator.

If it’s happening in education, we can be assured that it will happen in other areas. We could envision a scenario where everything gets tracked. If you are promoting a product, it gets tracked. As an affiliate you might have to always have certain code on your pages or you wouldn’t get paid.

It will never happen, though, until the advertisers and those they work with can come to a truce. The bad guys won’t show because they are the bad guys. The good guys will show, but they need to know doing so isn’t arming someone else to do their job. The onus of transparency is as much on the advertiser as it is on the publisher.

Like anything else, there is a two way street. At least in performance advertising, you can’t simply demand transparency without earning it.

3 COMMENTS

  1. From personal experience- here’s a real life challenge. I know a licensed Psychologist that also does things on the media.

    One of the issues is that if the show buys ad space, where will the ad be placed.

    In the world of a licensed Psychologist, they can’t be associated with certain things (pornography obviously, but also others- sites promoting things that might be associated with sexual predators – think facebook or myspace-sites that might encourage eating disorders- thing just about any woman’s site, including Victoria Secret_.

    So, this psychologist could get much more media work, if their licensing board allowed them to be associated with many mainstream sites.

    Or- when should a brand actually be able to control ad placement which may affect their brand?

  2. Transparency won’t ever work because it’s just an excuse that many advertisers use to try and cut out the network. They monitor the traffic source and when discovered make attempts to contact the source direct and work out a deal. I get calls like this ALL THE TIME.

  3. Back in the days when I made my living managing pay per click campaigns – primarily Google AdWords – ppc consultants coined the phrase Distribution Fraud to describe ppc engines selling advertisers clicks on poor quality and unrelated sites.

    PPC engines have the challenge of having a limited amount of relevant traffic that they “solve” by selling advertisers non-converting junk traffic without the advertisers knowing it.

    If you lived in AdWords accounts – and especially those for small businesses that had small budgets – the difference was easily seen and striking.

    What you never want to see is traffic and spend going up while conversions and sales simultaneously go down – and that is precisely what you see from non-targeted traffic sent from poor quality sites.

    The risk to advertisers is great and distribution fraud is fairly easy for a ppc engine to hide from their largest customers (but not all that difficult for someone like me to see and document – simply look for spikes in traffic with corresponding inconsistent conversion rates and disappearing conversions).

    I no longer manage ppc accounts because I did not have the scope or resource to protect the small businesses I prefer to work with from what I consider an acceptably high level of risk.

    Advertisers must be cautious not to be buying pigs in pokes.

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