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Adtech vendors need to be their customers' best friends

It has been one of the fastest success stories in technology. “Adtech” - the collective name for platforms helping advertising buyers and sellers to target, trade and transact - has been booming.

In recent years, the sector has seen a flood of investment, as venture capitalists poured money in to a segment that facilitates the internet’s primary monetisation model.

But adtech also now finds itself at its most challenging moment. The flow of money has slowed, as investors express scepticism over first-wave IPO returns, and as some begin comparing the economics of the media industry unfavourably with other enterprise or marketing software.

But this much we already knew. For the adtech vendors, the latest test is more fundamental. The perception currently gathering steam is that adtech platforms are no longer their customers’ best friends. And, whether you are serving the buy side (advertisers) or the sell side (publishers), the view is gathering pace.

It is easy to understand why. The US Association of National Advertisers’ explosive 58-page report in to shady ad industry practices has lifted the lid on a host of misdeeds, like rebates and back-handers between buy-side intermediaries, that obfuscate the real nature and effectiveness of their clients’ actual media spending.

That prompted P&G chief brand officer Marc Pritchard, to lay in to the rest of the sector. In an IAB keynote now regarded by the industry as its biggest speech in two decades, Pritchard complained: “We have an antiquated media buying and selling system that was clearly not built for this technology revolution. We serve ads to consumers through a non-transparent media supply chain…”

Suppliers are rightly spooked - Pritchard’s P&G is the world’s biggest-spending ad buyer, the beating heart that pumps blood throughout the ecosystem.

Now, not all of these criticisms speak specifically to the adtech community. The ANA’s report focused mostly on advertising agencies.

But the tech platforms are also being hit by the ongoing fall-out from the great transparency crisis. Some of them, upon formation, fell in to line with the agency practice that is now under scrutiny.

More seriously, others are facing the direct charge that it is they which are at fault for the sell side’s worsening outlook.

Around the world, even in developed digital markets, online ad spending to premium publishers has slowed to a crawl. In many cases, it is even shrinking - a startling fact for a medium we have only ever expected to go on growing.

As we continue to read analyses that upward of 80% of new digital advertising dollars go to just two giants - Google and Facebook - independent publishers are growing agitated, and their ire is also getting directed at adtech broadly.

It is open season on “ad tax” - the collection of fees charged by adtech platforms for the value unlocked by routing an ad transaction through their systems.

Case in point: The Guardian’s chief revenue officer this month complained that his company is only getting as little as £0.30 of every £1 for which its ads are bought through a supply-side platform.

This is adtech platforms’ chief challenge today - ensuring they continue to prove their beneficial value to customers, maintaining their relevance in the industry’s value chain.

Most publishers are not anti-programmatic. But they are calling for greater transparency. And adtech suppliers now most urgently show that they are on their side. They must quickly demonstrate that they have not become the problem but, rather, remain part of the solution.

Adtech platforms, then, must become advocates for transparency, not King Canutes on the media beach as a wave of customer resentment washes ashore.

If you are an adtech platform today and you are not actively talking about the need to clean up the ecosystem in a way that media companies clearly want, you are failing to empathise with your customers and prospects. It’s time to change.

Of course, that change cannot be just perceptional. Getting on the front foot is half the battle - but talking about change without living it is not enough. Vendors must aim to offer customers real visibility of every cent or penny bought or sold. Those that do will reap the rewards of customers’ flight to the transparent future.

And change need not be as hard as it may seem. Whilst the advertising agencies have operated, for decades, with a culture that has now been exposed, technology companies are newer to the game, more agile and should more readily be able to flex to an industry that is moving fast.

The future may depend on it.

by Robert Andrews 


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