Radical Transparency in Advertising Will Create Growth
In 1734, John Peter Zenger was arrested and accused of libel by William Crosby, the sitting Governor of New York. Mr. Zenger was the publisher of an opposition newspaper called the The New York Weekly Journal. The paper had printed stories critical of the Governor using factually correct accounts to challenge Governor Crosby’s preferred narrative. As an agent appointee of His Majesty the King, Governor Crosby was not accustomed to being criticized nor having his word challenged.
Throughout history, monarchists’ self-interest required tacit control over the press; resting on the belief that complex societies required a single ‘god-voice’ to maintain an orderly state of affairs. The temptation to own the narrative, without question, exists for any singularly embedded entity so as to perpetuate its’ existence, and extend its’ influence, in that dominant position.
“I am not afraid of debate; but I abhor well-informed opposition.” - Not attributed
However, New York in 1734 was not England. The grand jury refused to indict Mr. Zenger. It was argued by his attorneys that truth was a solid defense against the charges of libel — a radical idea at that time. The jury upheld truth over establishment. This decision decriminalized intelligent decent and public counter-argument. Americans in this distant colony were beginning to subscribe to the idea that a legitimate government could only dictate policy with full-disclosure and due consideration by the very people for whom it was responsible and from whom it drew its strength. As such, the seeds of rebellion were being sewn.
Mr. Zenger’s acquittal accelerated the march toward representative government and established the need for a free press as one of the critical elements of effective administration. As we now know, a free press provides a further ‘check & balance’ to measure a government’s effectiveness and to help it maintain the faith of the public. Enlightened people know this to be true; while narrow-minded and lazy beneficiaries of entrenched establishments openly resist challenge. The “American Idea” with its additional levels of involvement might seem unnecessary, messy and even treasonous to dictators and royalists. But yet, transparency in government fortified the new republic and unleashed the greatest economic and technological expansion the world has ever known. The most effective form of an organization is one that establishes a living administrative framework which encourages transparent self-examination with participation and debate; prompting constant innovation.
THE LAWS OF TRANSPARENCY APPLY BEYOND GOVERNMENT
The best form of capitalism enables transparency and vice-versa. In order to survive in a competitive market, a company depends on its product’s innate market appeal. Proper disclosure sustains the product’s strength by inviting critical review, while trust accelerates trading and value over the long-term. Thus, an independent for-profit news source like Mr. Zenger’s, efficient in its delivery and relied upon for its accuracy, can sustain itself in a competitive market, outside of government support or political appointment.
Transparency also opens markets to new entrants. Outsiders and their products must have opportunities to disrupt the established incumbents when those in power lack innovation — exactly as Governor Crosby feared challenges to his repressive position. Transparency is healthy for markets, for constituents and for the advancement of ideas.
THEY WERE AGAINST IT BEFORE THEY WERE FOR IT
Monarchies and monopolists have a lot in common. Neither will readily cede power, even to a more qualified alternative, nor disclose more information than necessary for fear of losing their perceived level of control. That is, until there is a crisis of confidence when they attempt to earn back their constituents’ trust. Truly advanced organizations appreciate the need to keep a culture of constant reinvention, with open exchanges and support for new ideas, inside and out. They must have faith in their own teams’ ability to evolve.
In that vein, the contemporary advertising marketplace is undergoing a shift to transparency.
The advertising world uses “impressions” as its currency. Thus, an ad publisher’s value to the advertiser is derived by maximizing the number (and the effectiveness) of impressions delivered. Therefore, providers of impression measurement tools are the barometers of success in the advertising world.
Many publishers use their first-party data sets to report on campaigns; as they are certainly best positioned to do. But without trusted, transparent disclosure, the temptation exists for publishers to unfairly embellish value for themselves. The perception (even if unproven) is that manipulating results or being slow to correct known inconsistencies, creates results in their favor; thus, cultivating doubt.
Advertisers Allege Facebook Failed to Disclose Key Metric Error for More Than a Year - Wall Street Journal article bySuzanne VranicaOct. 16, 2018 -
Transparency regarding first-party data sets, and their associated analytics in advertising, establishes trust while also enabling third parties to provide alternative verifications. Like a free press reinforces effective governments, both first-party reporting and third-party verification services are important for large scale liquid traded markets to evolve. Impression counts amongst different measurement providers will, of course, differ; given individual/proprietary data sets, algorithms and methodologies. However, the detailed frameworks through which entities generate their answers, should be fully disclosed and generally consistent with industry best-practices so as to minimize, and provide logical explanations for, those discrepancies.
Disclosure enables intelligent users to assess the fit and quality of the data for their purposes. One size/type does not suit all objectives and if assumptions are mistaken, it could alter results dramatically, at a great cost to marketers.
Digital media, television providers and other publishers are facing a crisis of confidence with regard to measurement disclosure. While most of the current public hype around digital advertising regards privacy, marketers and agencies are also voicing their concerns about the value they receive from publishers and the entities that measure their success.
“Report: Bots Make Up Nearly 60% of Online Traffic” - Ad Week 2015
“Ad-Click Fraud is Costing Companies $50 billion a Year” - Zero Hedge April 2019
The Media Rating Council provides standards used by publishers and counting agents across different media channels. These standards need to be followed, consistently, and an audit must be passed, in order to be an MRC-accredited source of measurement. It is now increasingly important in the ad-market that publishers promote disclosure and open themselves up to evaluation. It’s the natural progression we have seen in political history.
Facebook clears key hurdle in getting MRC Accreditation. The social network takes first and possibly biggest step towards providing marketers third-party verification of audience numbers – AdAge, November 2018
However, even accredited sources are not perfect. Only full-disclosure by these entities (publishers and measurement providers) regarding their methods and data sources, will enable advertisers to more thoroughly appreciate campaign reports and to begin assessing relative value across media types. This is especially true as marketers seek additional evidence of success with regard to targeting, delivery confirmation and attribution/ROI.
As an example, Nielsen has been a consistent provider of television measurement/ratings for many years. Nielsen’s National Television Measurement Service is accredited by MRC. As an established independent measurement entity for TV, it has been used by ad buyers and sellers as an agreed upon convenient source. However, as the digital market began to provide more granular metrics, as OTT began to take a greater share of viewing, and as alternative measurement sources such as Rentrak/Comscore provided different methodologies, buyers have begun to ask questions about the methodologies employed by Nielsen — seeking more detailed transparency regarding their data and procedures.
“CBS Considers Dropping Nielsen Ratings Contract as TV Landscape Changes” – Variety Dec 2018
CMOs and CFOs are attempting to evaluate cross-media relative values. “How do I value each channel, in which I can invest, against every other alternative channel, to get a customer to buy my product?”. Then there is the beginning of legitimate Multi-Touch Attribution (“MTA”) analysis. The theory states that a customer’s decision to buy a product is influenced by many different marketing signals — all present at the same time. Thus, value should be allocated to each channel according to its relative influence on the purchase decision. The question then becomes: “If I spend $1 in television, what is the equivalent for Facebook or on a billboard. And, how do I combine investments in multiple channels to maximize my efficiency of spend?”.
Responsibility for results is not borne by the measurement systems alone. Once appropriately detailed and disclosed, marketing executives should be able to create a proxy for a cross-media currency or an effective-CPM (cost per thousand impressions), by media type. Each unique campaign objective must align with budget allocation decisions — all in an attempt to affect lifetime customer-value-management strategies. Deeper disclosure enables better analysis, AI integrations and simulations on combinations of media, in order to arrive at the best fractional mix. This is something that can only be created when transparency is enabled and trust in the disclosed data/analytics has been established. We must help our clients understand and appreciate media values, so that they can invest more confidently across the media spectrum. We win when they win.
Andy Haldane, from the Bank of England, gave a terrific speech on modeling whole economies. It is equally applicable to the advertising marketplace:
Behavior […] is difficult to predict ex-ante, especially at times of policy change; it is emergent […]. Often, our policy intuition about complex systems is simply wrong. No model, however micro-founded or data-rich, is proof against those uncertainties. But one that embodies complex, micro-level dynamics is more likely to do so than one without them. A complex systems framework can make for robust policy choices.
[…] Like our bodies, understanding our economic health means taking readings at many resolutions. It means understanding the moving body parts, and their interactions, in microscopic detail. It calls for new data, at a higher frequency and higher resolution, and new ways of stitching it together.
In an Exponential View post, Azeem Azhar grabs that note from Haldane and ties it to Frederick Hayek’s “The Road to Serfdom”, where Hayek explains the difficulty in modeling complex societies and the “allure of economic planning”. Azhar and Hayek note that centralized planning (without transparent disclosure) can run counter to liberal ideals and the needs of a democracy; ironically encouraging a push to authoritarianism disguised as efficiency. Sound familiar Governor Crosby?
WHAT THIS DOES NOT MEAN
This does not mean that buyers and sellers should all use one data-set, one algorithm and one entity for reported measurement. Just as one news source cannot provide adequate reporting about governments, a master ad measurement entity would be equally deficient and foolish given the vast number of venues, formats and new evolving networks within our dynamic industry. Potentially most disturbing, a single measurement entity would stunt innovation as all future investment would be spent attempting to maximize results against a single inappropriate yardstick.
With profit motive as the forcing function, the correct market dynamic has begun to evolve…an independent standards body issues guidelines (the MRC) and provides accreditation to those measurement providers that pass their audits. Then those publishers and measurement services that provide the best product/tools at the right price, with the most granular disclosure, will flourish relative to their competitors.
OOH TO RELEASE CONTEMPORARY MEASUREMENT GUIDELINES
The out-of-home media sub-industry is quickly adopting a digital mindset and we enter the stage with the benefit of prior experiences. A committee of industry pros has been working with the Media Rating Council to publish standards, definitions and protocols for OOH which are meant to be released within 2019. The MRC’s work is a necessary first-step to keep OOH publishers and buyers aligned while promoting a freely traded and innovative marketplace for our media. After which, we must insist on radical transparency with regard to all entities’ data sources, counting methodologies and algorithmic analysis so that we solidify trust in our media. With this backdrop, OOH publishers will begin to make credible bids for a greater share of ALL media budgets.
Once established, robust measurement methods will enable OOH publishers to compare their media value to those proposed by publishers of web-display, in-app mobile, TV, etc. A common marketplace for media can only thrive when measurement, transparency and trust are present — where publishers’ and new entrants’ measurement products can be introduced, and challenged, with ease.
As an OOH industry, we believe in the power of our medium. We have conviction about the relative value generated by our impressions as compared to other publishers and that transparency will unleash a wave of opportunity.
Transparent and trusted marketplaces are more robust, can better withstand downturns and they accelerate growth as a whole. Markets with strong principles regarding disclosure also deliver the greatest benefit to their customer-participants over time.
Prior to 1933–34, the US stock market was a “wild west” of greed, limited transparency and shameless self-promotion. When the US government established the Securities Exchange Commission and common standards for public company financial reporting, it instituted trust and transparency for financial markets. By doing so, the SEC also enabled a free-market for measurement firms to analyze and rate those disclosures. $1 invested in 1934 is now worth $5500. This growth rate was accomplished because markets were more attractive to a greater number of investors as a result of significantly lower fraud, risk and volatility — thanks to transparent disclosure.
As a sub-industry, our best opportunity is to seek budgets not previously allocated to OOH. However, we do not want to blindly follow the current web-display and mobile ad ecosystem. WARC estimates that global media spend rose 5.4% to almost $600 billion in 2018, and by some accounts, ~80 cents of every incremental ad dollar this year will be spent with either Google or Facebook (outside of China). The established digital programmatic ecosystem is broken. Advertisers are now actively seeking alternatives to these markets (just ask Mark Pritchard @P&G). While the two largest incumbents are growing at double digit rates, “The amount of ad money available to online publishers beyond Google and Facebook … will decline by 7.2% this year”, according to WARC. The online programmatic ecosystem is broken:
· First: because the plumbing of programmatic ad trading separates brand from publisher by too great a distance; inserting entities that have neither the publishers’ nor the advertisers’ best interests in mind. Fast emerging private-market-places will help move money away from pure auctions to a zone where value is discussed and evaluated;
· Second: because the system optimizes with regard to price, treating each impression as equal (regardless of media and ad-unit type) rather than differentiating on the true value being exchanged. This commoditizes the market and disenfranchises both ends of the chain to the benefit of the conduit pipes (DSPs/Exchanges/SSPs).
· Third: because the counting and audience measurement systems ignore each medium’s relative value. This is where calls for additional disclosure have become commonplace and MRC accreditations are being sought in order to give marketers more information for analysis. The development of multi-touch attribution will serve us well.
There is a long way to go.
“Transparency is the Currency of Trust” - Freda Lewis, Pfizer
Out of Home advertising has a chance to establish itself in the larger traded markets with a higher bar.
· We should reject black-box methodologies, failed “programmatic” engines and indirect market systems.
· We must adopt best-practices with regard to data privacy, robust audience disclosure and transparent trading (including all fees throughout the chain).
· We must encourage new entities to join our OOH family, to innovate and to build new measurement products. These entities and their products must be as dynamic as the new ad-formats we will continue to release (trigger-based campaigns, day-parts, multiple-lengths, various video variations, digital formats, etc.).
· With the help of new hardware and software technology, significant ad-product variations will emerge, and they will include mobile integrations to combine our one-to-many strength with the narrowcasting of one-to-one media, creating a feedback mechanism. Our medium will continue its’ drive to “close the ROI loop”.
· If we seek to compete for a larger share of media budgets, we must wake up every day thinking about our buyers’ needs (ROI, transparency, objective-based campaigns, etc.) rather than our competitors’ position. Only then will we evolve.
With so much evidence to discredit their behavior, it is fascinating to watch as governments, companies (in all industries) and measurement services continue to promote solutions without granular detail being shared with clients and countrymen in an attempt to maintain a perceived advantage. A lot of this could be excused in the era before today where disclosure channels were difficult, constituencies were less aware of world politics and the intricacies of traded markets were a mystery. Now, a more educated buyer-base demands detail and understanding.
Cross-media buying is about to explode as the MRC releases cross-media measurement standards and multi-touch attribution begins to weigh in on the relative value of an impression across media types. Marketers are actively seeking alternatives to incumbent web and mobile strategies for all of the reasons discussed above.
The media world is democratizing with exponential leaps in innovative technology; and it craves fair business practices. Limiting disclosure in the hope of maintaining a market advantage is long-term foolish. Only radical transparency can unleash the full potential of companies and markets. Those who seek to control the narrative will be discredited.
The opportunity before our industry is enormous.
Within this industry, we are on the side of the angels.
We must stand firm on our foundation; and hold truth above establishment.
 For another time: a “graduate” level discussion on the rise of “fake news” and politically bias reporting in the 21stcentury that caters to rabid self-absorbed constituencies on all sides of the political spectrum. The phenomenon was fueled by news entities who sought out untapped market demand for sensationalist story-telling in the age of the 24/7 news cycle.
 For purposes here, ratings and data provided by measurement entities are not “currencies”. They are products offered to the industry used to count the number of, and eventually evaluating the effectiveness of, impressions, which is the accepted global media common currency. This is important as we expand our reach beyond OOH and begin to compare OOH to other media types.