Tech Op Ed #2: Advertisers need visibility into the quality of the data from platforms to make decisions.

Big Tech platforms, such as Meta, Google, and TikTok make huge profits as advertisers spend money to reach their audiences, and they have an ethical responsibility to provide accurate data on whether ads are reaching target audiences. Ad fraud is running rampant, and it costs advertisers who can’t determine the ROI and reach of their ad spend as well as can have severe consequences on the wrong audience receiving the ad. Advertisers need visibility into the quality of the data from platforms to make decisions.

To start our discussion, here are the primary ways that big tech platforms earn advertising revenue:

1. User Data Collection: Big tech platforms collect a vast amount of user data through various means, including user interactions, preferences, search queries, and more. This data is valuable for advertisers as it helps them target specific audiences.
2. User Profiling: Platforms create profiles of users based on their behavior, demographics, interests, and other relevant information. This profiling allows advertisers to tailor their ads to specific segments of the user base.
3. Ad Targeting: Advertisers use the platform’s advertising tools to target specific demographics, interests, and behaviors. This ensures that ads are shown to users who are more likely to be interested in the products or services being advertised.
4. Auction-Based Advertising: Many platforms use auction-based systems for advertising space. Advertisers bid on the opportunity to show their ads to specific target audiences. The highest bidder gets their ad displayed to the targeted users.
5. Pay-Per-Click (PPC) or Pay-Per-Impression (CPM) Models: Advertisers typically pay based on user interactions or impressions. In a PPC model, advertisers pay when a user clicks on their ad, while in a CPM model, advertisers pay for every thousand impressions (views) of their ad.
6. Ad Analytics: Platforms provide advertisers with analytics and insights into the performance of their ads. This data helps advertisers refine their strategies and improve the effectiveness of their campaigns.1

These revenue streams indicate how dependent the customer is on reliable data. If the user profiling is mistargeted, for example, the entire tailoring process is ineffective and can be damaging to the end-consumer. Or, if users are not actually viewing or digesting the information in a PPC or CPM, but the model considers any individual who scrolled past the ad, this would heavily distort the ad effectiveness and cost. Therefore, we can assume that platforms have an ethical obligation to define and uphold quality standards related to data they are selling.

Several industry organizations and initiatives have established standards to guide advertisers and platforms in reporting and sharing data. Here are some key industry groups and initiatives:

1. Interactive Advertising Bureau (IAB): The IAB is a major industry organization that provides guidelines and standards for digital advertising. The IAB offers various resources related to data transparency, ad measurement, and reporting. The IAB’s guidelines cover areas such as viewability, ad fraud, and ad measurement.
2. Media Rating Council (MRC): The MRC is an industry association that works to ensure measurement standards and practices are valid, reliable, and effective. It offers accreditation to measurement services that meet its standards. The MRC’s guidelines cover issues such as viewability, audience measurement, and ad verification.
3. Trustworthy Accountability Group (TAG): TAG is a cross-industry accountability program that fights criminal activity in the digital advertising supply chain. TAG provides various certification programs, including the Certified Against Fraud and Certified Against Piracy initiatives. These programs aim to ensure that participants in the digital advertising ecosystem adhere to industry best practices.2

While these guidelines and initiatives are continually evolving to address the changing landscape of digital advertising, the different groups align on fairly concrete basic standards and best practices. Many industry organizations set guidelines for advertising metrics and reporting, especially with regards to CPM and user profiling. Platforms that align with these standards demonstrate a commitment to ethical conduct in the advertising ecosystem. Those that do not adhere can become pariahs in space and lose significant business as it’s seen as a general violation of accepted terms. Yet, the loss of business is not the primary concern with data visibility, it’s the downstream effects. Digging deeper into the issue, let’s consider the implications of falsifying data or data accuracy:

Advertisers invest significant resources in advertising campaigns. Accurate data on ad reach, engagement, and conversions is crucial for advertisers to assess the effectiveness of their campaigns and make informed decisions. If data is inaccurate or incomplete, entire campaigns could be misevaluated.

There are also legal implications on data inaccuracy, which extends the argument for visible data quality beyond a moral one. Many jurisdictions have regulations and laws governing advertising practices. Failure to adhere to these regulations can lead to legal consequences and damage a platform’s reputation.

Furthermore, there are significant concerns surrounding data collection and privacy. If big tech platforms are not transparent with regards to their data collection and storage process, it can directly affect the privacy and safety of consumers. By providing transparency in digital advertising, the platforms “can ensure that their ads are being displayed to the intended audience fairly and ethically.”3Additionally, while ad personalization can enhance user experience, it can also lead to filter bubbles and echo chambers where users are exposed to content that reinforces their existing beliefs. A lack of transparency in how ad personalization algorithms work can be problematic and lead to serious consequences for companies leveraging the big tech data sets and platforms.

In summary, accurate reporting and visibility of advertising metrics is an ethical responsibility for big tech platforms because it fosters trust, supports fair business practices, ensures legal compliance, and contributes to a positive and sustainable advertising ecosystem. Advertisers and users alike benefit from platforms that prioritize transparency and accuracy in their advertising practices.

Citations

Reference Articles:

3.https://www.privacyend.com/impact-transparency-digital-advertising/

Reference Generative AI:

1.“How do big tech platforms make money off advertising” prompt. ChatGPT, OpenAI, 21 Nov. 2023.

2.“What are some industry guidelines around data visibility and reporting for advertising” prompt. ChatGPT, OpenAI, 21 Nov. 2023.