Advertisers and brands are increasingly losing patience with ad agencies and other players over the lack of transparency in the digital advertising space. Digital ad revenue for the first half of 2017 came in at a record $40 billion, up from $31 billion for the previous year, and it was estimated to have reached $85 billion by the end of 2017.
The fight for transparency intensified in 2017 after The Times of London published a report about how the ads of big brands were appearing alongside racist videos on the giant video platform YouTube. Several brands paused their spending on YouTube advertising temporarily, until YouTube reassured them that it had taken measures to correct the issue.
The issue with YouTube speaks to the larger theme of a lack of transparency in the space. There isn’t enough information at the disposal of the advertiser regarding what they’re buying and how much they’re paying for viewed ads. Duracell, furious after finding out how much of its money goes to hidden fees compared to the actual amount it spent on ads, built its own advertising audit system, whereby it relates directly with a demand-side ad platform and a brand safety vendor — all in a bid to be more informed of its advertising moves. Simply put, advertisers are looking for a more transparent way to connect with their customer and audience.
How does traditional ad buying work?
Typically, the advertiser — the brand that’s looking to connect with its audience — contracts a digital ad agency to manage its entire ad campaign, with the advertiser having a set target it aims to achieve from the campaign. The advertiser pays the ad agency an amount that would cover both the overall cost of creating ad content and the cost of distributing the ad content to the brand’s target audience/customers — these two types of costs are what digital media experts call non-working and working spend respectively. One thing to note here is that an ad agency’s overhead cost is also part of the non-working spend.
Once the ad agency has developed the content for the desired channels, it buys ad spaces — also called ad inventories — where the desired audiences would see the content. The ad agency has two options for buying ad spaces: buying directly from the publisher and buying programmatically through an ad exchange platform.