The etymology of the word “transparent” has evolved since the 15th century–from having the ability to transmit light to being diaphanous or see-through in nature to being easily understood.
In business, transparency refers to visibility of information, made available to key stakeholders involved in a business process or practice.
And transparency in business is easier now than ever before.
The internet has changed the way we seek, gather, and verify information. It helps us solve problems in our industries, and has forever changed the way we bring products to market. This challenges the isolation and protection of information that was once used to conduct business to one party’s advantage, creating mistrust in the business environment.
After all, if a company isn’t forthcoming about its products, practices, and policies, there are always blogs and online communities that provide that information directly from consumer to consumer.
Media Buying by Nature is a Non-Trusting Environment
It’s an industry driven largely by Fear, Uncertainty, and Doubt. (More on that here .)
- Advertisers don’t believe the information they’re given.
- Media outlets protect their rates.
- Average client-agency relationship lasts less than 2 years.
- Average tenure of a Chief Marketing Officer is 18 months.
- Employees and customers experience high turn-over
The result of this non-trusting business environment is that the parties involved spend more and more on data—third-party verification of information because we don’t trust the information provided by the media sellers or, for agencies, because clients may not trust the agency media buyer’s experience and instincts on the right media, placements, and rates for an ad campaign.
Transparency in Media Buying
Top of mind regarding transparency in media buying today relates to ad networks and exchanges—online inventory that can be bought using an auction-style business model, where the advertiser that bids the most for a placement wins it.
On some networks, however, advertisers typically have little control over the sites on which their ads will run. And the auction-based pricing model naturally favors the seller by promising the highest possible price to be paid for the inventory. (Here’s a good post on the difference between ad networks and exchanges.
In his article “Why Ad Exchanges Need Transparency,” Adam Cahill points out that when we stop buying inventory directly from the publisher and instead rely on a third-party exchange, we lose the ability to understand precisely what we bought and have instead a general sense of direction of where our ads are headed.
With the internet being used not only as another medium on which to advertise, but also a means of connecting buyer and seller, where does traditional media fit in?
Clients want to know exactly how much agencies are paying for their media buys, how much their competitors are paying, and how much of their media billings are going toward the agency’s administrative processes for planning and placing that media. And it has been argued that the relative ease of measuring online advertising has contributed to the increase in spend on that medium.
This uncertainty around price and value stems from that fact that, as Jim Edwards points out, “prices are on display for everyone to see, and everyone knows who’s paying what” for nearly every other commodity out there—from the products that line the shelves of grocery stores to the stock market to the products on sites like Amazon.com. Except for advertising media sold outside the auction, PPC, or CPA models.
Exchange Information, Not Inventory
The world has grown accustomed to the real-time transfer of knowledge attainable through the internet—open, timely information and convenience has become our expectation.
As such, media buyers and sellers need the ability to connect and exchange information before they exchange inventory—for both on- and offline media.
The platform that succeeds won’t push the media buyer into a process both prescribed and limited by the technology they use, or the medium they’re buying. It will simply open the channels of communication to facilitate information collection and analysis, process management, and execution. It must be
- Transparent,
- Non-biased,
- Media-agnostic, and
- Altogether removed from the commission chain.
This utopia must not only connect buyers with sellers of multiple media types, but it should also connect both parties with the user-driven and market-influenced data they need to participate successfully in the new and improved marketplace for advertising media.
What are your thoughts on transparency (or lack of) in the advertising industry? Are they mutually exclusive? Post your thoughts here!