Transparency is about understanding fees, not eliminating them

Transparency has long been a buzzword in ad tech, but like all buzzwords, its meaning has been twisted beyond recognition. One common (though incorrect) use of transparency is to see the concept as synonymous with the elimination of fees. That distortion is troubling because it does every ad tech stakeholder a disservice. Transparency is supposed to mean that buyers and sellers understand fees because they have complete visibility into the transaction. Here’s how we can reboot our thinking about transparency, and why doing so will build trust in our ecosystem and, ultimately, attract more ad dollars.

What’s the fee?

A recent eMarketer report estimated that the so-called “ad tech tax” amounted to about $12 billion in 2019. But when it came to the question of whether the ad tax was too high, the report couldn’t say for sure. The bigger problem, eMarketer noted, is transparency.

One immediate consequence of opaque marketplaces is that advertisers struggle to understand the fees they pay when they buy media. This problem makes it difficult for buyers and sellers to transact with trust. Everyone assumes they’re getting taken advantage of, but they aren’t sure by whom. When you aggregate that lack of trust, the entire marketplace looks suspect. Hardly the environment anyone wants to operate in.

But there’s also the problem of performance to consider. Digital advertising is predicated on the ability of advertisers to determine how well their media is performing. In fact, performance is one of digital media’s core value propositions relative to other channels. But a lack of transparency undermines performance. If advertisers don’t have visibility into the fees they pay, how can they know whether that performance is hindered because they’re paying too much in fees, or too little for an audience? To be blunt, they can’t. And so, a lack of transparency undermines digital’s ability to deliver on its promise.

Simple isn’t just better, it’s essential

Nobody in our space would argue that a company shouldn’t have the right to make money. But when we talk about the “ad tech tax” we’re engaging in a kind of blame game where all middlemen are suspect or somehow undeserving. That’s not the sign of a healthy industry. We all believe that those who add value should make money, but we need to get to a place where everyone can see that value.

How do we get there? To begin with, it shouldn’t be taboo to talk about fees. Maybe that taboo comes from our industry’s disruptive origins. Perhaps we’ve taken disruption to its illogical conclusion—one where fees are an abomination that should be brought to zero. But what does the future hold when all costs hit zero? At that point, there wouldn’t be any ad tech industry at all.

That’s why we need to talk about fees, and when we do so, we need to associate fees with value. If the fee isn’t worth it, that’s fine; If it is worth the price, that’s great. In either scenario, the market will either reward or punish, but for that to happen, stakeholders need to know what the fees are.

This isn’t a novel concept, of course. In fact, this is the way markets are supposed to work, and it’s the way other industry’s function. Stakeholders arm themselves with data (transparent knowledge of fees), so they can have real conversations about value. Let’s think of our industry like any other supply chain, where each company adds an easily understood fee. And by easily understood, we’re talking about the ability to say, “Our fee is X.”

Why hasn’t this happened sooner? And why now?

Our industry is roughly 20 years old. You could argue that we should’ve reached fee transparency by now. You could also marvel at the tremendous amount of disruption and innovation in our brief history. Yes, we’ve seen some fraud too. But we’ve also moved so fast that many vendors have gone from adding value to obsolescence virtually overnight. Fees have been opaque, at least in part, because the concept of value has been so dynamic for so long.

But as we enter a new decade, there are signs that we’ve matured as an industry. For one thing, we’ve moved away from meaningless metrics like clicks toward more impactful measurements that are increasingly tied to business outcomes. Equally important, new IAB tools such as ads.txt and sellers.json have brought us a long way toward the technology we need for a trusted marketplace. Put simply, we’re ready for transparency because the definition of value is no longer shifting and the tools we use to measure it are increasingly robust and trustworthy. Now, all we need to do is transform our culture, and the first step is to have a frank conversation about fees. It’s time to stop talking about transparency and start practicing it.

Michael Zacharski is Global CEO of EMX. He leads the overall vision, strategy, culture and development of the company. Under Michael’s leadership, EMX solves complex challenges and drives measurable business results for agencies, advertisers and publishers by providing solutions across full-service and programmatic practice areas. EMX is the programmatic marketplace division of global marketing company, ENGINE.