Three things marketers really need to know about supply chains

Andrew Gilbert
By Andrew Gilbert | 2 June 2020

Andrew Gilbert is head of platform sales ANZ at Verizon Media. 

We’ve known it for a while, but recently it has never rung truer. We live in a media bubble.

For the last six years, our industry has been shining a much needed spotlight on the grey areas of the advertising supply chain. But has anyone at any time thought that the old ways were immature, nascent or in some cases ill-conceived?

Supply chain inefficiencies are not a new thing. Bad actors within supply chains are not a new thing.

Learning to work with trusted partners within a supply chain is not a new thing. What is new is the thought that somehow our supply chain is different to any other.

With that in mind, before you overreact to the ISBA Programmatic Supply Chain report, here are three questions marketers should ask themselves.

1. If programmatic didn’t exist, how would you drive scale and operational efficiencies in your advertising?
Let’s remember what once was. Publishers owned media and brands bought that media. Sitting in the middle was a media agency, which signed a piece of paper and took a margin. It was essentially a wholesale, direct to consumer supply chain. If we look at the retail sector right now, this arrangement represents 12.8% of total sales for the sector. Unfortunately, it's not scalable.

If brands and publishers were trying to operate at the scale they are right now without the automation or efficiencies that the programmatic supply chain offers, things would be different. Brands would be talking about the sky high costs of marketing, rather than complaining about the fees associated with the technology that currently does it for them.

2. Have you taken the time to truly learn the programmatic industry in detail?
A lot of marketers understand that programmatic is the way forward, but are resistant to spending time learning the details. Hell, we don’t make it easy with our acronyms, and technical initiatives with mystifying names. We’re nerds by nature and it unfortunately seeps through into our client facing PR. We’re working on it.

To simplify things, consider that the programmatic industry, and the supply chain it operates, are no different to any other industry.

Australian food supply chains have been dominated by auction systems and regulated markets with a very limited use of formal contracts for decades. Fraud is a common occurrence comparable to our own issues. However, what they do not have is multiple stakeholders with competing interests trying to tear the supply chain apart, because they recognise that the supply chain drives profitability, scale and operational efficiency.

Despite some concerning numbers in the ISBA report, marketers and publishers should not be operating in a mindset of ‘has 100% of my $100 media dollars gone to the publisher I intended it to?’ This mindset breeds infighting and a lack of focus on what is most important. That is, efficiency and ROI.

An advertising industry with programmatic, is more efficient than an industry without it.

3. Is your technology provider providing the financial efficiency and transparency you need?
In the programmatic world, there are technology providers that own huge amounts of media, and there are technology providers that don’t. These platforms range from taking a margin at multiple points to charging for everything upfront because they don’t own the media they are buying.

There is also a new breed of media owner- backed technology platforms - that sit in the middle. They don’t take a margin on operations that used to be executed via a signed piece of paper, and they don’t charge for processes that exist purely because of the complexity of our industry.

Most importantly, they build technology and products that drive transparency within the supply chain, and operational efficiency in their workflow. They are committed to consistently increasing ROI by removing fees and improving transparency.

These factors - transparency into the supply chain, eradication of ad fraud, quality over quantity and investment effectiveness - have been the lofty goals of our industry since the original ‘Waterfall Report’ by the World Federation of Advertisers in 2014.

If we look at the Programmatic Supply Chain right now, the major project is transparency through industry initiatives aimed to fix it. The problem is that we make them so over-complicated that marketers can’t understand them.

I’ll try and help here. The most relevant initiatives are (excuse the acronyms) Ads.txt, App-ads.txt, Sellers.JSON, and OpenRTB SupplyChainObject. Here’s what they actually do.

Ads.txt - Publisher inventory direct seller or re-seller authentication. In reality it’s saying only these Supply Side Platforms can sell our inventory.

App-ads.txt - The same as above but for mobile apps.

Sellers.JSON - Supply Side Platform inventory authentication. This is Rubicon Project saying we are only allowed to sell this supply inventory.

OpenRTB SupplyChainObject - Enables buyers to see all parties who are selling or reselling a given impression opportunity by providing a record of the chain of custody.

On these initiatives and the ISBA report, Jonas Jaanimagi of IAB Australia says, “We intend to constructively leverage reports such as these as invaluable awareness drivers for the industry to help instigate genuine change through education, improved best practices and by working closely with IAB Tech Lab to help drive the full adoption of their relevant standards globally.”

These are highly complex and important initiatives. But you can trust me when I say the IAB are working assiduously to change the programmatic industry, and to drive a more transparent, marketer-first approach.

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