• by Evan Barocas , Op-Ed Contributor, April 6, 2016

Change is coming to the programmatic landscape. Agencies that don't deliver complete cost transparency for their clients, either intentionally through high rebates or unintentionally by being ignorant of ad-network and platform-pricing models, will lose their clients’ trust and eventually their business over the next two years.

To be clear, transparency means the disclosure of all rates and fees associated with buying media: ad serving, data usage, inventory, and agency management fees along with any and all tech rates and fees.

Programmatic used to be a complete mystery. It was too easy for agencies to bill a flat CPM/CPC price, which includes some undisclosed management fee, while still providing an excellent value to their end clients.

The lack of transparency creates numerous problems: from low-risk offenses, such as overpaying for both management fees and remnant inventory, to truly detrimental effects, such as financing ad fraud and enabling a dangerous culture of agency rebates.

What is placed most at risk when agencies are not transparent is the confidence brands have in programmatic.

Achieving transparency is an investment, a mindset, and a commitment to your clients. Here is one road map to achieving programmatic transparency.

First, you need the team

Let’s say an agency is 100% transparent with its management fees. If it’s handing off its ad dollars to ad networks/platforms to manage on a flat CPM/CPC/CPI or variable-margin cost structure, then it’s still not providing transparency to their clients. My rule is that as long as there is an unknown variable in the CPM, we do not have transparency.

To really achieve transparency, an agency needs a team that has the expertise to manage ad servers, demand-side platforms (DSP) and, data-management platforms (DMP) with the same quality and performance (even more so) than a platform-managed service. Remaining in control of your budget and buying decisions is essential for ensuring transparency when purchasing media programmatically.

Second, you need the right tech

There are more than two thousand ad servers, DSPs, DMPs, measurement/analytics/data/ad verification partners, ad exchanges, and so on in the programmatic ecosystem. With all of that variety comes a plethora of pricing models, too many to list.

The tech in which you invest needs to reflect your commitment to transparency. Specifically, the company needs  to have fixed, transparent pricing while also providing a support framework for agency self-service management. In almost every area of the display ecosystem, there are numerous companies that prioritize and value transparency without sacrificing performance, capabilities, or effectiveness.

Third, you need to be an educator

“If you think it’s expensive to hire a professional, wait until you hire an amateur.” — Firefighter Red Adair

My father, a lifelong client manger and salesman who loves this quote, understood that what matters is not your cost but the value you bring to your customer.

Your clients need to know why transparency is important and how to value it. They need to know there is a fundamental difference between performances when media is being optimized for performance versus media being optimized against a margin. They need to know why transparent campaigns are more sustainable and scalable than those with variable margins.

Having the right team and transparent tech in place, you are now in a position to talk openly about the value you bring to your clients. Ultimately, transparency helps achieve the end goal for any agency in the programmatic era: lasting client relationships.

As Red would have said, “If you think hiring an agency is expensive when you know your fees, imagine how much it costs you when you don’t.”

In conclusion, agencies need to stop fighting progress. Transparency is coming to programmatic buying and, if you are not investing in building that framework now, it will most likely leave you behind.

Agencies have a critical role to play in building the future of advertising technology. Transparency is our next hurdle and, once we have crossed it, we will take another step toward fulfilling the promise of programmatic.