• by Joe Mandese  @mp_joemandese, December 14, 2023

"Sorry Joe," ANA Group Executive Vice President Bill Duggan wrote in an op-ed published earlier this week, shooting down my Hail Mary endorsement that MFAs -- or made-for-advertising sites -- should be the ANA's marketing word-of-the-year.

He went on to point out that "AI" was actually voted the trade association's word-of-the-year by its members, and by a wide margin.

And while he noted that MFAs were in the consideration set, it ranked dead last and barely made the list at all, drawing less than 1% of the members' votes.

On the bright side, Duggan went on to make the point that MFAs should be generating much more attention in the advertising marketplace, and that is the reason I'm declaring the term "information asymmetry" the most important term of the year -- and maybe the past half century.

Interestingly, that term didn't even make the ANA's runners-up list. Nor did a companion term that also was one of the highlights of the association's programmatic transparency study -- and subsequent reports -- this year: "misaligned incentives."

But I understand why those terms didn't rank, and why MFAs barely ranked. It's because they are complicated concepts that require serious thought and consideration before marketers and their support and supply chains can properly understand and assimilate them.

Ironically, that's what makes information asymmetry the actual term of the year in my opinion -- because it illustrates exactly how out of synch the information knowledge is across the industry. At least insofar as its marketing leadership considers it.

The first time I heard the term "information asymmetry" was about a dozen years ago -- coincidentally, at a MediaPost conference where an economist was explaining the dysfunction of the advertising and media marketplace by comparing it to other markets where there is a disparity of information between buyers and sellers.

It's a big concept, but once you get it, I don't see how you can look at a market any other way.

The best way I can explain it is by comparing Madison Avenue's marketplace to Wall Street's.

Thanks to federal regulations governing the trading of public stocks, everybody has access to the same information about stock prices, as well as publicly reported information about the fundamentals of companies' financial statements. In other words, there's a pretty good symmetry of information between the buyers and sellers of publicly-traded stock

It's not perfect. Some investors, especially managers of hedge funds, invest in acquiring and analyzing ancillary information they believe gives them better knowledge and more leverage in the market. But that's just enterprise and in theory, any other trader -- even individual investors -- have the same ability to do that.

When I began covering the advertising marketplace, that's how I assumed it also worked. But only a few weeks into covering my first upfront TV advertising marketplace in the early 1980s, I learned Madison Avenue functions nothing like Wall Street.

For one thing, there are no regulations requiring the public disclosure of advertising "commodities and equities" -- you know, media. For another thing, I quickly learned that the market functioned with an acute information asymmetry (even though it would be years before I actually heard that term).

Weeks into my first upfront market coverage, a network executive explained that the first step involves ad agencies "registering" their clients' budgets with the networks so the networks can set prices and "allocate" their inventory to them.

Huh? Yeah, that's what I thought too. But amazingly, that's still the way the upfront functions to this day. It's a question I ask the big media-buyer panelists at MediaPost's Outfront Forum each year, and they continue to raise their hand when I do.

Over the years, I've worked hard as a journalist to find and publish the equivalent of Wall Street's market data for the advertising marketplace.

I did this, because I've believed it would be of value to readers, but also so I and other trade reporters would have accurate information to report on it.

It's why we collaborated with Standard Media Index (now Guideline) to publish the U.S. Ad Market Tracker. And it's why we've tried publishing other market indexes -- usually composites of real market data -- to serve as open-market proxies to provide symmetrical information to all sides of the marketplace.

Some of them failed, including one that I thought would be great.

In the early days of the programmatic marketplace, we created a composite index based on open RTB (real-time bidding) to show actual real-time ad inventory costs. The index, which was modeled on the S&P 500 was called the "RTB500," and was developed with DSP Owner IQ.

It failed for a lot of reasons, including the fact that I don't think anyone actually understood how to apply a real-time advertising marketplace index.

I think it also failed, because as much as people in the ad biz talk about the importance of "transparency" -- the word ranked as the second runner-up in the ANA's poll this year (see above) -- I don't think most people in the industry use the word the way I do as a journalist.

To me, transparency means transparent for everyone to see (ie. like Wall Street's markets). But I've come to learn that most sources in the ad industry -- both demand-side and supply-side -- mean that it is transparent to them, not necessarily to others.

I get that. I understand that the advertising marketplace is not publicly regulated in that way and that advertisers, agencies and their "partners" -- the media that supply them -- actually want transparent access to proprietary knowledge they can use to gain marketplace leverage, get the best deals, ROIs, and beat their competition.

The problem is I don't think that works, because without a fully transparent, well-lighted marketplace, who would actually know?

So as shocking as the ANA's programmatic transparency findings have been, I don't think anyone should be surprised that there is an acute information asymmetry in it, and that the result is incredible marketplace disparities, inefficiencies, mark-ups, bad inventory, and as the ANA estimates, only 36 cents of every programmatic dollar actually going to "working media" buys.

Apologies if I sound a bit cynical after 40-plus years of covering this, but after all that time covering it, I don't understand why people are shocked when they learn how inefficient and dysfunctional the advertising marketplace actually is.

Honestly, one of the most refreshing conversations I've had about it recently was with Richard Plansky, the Kroll analyst who helped prepare the ANA reports and also identified information asymmetry and misaligned incentives as the big culprits.

It was refreshing, because Plansky acknowledged he knew very little about the history of the advertising marketplace. He seemed shocked when I told him anecdotes like the networks requiring agencies to register their budgets heading into upfront negotiations -- and was basing his recommendations solely on what Kroll uncovered during the programmatic transparency study.

So I don't actually expect information asymmetry, misaligned incentives, or even MFAs to actually become the ANA's word-of-the year any year soon, but like the ANA's Duggan, I think they should.

Lastly, since AI not surprisingly is the ANA's word-of-the-year, I figured I'd ask one what it thought the top marketing words of the year are for 2023.

Alas, ChatGPT acknowledged that it also suffers from some information asymmetry, because its last "knowledge update" was in January, so it couldn't rank the entire year, but based on its trending to that date, it's interesting to see that there are only two common words between its and the ANA's top 10 list: "sustainability" and "AI."