Transparency within programmatic advertising is generally considered to be very widely talked about, but not very widely achieved. Ahead of the Index Exchange Digital Techfront being hosted at the IAB on 14 March on the topic of transparency, ExchangeWire speaks to James Prudhomme (pictured below), Managing Director EMEA, Index Exchange about how header tag bidding is bringing transparency to the programmatic transaction and that the industry needs to make moves towards creating a fully transparent marketplace.

Defining transparency in programmatic advertising is simple. The seller sees the winning bid price (not just the clearing price) and knows exactly who the buyer is. The buyer understands exactly where their ad is being placed and knows the floor price is not going to dynamically shift beneath their feet. Fees are deducted in plain sight and there is no chicanery happening within the exchange; in other words, it is a true second-price auction.

That's it. The goal posts don't move, the rules don't change, the fees don't shift around because: "well, it depends". Why is this so hard to achieve? As an industry, we are taking steps towards a common understanding of transparency and, in many ways, it feels like we still have a long way to go. 

I'd like to explain why executing transactions in a completely transparent marketplace will lead the industry towards unification by: first, bringing the buyer's DSP and the seller's ad server in closer harmony and, second, enabling the programmatic delivery of guaranteed ad programs.

I have already provided a concise definition of transparency. This applies regardless of the nature of the integration between the publisher and its ad exchange. However, in order to further illustrate my point, I'll unpack some of the intricacies around header tag bidding as a way of illustrating why transparent transactions are essential. In addition, I'll discuss the downside of non-transparent models and why both buyer and seller suffer in their wake. There should be no dancing around this. The lack of transparency in programmatic advertising has hurt our industry immensely. 

Header tag bidding has been around for a few years now and is rapidly becoming table-stakes for publishers. Header tags call out to an ad exchange before a desktop or mobile web page loads, the exchange sends back a winning bid price and the header tag sends this price to the publisher's ad server, which is tasked with making the final decision around which ad to serve. From a high level, one could argue that header tag bidding allows the buyer's DSP to interact directly with the publisher's ad server, whilst ensuring that the ad server maintains the power to make the final decision every single time. This is the harmony which I was referring to earlier. 

The key point here is that the ad server is the decider and, just like that other great decider, the ad server needs a transparent response from the exchange. The ad server will rely on a header tag to poll the real-time market for a given impression and then consider the market price against other line items that have been booked, either directly or indirectly. If the response sent to the ad server, via the header tag, is not an accurate representation of the real-time market demand for the impression, then the ad server simply cannot do its job correctly.

Header tags are designed to offer a window into the real-time ad market. Sophisticated buying systems are designed to predict the value of a given ad impression. If the price offered as a result of that prediction is reduced by the exchange, or some other intermediary, in a non-transparent way then the entire process breaks down and the ad server does not have access to the data it needs in order to make an accurate decision. We all remember the mess that was created the last time a decider made a decision using nefarious data – goodness knows we should try and avoid that at all costs.

The same logic applies in a more specific way to the programmatic delivery of guaranteed programs. In this case, the ad server is still the decider. However, it is being instructed to make a different decision when it is informed, via the header tag, that certain ads should be delivered at a higher priority. Through a header tag integration, every impression sent to a buyer is a first-look impression. Therefore, the deal ID mechanism can be used to earmark impressions that fulfil the criteria for a guaranteed program.

If buyer and seller have agreed on a specific price and delivery priority, then the systems charged with executing the transactions associated to that agreement must be able to share data with one another in a completely transparent manner. Price typically drives priority in the ad server decision tree. If the price is obfuscated through a nefarious hidden fee of one sort or another, then the priority is impacted. Ads don't deliver, obligations are not met, and faith is lost in the delivery mechanism. Again, the example used here is based on a header tag integration. The same construct applies to more traditional methods of integrating publisher delivery systems with their ad exchange. 

I provided a simple definition of programmatic transparency earlier on and I'll reiterate it here. The seller should know exactly who the buyer is and have the ability to accept or block them. The buyer knows exactly where their ad is going to run and is not subject to dynamic floor pricing. Most importantly, the seller sees the winning bid price (not just the clearing price) for every impression it sells in an exchange. Both buyer and seller have 100% transparency into the fees being charged by the intermediaries to the transaction.

If we, as an industry, cannot uphold a straightforward social contract, underpinned by a common definition of transparency, then we will struggle to move beyond insertion orders and ad server waterfalls. Programmatic delivery channels will remain relegated to filling inventory that is not sold via traditional direct deals. 

Please join @IndexExchange along with special guests from Time Inc. UK, MediaMath EMEA, Integral Ad Science, The Economist and VivaKi at: Getting to Transparency - and Beyond in Programmatic Digital Advertising, on Monday 14 March 8:30AM - 11:30AM at the @IABUK Training and Event Space.