On 24 March the IAB announced the release of the IAB Programmatic Free Transparency Calculator to allow for charges of programmatic ad technology services during a bid request or response to be broken down, providing greater transparency.

Transparency is a sore point across the ecosystem and those accused of not being transparent are by proxy assumed to be involved in less-than-rosy practices. However, with a media buy consisting of so many layers - from data, targeting, bid evaluation and even brand safety precautions - all requiring different technologies, which are outwardly fundamental to the effective running of a campaign, advertisers need to understand all the elements that comprise a media buy, before understanding transparency.

IAB's transparency calculator should help with that understanding. The tool is aimed at advertisers, agencies and publishers to allow them to analyse the cost of ad technologies and services that are commonly applied within programmatic executions. This will provide a better understanding of the fees incurred by each party, allowing for greater transparency across the supply chain.

Transparency is complicated and is generalised by a legacy of high margins being charged by agency trading desks, with an explanation why. It is much deeper than the CPM quoted on a media plan.

According to the IAB, the tool asks users to input planning rates and budgets by channel and select the ad technologies that are being applied. The calculator then tabulates the overall cost of the different layers and their percentage share of the effective CPM. There is a selection of default technology layers included as standard within the calculator, such as ad serving; DMP technology; and post-bid technology, with the option to include additional layers where necessary.

This will help advertisers evaluate the technology, service and inventory costs as a percentage of the eCPM, but beyond that, it will allow them to develop a greater understanding of all the different layers that make up their campaign eCPM and help them to interrogate the media plan much more effectively.

Joe Laszlo, vice president, industry initiatives, IAB said, "This calculator will be invaluable to both buyers and sellers in understanding the anatomy of a programmatic ad request or response. The programmatic ecosystem is diverse, complex, and fast-changing. Clarity around processes and intermediaries is critical if we’re going to drive further growth for the programmatic marketplace."

Commonly referred to as the 'ad tech tax' or the 'technology tax', the fees in the supply chain that occur in between the advertiser paying budget and the ad appearing on a publisher site are confusing, at best. As Jason White, general manager and vice president, programmatic revenue, CBS Interactive said, "It's time we cut through the confusion, dispel the misnomer of 'ad tech tax' and help practitioners on both sides of the fence manage and appreciate these valuable assets. As a result, this should improve trust and increase liquidity in the marketplace, which will provide a healthier ecosystem for all buyers and sellers."

At the very least, the calculator is intended to make advertisers more informed, allowing them to ask the right questions about their campaigns and help transparency develop across the entire ecosystem, not just remain a misunderstood issue for advertisers. By allowing advertisers, agencies and publishers access to the same information, it will help to foster more trust within the industry.