Transparency And The Necessity For An Independent Rating Authority of Digital Media

By Kent Wakeford, co-Founder and EVP of AdSafe Media.

Exchange Ideas“Transparency.” It’s a word often heard in the discussion about Ad Exchanges.

Advertisers want more of it. “Can’t I just get a site list?” they ask. But while buyers are asking for “transparency,” those operating (and contributing inventory to exchange platforms) know that the very existence of the Ad Exchange business model depends on the choice to have opacity since many publishers want to avoid channel conflict issues with their in-house sales teams or being seen as “dumping distressed inventory.”

So what’s to be done to solve the logjam created by the clash of marketers’ demands for greater transparency and the inherent requirements for a certain degree of opacity on the part of the Exchanges? It’s obviously a problem which must be solved if the Exchange model is to enjoy further growth. Despite high levels of consumer engagement with the medium, only 5% of all brand dollars are today spent online. And according to a recent eConsultancy study, 65% of marketers say that the biggest gating factor preventing increased digital spending relates to the threat of their ads appearing adjacent to “unsuitable” content.

While the Exchanges such as RightMedia are repositioning themselves as “Premium” to address the evolving market, it’s clear that the long-term solution to the issue of brand safety will involve the creation of an independent, trustworthy and universally recognized rating authority. The establishment of a standardized industry rating system will provide brands with confidence that their brand messages are running on “safe” content without compromising the opacity required by certain publishers, networks and exchanges.

When RightMedia first launched, it was brilliantly positioned as the “NASDAQ” for Internet media. In many ways, this analogy is apt. But what has been missing to date has been the presence of an independent rating authority. Such a rating authority is a prerequisite for the broad based acceptance of any exchange based trading platform, whether it involves financial instruments or digital display ads. History has proven this very clearly. No one, of course, would buy a bond absent a rating from an independent authority. And certainly no one in their right mind would buy a bond rated by the issuer themselves. That’s why Moody’s and its competitors exist. But when it comes to the high dollar trading of trillions of Internet impressions, such an independent authority is totally absent from the scene.

Given the obvious necessity and centrality of the independent rating authority to the proper functioning of any Exchange market, it should come as no surprise that those with the biggest marketing budgets, absent either transparency or an independent rating authority, have largely boycotted the Exchange model. For the NASDAQ- like promise of Exchange traded digital media to succeed (and to secure the participation of big dollar brands) we need an independent rating authority.

Exactly what service would this rating authority provide and how would it operate? These are important questions which will take time to properly answer but certainly the successful rating service will be independent authority using sophisticated, scalable and algorithmically driven data science to group “like” Internet content into rational trenches. Publishers having professionally published content without any opportunity for the risk associated with user-generated content would be in a different trench than content that permitted UGC. Unmonitored user generated content would be assigned a different risk profile (and presumably would fetch a lower price) than would media proven over time to monitor UGC and maintain “family standards” within all their content.

How would such an independent rating authority benefit both the Exchange operators and media buyers? A credible rating authority would permit buyers, particularly risk averse brands, to buy Exchange-sourced media without demanding total transparency. (When a rating authority enjoys the confidence of the market, participants on the Exchange are willing to forgo demands for “total transparency” and will accept the independent rating authority’s assertion that all the constituent media is genuinely of a similar, readily identified kind.) In the case of an ad Exchange and its publishers, a properly functioning independent rating authority will put an end to marketer’s demand for a “site list” as a pre-requisite to participating thus permitting the necessary levels of opacity for publishers to contribute their inventory without revealing themselves to the market as the source of media, something that many are loathe to do.

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1 Comment

  1. Good article, Kent. You raise some valid points, and the issue of transparency is a sticky wicket. I think your ideas around “traffic tranches” are good ones and will likely be adopted voluntarily by networks and exchanges as industry standards in the next 12 months. But as we have seen with Moody’s, independent ratings authorities can provide a false sense of security to the marketplace – with devastating results. A lack of transparency will always give the bad actors a place to hide, and IMO prevent real brand dollars from coming online.