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Can data transparency labels help restore the health of digital advertising?

July 10, 2019 | By Tim Bourgeois, Partner—East Coast Catalyst @ChiefDigOfficer

Not too long ago — about 10 years — a CMO client of mine explained with surprising candor how his job was evolving. “Up until a couple of years ago, I set my marketing strategy in October, got it approved in December, and then executed on it over the course of the following year — without much fanfare or oversight from anyone else in the company. Now I’ve got everyone from the CEO and CFO to business until GMs stopping by every week asking about new tactics I should employ.” I sometimes think about that comment. I wonder if it portended things to come for the industry or if that was a relatively calm environment, compared to today’s landscape. 

While we’re all acutely aware of how much the marketing ecosystem has changed in recent years, it’s jarring to stop and think about how much it’s really changed. Brands spend more ad dollars on a channel that effectively did not exist in a meaningful way until the mid-2000s. They have increased online ad spending by 5x since 2010. And these same brands will spend more than $125 billion on digital this year, a channel that is widely understood to be fraught with fraudulent activity, spotty data, and gaping transparency issues

The FBI has investigated the sector. Respected industry outlets report that “digital ad fraud is worse than ever, a daily, hourly fight.” The online advertising supply chain is a swampy morass that includes everything we’ve come to expect from swampy morasses: bad international actors, sketchy data, grossly exaggerated or just downright false claims, opaque fee requirements, and even the peripheral involvement of Cyprus

But so it goes. The digital channel is more cost effective than offline options. It is wildly popular and still growing. Warts and all, it works on multiple levels, and continues to gain in influence and stature. Perhaps the digital advertising community has either been disinterested in intervening meaningfully to improve conditions or stymied by immovable roadblocks (see: duopoly). However, the industry does seem toy insert a concept like Data Nutrition Labels into the ecosystem on a semi-regular basis. Here’s what advertising and media executives need to know about the industry’s latest attempt to improve market efficiencies, reduce waste, and regain a bit of self-governance. 

Data transparency labels make sense and could bring clarity to a murky marketplace

Obviously borrowing the FDA’s approach to food nutrition labeling, DTLs provide basic, valuable information about, well, data. This includes answering who / what / how / where / questions. As in: 

  • Who provided the data?
  • What does the describe (what audience segment)?
  • How was the data collected and constructed? 
  • Where were its components sourced? 

Implications for advertisers & publishers

If widely adopted, advertisers will benefit by being able to comparison shop more easily and be afforded some peace of mind when they do shop. Large operations are already doing this kind of diligence during the buying process.

However, smaller and less experienced advertisers don’t have the resources or know-how and are at a big disadvantage as a result. On the publishing side of the house, meaningful adoption of the DTLs will should benefit entrenched competitor. This is because they have a much better understanding of their inventory than many of the platforms or ad tech companies, which are either too big to precisely understand what’s going on or are currently under too much marketplace pressure and running too lean to be able to invest the resources necessary to acquire the understanding. 

While obviously logical, these kinds of initiatives don’t typically endure

At the end of the day, however, markets resist being controlled. In categories like healthcare and transportation, where lives are at stake, it goes without saying that regulation on top of strict self-governance (if only for risk management reasons) is required and mostly welcomed by consumers. However, it is the rare situation in which advertising involves persistent life-and-death implications so motivation may be lacking.

As a result, if only because most initiatives like this fail or wither without explicit government backing, it’s best to approach DTL with a dose of caution. Most large, deep-pocketed advertisers either have their digital advertising operations under control or are trending in that direction, so their support of DTL may manifest in spirit only, which could be problematic for the effort over the long term. 

Implications for advertisers & publishers

Expect advertisers to support DTLs in principle, if not via financial support (at least not out of the gate). However, if the project’s key sponsors — the Association of National Advertisers, Interactive Advertising Bureau, Coalition for Innovative Media Measurement, and Advertising Research Foundation — can generate and sustain some momentum, things could change.

But remember this only launched in October of last year. It’s too early for publishers to build a business case around supporting DTL adoption. That said, it certainly can’t hurt the cause, and many of the building blocks for incorporation are already in place by way of marketing and sales collateral that espouses data integrity and value. There’s little downside for publishers to embrace the initiative, and do what they can to help make it successful. The current working group is not unimpressive and seems open to accepting new members. 

While unique in its form, the launch of the Data Transparency Label initiative is another well-intentioned effort by the industry to improve the marketplace via a combination of buyer education, supplier accountability, and standardization. Over the years, we’ve seen industry groups such as ANA, DCN, IAB, and others insert themselves into the online advertising ecosystem to drive change in a volatile and often uniquely inefficient marketplace. 

With its straightforward packaging and potential to address an obvious market need, the DTL initiative has the potential to eventually be a game-changer. Having multiple industry groups and a laundry list of recognizable companies involved at the outset is notable and encouraging. Advertisers and publishers alike will be well-served by keeping a close watch on the development of this project. There’s no guarantee of its success and indeed past experience suggest it faces an uphill battle, but it’s an initiative that most certainly fills a market need. 

About the author

Tim Bourgeois is a digital marketing analytics and SEM consultant that helps brands optimize ROI on advertising, technology and agency investments. 

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