David Moore’s Law: The Biggest Problem in the Industry is the Illusion of Transparency

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Cover image for  article: David Moore’s Law: The Biggest Problem in the Industry is the Illusion of Transparency

American businessman David Moore is best known for founding 24/7 Real Media and heading the IAB. He is currently chairing WPP’s Xaxis, the world’s largest Programmatic Media and Technology platform. Moore believes the problem in the digital media industry is definitional -- in particular transparency, which he believes generally implies openness, communication and accountability.

Operating transparently is working in such a way that others see the details of the event, the transactions and the results from the performance. An example of transparency outside of the media industry is when you buy gear or apparel. You expect some information about the product or the gear but not specifically about the materials, hours put into building the product or the margins. You do not need to know the BOM (bill of materials) price in order to buy and build trust with the product and brand. You simply want a tie or a duffle bag.

On the other hand, companies in the advertising and digital media space -- especially agencies -- are considered to be in the services industry and expected to have complete transparency into the BOM price or the services rendered. This is a problem according to Moore. For example, some agencies or digital services companies are transparent on their business model and some even work on cost-per or cost-plus. However, in order for the industry to advance, transparency needs to be in the results and measurement, not the business model for true non-linear growth.

Xaxis has a non-transparent media model but is 100% transparent on the results. Hundreds, if not thousands, of their customers understand this simple media model and are very happy with the results.

The current time and materials or cost-plus model does not work well anymore. Costs and technology investments are much higher in the new high tech platform era of media buying and selling. The technology and platforms have changed with the times as we automate, but the brands and agency procurement offices have not. Competition has moved into the agency business model. This consists of start-ups, technology companies, new services businesses and even the brands or clients themselves who wish to do what was once considered agency work. In fact, competition has made all these companies and especially agencies much better.

Xaxis has been developed and continues to have dramatic growth due to the help of competitors, partners and automation. However, many of the recent IPOs in digital media have closed or non-transparent models and are not held to the same standard as an agency trading desk. Advertisers are not asking for transparency into their business models.

Transparency in all areas of the digital media business is sought. In fact, publishers are seeking more openness on how their media is bought and sold in the exchange. Private exchanges have stemmed from the need for two media partners to work closely together and receive a greater value than the sum of the parts. This closeness and trust yields better results with the partnership and media strategy.

Many of the top ad organizations are requesting more transparency to combat fraud, achieve better viewability and move beyond the click. The 4 As, the ANA and IAB are all concerned that negative press in the ad world is fighting fraud, bot or non-human traffic and the lack of display ad viewablity. 100% transparency seems to be one of the answers to this negative cloud over the industry despite our last 20 years of amazing growth.

Many believe, like Moore, that rather than transparency, which leads to complexity, we just need to remind the media of the lower prices for digital media in the past. This took into effect the fraud, bot traffic and low viewability by assigning extremely low rates and value for programmatic and performance-based display media (built-in effect). While all this is happening, performance advertisers have not seen a difference in their results. However, pricing for impressions will continue to go up as these bad actors are rooted out.

Moore’s law (differentiated from the computation law) states that in a results-based society and advertising industry, brands -- including his clients at Xaxis -- will want to see “transparent results” that double every two years (2X). This is tough, but with a better understanding of attribution for both DR and branding, clients will look to Xaxis and others for this digital 2X increase. Not only does this include great digital performance, but an increase in analytics, measurement and validation. This can change the industry like measurement has in other media spaces.

Moore does not desire to manipulate performance or move to CPA (cost-per-action), but to show better transparent results. Those with the best results in a meritocracy win. This applies in the digital agency world and, of course, every other business. Transparency of results and trust yield to market, share gain and reward risk. The industry needs to continue to show transparent results, help define what is needed, and interpret how that translates to the business of media transactions and programmatic buying and selling. Moore’s law and performance at Xaxis is not going to run out of steam anytime soon.

Skip Brand, Ph.D., is the CEO and founder of bbd (Branding Big Data). Previously, Skip foundedSkip Brandand ran Martini, JiWire, Simple, Rhino, Advocacy and ASPIN. As the start-ups sold he worked at big media companies including Cox Media, Excite@Home and Yahoo.

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