In the ever-evolving landscape of programmatic advertising, where issues such as transparency, trustworthiness, and economic feasibility persist as ongoing challenges, one figure emerges as a guiding beacon of insight.
Tom Triscari, the CEO and Founder of Lemonade Projects, an advisory firm dedicated to shedding light on programmatic ad tech practices, offers a unique perspective. In this extensive conversation, we delve into Tom’s insights, spanning from the intricacies of programmatic economics to the revelations uncovered in the ANA’s programmatic transparency report.
The discussion, led by Alison Schiff on Ad Exchanger Talks, begins with a glimpse into the shared history and camaraderie between Tom Trica and Alison within the programmatic realm. The atmosphere is relaxed, reminiscent of old friends reminiscing about industry events. It provides an inside look into a dialogue with profound implications for the programmatic advertising sphere.
Tom introduces himself as a “programmatic economist,” a title that arouses curiosity. He attributes this label to his academic background in economics, including studies at UCLA and a game theory course taught by Nobel Prize-winning economist Lloyd Sharpley. This academic foundation serves as the lens through which he analyzes programmatic advertising, merging classical and behavioral economic theories.
The heart of the conversation lies in the concept of “programmatic economics.” Tom elaborates that a deep understanding of programmatic advertising relies on accurately evaluating the likelihood of current and future events. Mastery of the concept of expected value is pivotal. Advertisers must enhance their ability to ascertain the true value of their programmatic investments by refining their probability assessments.
Transitioning to the ANA’s programmatic transparency report, Tom, who played a pivotal role as a consultant and advisor to the ANA, underscores his deep involvement in the research. Alison highlights the astounding findings, notably the revelation that advertisers are losing approximately $13 billion annually due to Made for Advertising (MFA) websites, accounting for 20% of all ad impressions.
The discussion delves into the concept of “FoFo,” or the fear of finding out, which reflects advertisers’ reluctance to confront the harsh realities of programmatic advertising. While the ANA report has brought significant issues to light, a fundamental question looms: Will advertisers alter their behavior in response?
Tom counters FoFo by introducing “FOMO,” the fear of missing out. He suggests that advertisers rushed into programmatic advertising, driven by FOMO, without thoroughly scrutinizing the complexities of the ecosystem, which ultimately led to the current challenges. Programmatic was initially hailed as a golden opportunity promising efficiency, transparency, and quality results, but it fell short of expectations.
The conversation shifts to Made for Advertising (MFA) websites, the report’s focal point. Tom expounds on MFA, describing it as a strategy to gain cheap reach by enticing users to click on clickbait content. MFA involves humans clicking on deceptive content, inflating ad inventory auctions, and benefiting MFA site owners. Tom draws parallels to the “lemon market” concept, where buyers struggle to distinguish between good and bad products, eroding trust and efficiency.
One of the programmatic advertising industry’s challenges is the absence of a standardized definition for MFA websites, which hampers effective countermeasures. Tom emphasizes the need for a universally accepted definition and questions why MFA, despite being a clear issue, is not consistently labeled as fraud.
Tom employs an analogy, likening programmatic ad inventory to branches on a tree. At the top, there’s a basic division: inventory is either wasteful or not. Within wasteful inventory, two significant branches emerge: MFA and legitimate bot fraud. MFA involves human clicks on clickbait, while bot fraud entails actual bots generating fraudulent clicks. The challenge lies in defining and addressing these multifaceted issues.
The conversation delves deeper into economics as Tom introduces the principle of arbitrage. He explains that the programmatic ecosystem thrives on arbitrage opportunities, often overlooked by advertisers who are unaware of the intermediaries between them and their target audience, each taking a share. Tom’s mission is to eliminate these arbitrage opportunities, ensuring advertisers receive maximum value.
As the interview concludes, Tom leaves us with a powerful insight: genuine transparency in programmatic advertising requires more than education; it demands action. Advertisers must actively demand the transparency they rightfully deserve and hold intermediaries accountable. The pursuit of truth and transparency, Tom emphasizes, steers the industry toward a brighter future.