Advertisers push for transparency standards in ad sales

Some of the advertising industry's largest players have joined forces to propose new standards for transparency in the digital auctions that increasingly dominate ad sales.

- Patrick Coffee

These auctions determine which ads show up when someone opens a website, conducts a search, plays a video or scrolls through a social-media feed.

Eighty percent of all digital ad sales occur in "closed loop" auctions run by one major player, according to the Media Rating Council, the industry self-regulatory body that published the proposal last month for comments. Auction operators including Alphabet's Google, Instagram parent Meta Platforms and Amazon.com decide how much to reveal about their processes to ad buyers.

Those that adopt the MRC standards, however, would agree to disclose key information such as the types of auctions they run, how they decide winners and what influences prices on their platforms, including any fees, discounts or bidding minimums. They would also pledge to disclose any significant changes.

"We're trying to bring sunlight into the ecosystem," said Ben Hovaness, chief media officer at OMD Worldwide, an agency within ad giant Omnicom, who approached MRC nearly two years ago to begin developing the standards and chaired the steering committee.

The proposed disclosures matter to advertisers because the auctions don't always go to the top bidder, and the ultimate price paid isn't necessarily what the winner bid.

The winner in a so-called second-price auction, a format designed to encourage higher offers, pays a small amount more than the second-place bid. Most digital ads are sold through "modified" secondprice auctions, in which bids can be just one factor in winning alongside such elements as relevance scores focused on the odds a consumer will buy an advertised product.