January 26, 2016

We Rep the Buy Side...and Only the Buy Side

In sports as in media, you've got to pick a side. The current media landscape sometimes makes this distinction unclear.

Like a lot of people, I tend to do research before I set out to make a big financial decision. And as someone who was recently married, big financial decisions seem to have picked up in frequency over the last few years.

In my research I’ve seen so many parallels between our lives as empowered and responsible consumers and our lives as professional media buyers. Misaligned incentives and conflicts of interest are everywhere. Especially in ad tech where we live in a world of burgeoning technology, it's easy to divert people's attention away from glaringly obvious conflicts of interest like representing both the buyer and the seller in media transactions. It's our job to be informed and represent our clients in responsible ways.

I recently went out to find a financial advisor. I quickly learned from WSJ.com that I should really be looking for is a fiduciary. If you're like me and either didn't take the right finance courses or happened to miss this class, an advisor who acts as your fiduciary is someone with the legal duty to act solely in your interest. Also (and equally important), a fiduciary has to disclose what commission he or she earns and why a particular investment is advisable over another.

Why is that so important? Increasingly, the people positioned as "wealth managers" or "advisors" also operate as salespeople selling securities or other products for commissions. They’re incentivized in ways that are different from simply selling you investments that will produce the best returns for you. Or worse, they’re specifically incentivized to sell you investments that won't work but will make them money in other non-transparent ways.

The same goes for investigating buying a house and looking into realtors. My colleague Brian Stempeck recently wrote about real estate’s “dual agents” in AdExchanger. If you’re not familiar, dual agents, while illegal in many states, are real estate brokers in places like New York and California who simultaneously represent the buyer and seller. While these dual agents will often compromise on their own upfront fees in order to get deals done, questions can exist about what information is shared at the firm and what sort of transparency you will have into the broker's actual interests.

In finance, in real estate, in law, there are heavy regulations imposed around conflicts of interest. And as I found in my research there’s a lot of consumer education around those topics. You would never have a single lawyer represent both sides in the courtroom. Why is it so acceptable in ad tech?