In the few past years, we’ve heard a steady drumbeat about adtech’s broken media market. The bad news is problems like hidden fees, fraud, viewability and other related issues are real. The good news is that advertisers have begun to demand change. In fact, one study credits advertiser pressure as the reason for a 31% year-over-year decline in fraud. However, while advertiser pressure is critical, the key to building a better media marketplace is to model the experience of the capital and commodities markets.

By one estimate, about 90% of today’s listed assets, by volume, in the capital and commodities markets, are traded electronically. One byproduct of automation has been a substantial increase in trading volume since the 1990s, when computers began to perform repetitive, time-consuming tasks like reconciliation. From a macro perspective, the exponential increase in volume over the decades is a win for all stakeholders because of what has to happen to efficiently process so many transactions.

In the capital and commodities industries, all participants trade within the framework of a predefined set of rules. Each trade, whether it be for listed stocks, bonds or derivatives, results in a guaranteed contract between a buyer and a seller, governed by these universal rules. Just as important, the terms and fees associated with those contracts are pre-negotiated and transparent to the trading parties. Without transparency, buyers and sellers may have to invest time and resources developing an individual set of terms, and may not discover fees charged by middlemen until after delivery. The result would be a dramatically less efficient marketplace—one where volume would be a fraction of what it is today, and the validity of each transaction would be subject to endless second-guessing.

Unfortunately, advertising stakeholders know exactly what that inefficient marketplace looks like, because that’s the market they’re trying to transact in at the moment. Advertisers want to know where their ads are running, and a clear accounting of each media dollar spent. Their ultimate counterparties, publishers, need transparency in order to realize the true value of their assets. Meanwhile, rather than playing the blame game, agencies and technology vendors want a marketplace that rewards them for the value they add. And of course, all stakeholders want to be able to reconcile media transactions as quickly and efficiently as possible.

There’s no question that fintech and adtech have different missions and cultures, but fintech provides a model for a new digital media marketplace in three ways.

1. Standardized Rules

In finance, all trades are governed by the same set of rules. Adapting that framework to advertising means all participants are governed by the same overarching rules and definitions, with an ability to specify — in advance — which specific predefined contract terms (such as model of reconciliation, payment terms, delivery and verification metrics, etc.) will govern the agreement. Within that framework, however, buyers and sellers can get creative to meet their business goals. For example, to incentivize sellers into offering a lower CPM price, a buyer might offer payment upon trade in their bid, as opposed to net 90. Or a seller may provide CPM discounting on inventory purchased further in advance. In both scenarios, standardization allows for wider marketplace participation (better deals), as well as automation (greater efficiency).

2. Adtech Needs a True Financial Exchange

Financial products are incredibly complicated, but that complexity isn’t a drag on transactional volume because a true financial exchange means that assets (e.g. stocks, options or futures) are listed in a uniform way, effectively guaranteeing the integrity of every asset in the marketplace. Media contracts, to date, offer no such guarantee between buyer and seller, but durability of instruments will solve for this. As a result, Adtech’s stakeholders are addressing industry wide challenges gradually, rather than using the market to implement solutions at scale.

3. The Ability to Re-Trade

While exiting a position if business environments change (re-trading) is a common feature of capital and commodities markets, it doesn’t currently exist in advertising, due to custom media contracts and a lack of standardized rules. With standardized contracts and rules, media traders are able to re-trade their position to another buyer who will maintain the stringent terms, without resorting to simply canceling the contract and affecting their partners ability to plan and monetize. While re-trading within advertising may not achieve the same volumes as the capital and commodities markets, bringing re-trading into the marketplace will improve the ability of all stakeholders to perform long-term planning, and open the door to new revenue opportunities.

Why Now?

In response to marketplace failures that have resulted in hidden fees, advertisers like P&G (story) and Unilever (story) have begun to shift hundreds of millions of dollars away from their programmatic spend that have resulted in little ROI. Brands are seeking increased accountability and platforms that allow advertisers to go directly to publishers for every media buy. Streamlining and automating the frontend and backend processes, including reconciliation, through standardization and uniform rules, can reduce time and costs. This in turn, can provide more accurate and timely performance data.

More broadly as marketing becomes increasingly driven by ROI, marketers need to better understand media performance. By putting a market value on impressions and targeting sets, marketers can better quantify what they’re buying, and over time, develop better strategies that maximize performance. However first, marketers and other industry stakeholders need good information, and as anyone in finance can tell you, a true marketplace is the best tool we have to identify trends, and make verifiable predictions.