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By Keri Bruce
With an unknown delta of 15% and the ANA launching a new study, what can advertisers do to stop wasting billions of dollars and funding an opaque ecosystem?
Moment of Truth
“Billions of dollars are being wasted and brands are funding an opaque ecosystem and need to fix it”
Programmatic display spending in the United States is anticipated to increase by 16.3 per cent in 2022 to over US$120 billion, according to eMarketer. This increase is despite multiple separate studies by the World Federation of Advertisers (WFA), Association of National Advertisers (ANA), Incorporated Society of British Advertisers (ISBA) and Australian Association of National Advertisers (AANA) demonstrating material issues with the programmatic ecosystem, including lack of access to data, inability to follow money through the supply chain, inconsistent accountability and increasing complexity.
The WFA’s Guide to Programmatic Media (the “WFA Report”), which was published in 2014, was the first report that caught the industry’s attention and showed the waterfall effect of the costs of programmatic media. In 2017, a joint study from the ANA, the Association of Canadian Advertisers (ACA), Ebiquity and AD/FIN (the “ANA Study”) was released.
The ANA study showed numbers that were slightly better than those estimated by the WFA – 58 per cent of an advertiser’s dollar is working media versus the 40 per cent found by the WFA Report. However, a key discovery in the ANA Study was that numerous advertisers, whether knowingly or not, had agreed that they would not have a right to audit or access the underlying costs for their programmatic media.
The joint study between the ISBA, the Association of Online Publishers (AOP) and PricewaterhouseCoopers (PwC) (the “ISBA Study”) in 2020 found that 51 per cent of the study participant’s media spending was working media. While the overall findings at first glance don’t seem to be that different than the findings of the 2017 ANA Study, other important insights were uncovered, including that 15 per cent of participants’ analysed spend could not be attributed to anything within the supply chain.
This 15 per cent ‘unknown delta’ could have been the result of a combination of factors, such as limitations in data sets, necessitating occasional estimations; DSP or SSP fees that aren’t visible in the study data; post-auction bid shading; post-auction financing arrangements or other trading deals; foreign exchange translations; inventory reselling between tech vendors; or other unknown factors.
In addition, the ISBA Study revealed an inability to match data in the supply chain for the majority of impressions served by participants due to low data quality; complex permissioning structures leading to delays in access to data or making access impossible; inconsistent industry taxonomy; and hundreds of different supply paths to reach the same publisher.
Finally, the AANA study with Method Media Intelligence (MMI) (the “AANA Study”) which was released in 2021 ten months after the ISBA Study, faced similar hurdles to the ISBA Study when it came to access to data (including failure to have processes in place to share the data, data was not kept as long as expected and supply chain partners were not cooperative) and the inability to properly match data.
The AANA study found a number of key additional barriers to supply chain optimization, including agency teams being unfamiliar with emergent data sharing hubs, traffic verification approaches not filtering all bad traffic or payments, use of programmatic buying bundles and a systematic disconnect between verification data and using such data to improve supply path optimization.
The programmatic supply chain issues highlighted in these studies impair marketers’ ability to truly know the ROI for their spending, maximize their ad dollar and properly account to their shareholders and C-suites. Given that virtually every medium is or will be able to be brought through programmatic, the industry is at a critical inflection point and marketers cannot continue to look the other way.
The ANA has launched a new programmatic study with PwC, Kroll, and TAG Trustnet to go deeper than ever before and examine the entire programmatic supply path from the advertiser to the consumer. The objectives are to: (i) drive business and brand growth through the elimination of wasteful and unproductive spending; (ii) make the whole digital media supply chain understandable, highly transparent, and analytically rich; (iii) institute corrective solutions and industry standards that have long-term sustainability; and (iv) determine whether industry oversight bodies are needed to ensure the integrity of the programmatic ecosystem.
This latest effort by the ANA offers everyone in the supply chain an opportunity to participate and confirm their commitments to accountability and transparency. Preliminary results are anticipated in late 2022. Hopefully, the results will bring new insight, clarity and accountability to programmatic buying so that advertisers can decide if the murky world of programmatic is worth the investment.
In the meantime, what can and should you be doing if you are an advertiser?
Finally, advertisers need to care. Billions of dollars are being wasted and brands are funding an opaque ecosystem and need to help fix it.
Keri Bruce is Advertising, Marketing, Promotions, Media & Technology Law Partner at Reed Smith