A third of programmatic supply chain costs ‘unattributable’, landmark study finds


The programmatic advertising market is “ripe for reformation” after a landmark UK study revealed around half of the money advertisers spend never reaches publishers and around one third of the programmatic supply chain cost is “unattributable”.

The report [pdf], prepared for UK advertiser industry group, the Incorporated Society of British Advertisers (ISBA) by PwC will make interesting reading for Australian regulators, currently preparing their own investigation into the adtech supply chain.

The report’s authors stress their findings are based on “the most premium parts” of the $3.78 billion UK programmatic market. The study used data from 50 companies, including high profile advertisers like the UK’s biggest banks, airlines and supermarkets; publishers such as The Guardian, News UK and AustTrader; agencies like GroupM, Dentsu Aegis and Publicis Media, and adtechs like Google, Amazon, and Rubicon Project. Longtail content was not included but is widely regarded to have more problems with transparency and fraud.

The ISBA also says the study blew out in duration and cost, requiring additional funding from advertisers to ultimately find out where their spend ended up.

PwC examined 2.2 billion lines of data from 267 million impressions served over the first three months of 2020. The researchers could only match 12 per cent of the total impressions. The rest could not be mapped because of low data quality, which the study authors say “reinforces the critical conclusions from this study”.

The impressions PwC could match reveal around half of advertisers’ spend is collected by intermediaries and a third of that money goes to an “unknown delta” of unattributable costs.

Where brands’ money is going

Of the money advertisers spend on programmatic advertising publishers receive just over half of the total, 51 per cent on average according to the study. The rest goes to a complex and notoriously opaque supply chain.

“The 15 advertisers had nearly 300 distinct supply chains to reach 12 publishers,” the authors write. “This complexity contributes to a markedly opaque supply chain.”

Source: ISBA programmatic supply chain transparency study

The ‘unknown delta’

According to the study, 15 per cent of advertisers spend, representing around a third of the programmatic supply chain cost, effectively disappears. 

“In our sample of 31 million matched impressions, the winning bid in the DSP often does not match the gross revenue recorded in the SSP,” the report states. “This ‘unknown delta’ averaged 15 per cent of advertiser spend. Our study shows that even in a ‘disclosed’ programmatic model, around one-third of supply chain costs remain undisclosed.”

The report states it is unclear exactly what the “unknown delta” represents and calls on the industry to collaborate to find out.

“It could reflect a combination of 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.”

What’s next

The study concludes that data maturity in the UK programmatic landscape is below average and made two key recommendations: standardisation is urgently needed and industry must collaborate on the unattributable costs of programmatic.

Leading advertising groups cautiously welcomed the study and its calls for standardisation and industry collaboration, but defended the role of programmatic in online advertising.

“Digital advertising – and particularly programmatic – is complex and relies on many companies to play a part in ensuring it works for publishers, advertisers and consumers,” said IAB UK CEO, John Mew.

“However, it is not a dark art and we shouldn’t lose sight of the crucial role programmatic plays in supporting our ad-funded, open web.”

Mew’s counterpart in Australia, Gai Le Roy expressed similar sentiments.

“IAB Australia recognises the challenges that the complexity of the digital advertising value chain presents, however programmatic advertising plays an important part in supporting an ad-funded open web,” the local IAB CEO said in a statement.

“Ad technology can be a powerful lever in improving automation and efficiency for publishers, agencies, advertisers and consumers however industry alignment around standards, harmonisation and collaboration should be used to address many of the issues identified in the ISBA report.”

Le Roy said the IAB will continue to review the report and its recommendations, adding the Australian market has a good history of collaborating and has a chance to be “ world leaders in driving adoption of transparency standards”.


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