To say the programmatic media supply chain is a transparency-free zone that increasingly serves as a vehicle to funnel money to websites whose sole purpose is to facilitate advertising arbitrage is to say nothing new. It’s a fact.
But the Association of National Advertisers (ANA) has the receipts.
On Monday, the ANA released the first part of its programmatic transparency report, which found that brands could save at least $20 billion a year by avoiding low-quality inventory, such as clickbait, filler content and slideshows jammed with more display and video ad slots than there are sometimes words on the page.
In the ANA’s estimation, advertisers unknowingly spend an astounding $13 billion annually on made-for-advertising (MFA) websites alone, which translates into 21% of all impressions and 15% of ad spend.
It’s a weird world in which advertisers will assiduously avoid running against news content because of brand safety concerns, but blithely spend billions on crapola that’s been specifically engineered to capture programmatic ad budgets.
The ANA conducted its study in partnership with TAG, PwC US and risk management services provider Kroll. It ran between September 2022 and January 2023, covering $123 million in ad spend tied to 35.5 billion impressions. Part two of the report will come out later this year.
Why is it happening?
The reasons behind waste in the media supply chain are well documented, including ad fraud, an abundance of intermediaries each taking their cut, opaque algorithms and a lack of data transparency.
But the ANA calls particular attention to two interrelated issues: information asymmetry and misaligned incentives.
Information asymmetry is when one party in a transaction has access to information that others do not. In the open web context, buyers often overpay for low-quality inventory because they have no purview into programmatic pricing or media quality.
At the same time, buyers have become almost complicit in their own exploitation because they prioritize cheap reach over quality inventory.
“Programmatic has made it all about the audience, and I think we are at a point where people are starting to question that,” said Bill Duggan, group EVP at the ANA. “At some point, people have to realize that you get what you pay for.”
And also realize that more isn’t better. In fact, more often doesn’t add very much at all.
The ANA found that the average programmatic ad campaign runs on 44,000 websites, a very long tail, indeed, Duggan said.
“Can you even name 44 websites that you visit as a consumer or that you’d want your ad to run on as a marketer, let alone 440 or 44,000?” he said. “This puts advertisers at risk of buying inventory that’s fraudulent or not viewable.”
What should buyers do?
Yet waste in the supply chain isn’t immutable, and buyers can get better transparency by taking a more active role in managing their programmatic spending.
The ANA advises advertisers to sign direct supply contracts with specific data rights included and to press their partners for log-level data. Advertisers should run their ads on fewer sites and prioritize value over cost.
Instead of trying to pinpoint every garbage site on the internet, media planners should replace bloated and ineffective exclusion lists with inclusion lists of acceptable domains.
If the tenor of those recommendations sounds familiar, it’s because the ANA has made similar ones in the past after dropping other bombshell reports in 2016 and 2017 looking into programmatic media transparency (as in, the lack thereof) and undisclosed media rebates.
“We said seven years ago that advertisers need to lean into media because it’s gotten complicated and you can’t just have a senior brand manager or CMO with ‘media’ as part of their role – you need an internal expert, a chief media officer,” Duggan said. “It’s a little sad to me that all these years later we’re still saying the same thing: that advertisers must be more responsible in providing better stewardship of their media investments.”
At loggerheads
But pushing for more transparency and better data access and actually getting it are two different things.
For example, the ANA vigorously recommends advertisers get log-level data from every ad tech vendor in their supply chain.
Log files provide a detailed historical record of everything about an impression, including precisely when an ad was served, where, how much it cost, the type of ad it was and the user who saw it.
Using impression-by-impression log-level data, it’s possible to attribute previously unattributable ad spend, what UK-based advertising trade org ISBA had termed “unknown delta.”
The problem is that some exchanges refuse to share this information because they claim it’s proprietary. They’ll even include clauses in their publisher contracts that preclude them from sharing pricing information with other people in the ecosystem.
The ANA itself has run into walls multiple times trying to get its hands on log files.
The ill-fated ad tech startup Ad/Fin, for example, which helped the ANA conduct its 2017 programmatic transparency study, got stonewalled by agencies that owned the vendor contracts and were unwilling to share log-level data with researchers.
The same is still true today.
Although 67 ANA member companies initially signed up to participate in its current study, PwC and TAG were only able to analyze the log files of 21 companies.
Forty-six brands had to pull out, in part because they were unable to get their hands on log files from their DSP, SSP and ad verification partners. Only three DSPs, six SSPs and three ad verification companies took part in the study.
That doesn’t mean advertisers shouldn’t demand access to log-level data and, ideally, hire someone internally who knows how to interpret it. But buyers have multiple opportunities to be more efficient even without log files, Duggan said.
“You don’t need log files to know that you shouldn’t be running campaigns on 44,000 websites, that MFA sites are low-quality content or that you should own the contract with your supply chain partners,” he said. “Log files are the holy grail – they can tell you exactly where your money is going, but there are many other issues you can address without them.”
