Only One-Third of Every Programmatic Dollar Reaches End-User, ANA Report Finds

A new industrywide report shows how buyers, including top advertisers, continue to waste money on inefficient supply paths and low-quality media. Media quality and the cost of media are not correlated, according to the Association of National Advertisers' programmatic media supply chain transparency report. The study analyzed campaign data from 21 brands including State Farm, Mondelez and Discover, and encompassed $123 million in ad spend between September 2022 and January 2023. Theoretically, media providers with a higher percentage of high-quality impressions—which the ANA defines as impressions that are viewable, measurable and non-fraudulent—should be able to charge more for their inventory. However, the ANA found no such correlation. Made for Advertising Sites Are Programmatic's Latest Boogeyman In another disturbing finding, only 36 cents of every dollar that enters a demand-side platform reaches a consumer. Around 29 cents go toward fees to ad-tech intermediaries, and 35 cents go toward low-quality media, including invalid traffic and made-for-advertising, non-viewable and non-measurable inventory, the ANA found. Ultimately, of the $88 billion in open web programmatic ad spend, the ANA estimates that around $22 billion is wasteful and unproductive. These findings build on an earlier report that the ANA released in June that kicked off an industrywide conversation on MFA sites after finding that 21% of impressions among study participants went to spammy sites. These findings, which show the continued problems of programmatic systems, are particularly relevant to advertisers grappling with a future where algorithms will make more buying decisions, said Robert Webster, global vice president of strategy at CvE, a marketing consultancy that works with the buy side. “People are still buying in a simplistic fashion ... Everyone is using the algorithm to set the price, and the algorithm is set on flawed metrics,” Webster said. “The problem is not technology. The problem is human.” Doing more with less A key theme in the ANA’s findings is that marketers don’t need to work with as many publishers as they currently do, undermining the original programmatic promise of unlimited scale. The average campaign among study participants runs on 44,000 websites, although 63% of impressions came from the 500 top websites, by volume of impressions. In 2018, automaker General Motors used inclusion lists to run ads on 4,000 and 15,000 websites. There was no negative impact on performance when compared with campaigns run on 800,000 websites. Meanwhile, an analysis from Trustworthy Accountability Group's TrustNet initiative found that the long tail was 12% less viewable and had a 100% higher rate of invalid traffic than the top 500 domains. You absolutely should know all of the suppliers you work with Chris Kane, founder of programmatic consultancy Jounce Media Moreover, private marketplaces—billed as tools to help marketers find quality within the open web—that contain more than 500 domains have 20% of impressions go to MFA sites. That's not far off the open web's level of 27%, the report found. PMPs with more than 500 domains had 1.4% of impressions run on invalid traffic, more than the open web's rate of 1.1%. By contrast, PMPs with 11 to 500 domains only send 1.3% of impressions to MFA sites and 0.2% of impressions to invalid traffic, the ANA found. The important takeaway for buyers is not necessarily the raw quantity of websites that they advertise against, but vetting all of the publishers they work with, said Chris Kane, founder of programmatic consultancy Jounce Media, who advised on the ANA study. For example, a buyer might rack up domains if they work with a publisher network like Raptive or Mediavine, but they can call up a single seller with a problem. “You absolutely should know all of the suppliers you work with,” Kane said, “but there are scalable ways to do this so that you’re still reaching the mid and long tail of high-quality content.” The case for optimism in MFA progress While the ANA report shows that many long-standing problems of programmatic persist, there are some signs of progress. This year's first ANA report in June found that only 8% tracked MFA sites. By September and October, 21% of survey respondents said they currently track MFA, with 33% claiming that they plan to. In recent months, several ad-tech firms have made it easier for buyers to avoid MFA, and the industry has coalesced around a new definition of MFA inventory. Yet Another Programmatic Problem, Bid Duplication, Gets Fresh Attention The report suggests that there is an opportunity for marketers who take this kind of hands-on interest in their programmatic investments, said ANA group executive vice president and co-author of the report Bill Duggan. “The broad finding for marketers is to be curious and to take an active interest in this,” Duggan added. “Don’t simply outsource this to your agency partners, with all due respect to agencies, and don’t be afraid to ask questions.”

Platforms

Only One-Third of Every Programmatic Dollar Reaches End-User, ANA Report Finds

The supply chain is still filled with waste, and impression price doesn't correlate with quality

Catherine Perloff

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Catherine Perloff