Half of the money brands spend on online publishers is lost in the programmatic advertising supply chain and 15% cannot be attributed at all. This is according to a new study that is prompting yet another call for reform of a complex ecosystem that still lacks transparency and “does not serve the principle interests” of advertisers or publishers.

The advertiser-funded research from ISBA, in association with the Association of Online Publishers (AOP) and carried out by PwC, marks the first time that programmatic advertising supply chains have been mapped from end-to-end, anywhere in the world.

The study collected data from 15 brands – including Tesco, BT, Unilever and British Airways – eight agencies, five demand side platforms (DSPs), six supply side platforms (SSPs) and 12 publishers, representing approximately £100m in UK programmatic media spend in total.

All of ISBA’s 3,000 members were given the opportunity to participate, but only 15 chose to take part.

The report found that publishers receive approximately half of advertiser spend. Of that 50%, the study could attribute 35% to suppliers including the agency, DSP, technology providers and SSP.

Source: ISBA/PwC supply chain transparency study, 2020

That left 15% in unattributable spend, or the ‘unknown delta’ on the above chart, equal to around a third of supply chain costs. However, given the study only takes into account disclosed programmatic models, this is a best-case scenario and the figure is likely much higher in the long-tail of publishers and ad tech.

A previous experiment by The Guardian found that in a worst-case scenario it received just 30% of the money brands invested, with the rest lost in the supply chain.

Tackling issues with the data

It has taken advertisers and publishers nine months to retrieve the data from tech vendors, highlighting the lack of organisation and complexity in the supply chain.

“Advertisers and publishers want to share their data, the bit in the middle should be facilitating that,” says PwC partner Sam Tomlinson. “Once you get the data from the DSPs and SSPs the data formatting is terrible, inconsistent, not granular enough. That data access and formatting is at the heart of all of this.”

Of the 1,000-plus distinct supply chains that were identified, PwC was able to end-to-end match 290 chains (31 million impressions) from across the 15 advertisers all the way to the 12 publishers.

PwC says there is a lack of understanding and consistency among the ad tech suppliers as to how they can legally share data and what permissions are needed, as well as a lack of uniformity on data storage and formatting. In addition, data captured by a DSP for an impression is not equally captured by SSPs, which hindered impression matching.

Some of the brands in the study were appearing on tens of thousands of different websites in the three-month period.

“If you’re on more than 5,000 websites, you’re probably wanting to look at your programmatic strategy,” Tomlinson says.

“Marketers need to make sure their agencies are on a disclosed programmatic model, that they are operating all the key verification tools. What I would absolutely say is you should pay more to get a really high-quality service from your agency. We see significant variations in the quality of agency programmatic teams. If I was a brand, I would want the best.”

The study highlights the need for urgent standardisation across a range of contractual and technology areas to facilitate data-sharing and drive transparency, as well as industry collaboration to further investigate the unknown delta.

This is not the first time there have been calls to clean up the digital ad ecosystem. Procter & Gamble’s chief brand officer Marc Pritchard issued an ultimatum to the industry back in 2017 and many others, including more of the world’s biggest ad spenders, have since demanded change. The ISBA study suggests there is still work to do.

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ISBA has pledged to “immediately convene” a cross-industry taskforce to begin studying the causes of the unknown delta. There will also be an independently-led effort to work on standardisation and data sharing in order to facilitate more robust supply chain verification.

The brands that took part are clear that if progress is not made they will pull back on spend. BT has warned it will “cut back” on programmatic if it cannot account for every penny spent.

“While digital display is an effective sales driver for us, the findings of the study are stark: there is a big hole in the value chain,” says BT’s head of media, Graeme Adams.

“We desperately need to see a common set of standards adopted and more openness in this market, so that every penny spent is accounted for. If this happens, we’ll invest more in the channel; if not, we will cut back and reshape our trading approaches.”

However, the digital ad industry has cautioned against brands making any knee-jerk decisions. The IAB admits that while more work needs to be done to improve transparency, it is not a “dark art” and plays a valuable role in the online ecosystem.

IAB CEO Jon Mew adds: “Transparency in digital advertising’s supply chain is critical for its sustainable future and we thank our members for their proactive involvement in this study. Programmatic advertising is complex, but it is not a dark art and we shouldn’t lose sight of the valuable role it plays in supporting our open, ad-funded web.

“Collaboration will continue to be essential to shine a light on the value added at each stage of the supply chain.”

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