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By Phil Smith
A groundbreaking study by ISBA shines light on need for reform.
Where advertisers’ money actually goes
The overall analysis of the ‘industry waterfall’ – in short, where advertisers’ money actually goes – shows that publishers receive on average 51% of advertiser spend….15% of advertiser spend cannot be attributed at all.
Advertisers must go to where their audience is – and, in ever greater numbers and at ever greater volume, that means online. But when the online space has become so crowded, with countless websites, mobile apps, and platforms on which to advertise, how can a marketer be sure that they are reaching the right people?
This, of course, is the promise of programmatic advertising: being able to target the right audience, in the right place, at the right time. The trouble is that the system – the digital supply chain – is far from transparent. It has become so complex and so opaque that it is to all intents and purposes impossible for participants to follow transactions from one end of the process to the other.
This is not a new problem. Groundbreaking studies like the WFA’s Waterfall Report (2014) and the ANA’s Programmatic: Seeing Through the Financial Fog (2017) have illustrated the scale of the difficulty. Now, frustration with the system has driven an impressive range of advertisers, publishers, agencies, and adtech companies to come together behind the study which we publish today. Guided by our members and in collaboration with publisher body the AOP, we have worked with PwC to develop the first end-to-end study in the world of the programmatic supply chain – from advertiser budget to publisher receipts.
The road has not been easy, and it has been long. There were significant challenges in obtaining the data we needed, because of difficulties with contracts, permissions, and technology. It took more than a year to secure access. We chased our tails as a publisher authorised PwC to access data from an SSP, which then required permission from the DSP, which then asked the advertiser’s agency … which closed the circle by asking permission from the advertiser. Such doom loops took, in some cases, months to resolve; and even when resolved, the data could not always be shared for technical reasons. The truth is that this market has simply not evolved to be audited by accredited third parties.
But we have battled through and the result is a world-leading study of the £2 billion ‘Open Display’ digital advertising market (distinct from ‘walled garden’ platforms, search, and digital classified ads). We are also dealing with the majority portion of this spend which is ‘disclosed’ – where agency margins are known, and which we have often seen described as ‘transparent’. The data from 15 advertisers, 12 premium publishers, eight agencies, six SSPs, and five DSPs has enabled us to draw back the curtain and shed light on the programmatic supply chain.
In total, the study identifies over a thousand distinct supply chain variations, with PwC’s researchers able to end-to-end match 290, or 31 million impressions. Adtech suppliers did not have a clear understanding of whether and how they could share data and there was a lack of consistency, in the uniformity of data storage and formatting; and in the fact that the data captured by a DSP for an impression is not equally matched by SSP capture. The complexities of the system very clearly do not serve the interests of advertisers or publishers.
The overall analysis of the ‘industry waterfall’ – in short, where advertisers’ money actually goes – shows that publishers receive on average 51% of advertiser spend, while taking other visible costs such as DSP and SSP fees, 15% of advertiser spend cannot be attributed at all.
Reform is clearly, and urgently, needed. The study makes two key recommendations for industry. First, that standardisation is urgently required across a range of contractual and technology areas, better to facilitate data-sharing and to drive transparency; and second, that collaboration is required further to investigate the unattributable discrepancies.
We are getting cracking on these recommendations straight away. A cross-industry taskforce is being convened to study the causes of the unidentifiable differences. Meanwhile, we are shaping an independently-led effort to work on standardisation and data sharing, to facilitate robust supply chain verification, and to produce the reform which is manifestly required if we are to raise standards in the global market.
No individual advertiser, publisher, or industry participant could have achieved the result of this study alone – nor could they make meaningful change in isolation. Bringing greater transparency and higher standards to the programmatic chain can only be done by a collaborative effort from all participants. The benefits are clear, not only for marketers and publishers, but for people and society. The challenge now is for all of us to address the opacity and inconsistencies highlighted by this pathfinding study. In concert with our members, ISBA will certainly play its part.
About the author
ISBA is the only body representing the UK’s leading advertisers. Speaking with one voice on behalf of over 3,000 brands, we advocate a trusted advertising environment – transparent, accountable and effectively regulated. Working with our network of senior marketers, we help our members make better decisions both now and for the future.
We provide Marketing Procurement professionals with access to ISBA best practice guidance and contract templates. We work with members to explore innovations and seek solutions through our decided marketing procurement group and offer insight and knowledge within the marcoms sector.
ISBA is a member of the Advertising Association and represents advertisers on the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice, sister organisations of the Advertising Standards Association, which are responsible for writing the Advertising Codes. We are also members of the World Federation of Advertisers. We are able to use our leadership role in such bodies to set and promote high industry standards as well as a robust self-regulatory regime.