In the past decade, advertising has undergone a revolution with the significant growth of open web programmatic advertising. This $88 billion global market allows marketers to pinpoint their target audiences with precision, resulting in cost savings through automation.
However, the vast and diverse reach of the open web presents both opportunities and challenges. For savvy marketers, it provides unparalleled access to potential customers. But for the less observant, it may become a pathway for questionable inventory to infiltrate media plans, thus undermining the effectiveness of programmatic advertising.
The Association of National Advertisers' (ANA) recent study on Programmatic Media Supply Chain Transparency provides intriguing insights into the industry, exploring the challenges surrounding transparency and offering potent strategies to address these issues.
The study's findings shed light on several issues that require attention.
1. Information Asymmetry: The study highlights the challenge of information asymmetry in the programmatic supply chain. Sellers often possess more information on the quality of media inventory than buyers, potentially leading to overpayment.
2. Data Access: Inadequate data access can lead to inefficiencies and waste. Brands must own their supply contracts with data rights or instruct their agencies to access such data to harness valuable information for optimized decision-making.
3. Misaligned Incentives: The study identifies advertisers' tendency to prioritize cost over value as a significant issue. Pursuing cheap CPMs can result in ad quality problems that are not initially visible.
4. Waste and Lack of Control: The average campaign runs on 44,000 websites, indicating advertisers' lack of control over their media placements.
5. Predominance of MFA Sites: A shocking 21% of impressions and 15% of spending went to "Made for Advertising" (MFA) sites. These sites generate revenue through low-quality content and intrusive ads.
6. Sustainability Concerns: The rapid growth of the programmatic ecosystem has led to negative environmental impacts. Lower quality websites, especially MFA sites, contribute to higher carbon emissions.
7. Unknown Delta: The "unknown delta" gap between funds leaving a DSP and funds received by an SSP was initially thought to eat into 15% of working media. However, it was found to be a missing data capabilities issue rather than missing money.
Based on the research, we have come up with some crucial recommendations to help Challenger Brands navigate the complexities of programmatic advertising and take advantage of its potential efficiency gains.
Firstly, we suggest that you take a more active role in managing your media investments. Since programmatic media often constitutes the largest portion of a company's digital media spend, taking an active role can help mitigate the risk of wasteful and inefficient media buys.
Secondly, it is advisable to have direct data access contracts with key supply chain partners such as Demand Side Platforms (DSPs), Supply Side Platforms (SSPs), and Ad Verification vendors. Transparency and data access go hand-in-hand, so if you cannot own your own supply chain contracts, then at least make sure your media agency agreement stipulates that the media agency should provide access to data from supply chain partners.
Thirdly, we recommend partnerships that provide full access to data and transparency about websites purchased on media buys. You need to understand when your media agency is acting as an agent or as a principal. If the agency is acting as a principal, it is not obliged to act in your best interests unless it's contractually required to do so.
Fourth, instead of prioritizing low-cost inventory, you should place a greater emphasis on quality media buys. Pursuing low-cost or cheap CPM buys can result in non-viewable or non-measurable media purchases, so it's important to balance the pursuit of low-cost inventory with ad quality.
Fifth, accessing log-level data (LLD) from all AdTech vendors across your supply chain can lead to better decision-making. With the right information, you can assess Quality CPMs (qCPM) across different strategies and make informed decisions.
Sixth, we advise you to limit the number of websites used. With an average of 44,000 websites utilized in this study, a more streamlined approach would diminish the risk of purchasing non-viewable and fraudulent inventory.
Seventh, you should demand to exclude Made for Advertising (MFA) websites from a media buy unless they are explicitly needed. This study found that a staggering 15% of spending and 21% of impressions appeared on such sites. Some say MFA stands for 'Made For Ad fraud' for a reason.
Eighth, you should focus on creating website inclusion lists, as there are just too many websites for exclusion lists to be effective.
Ninth, we recommend using partners where quality metrics like viewability, fraud, and brand safety are available. Unmeasurable impressions or situations where an IVT decision cannot be made need to be minimized, and this can be achieved by leaning into LLD and aligning buying to the best prospects of viewability.
Finally, you need to understand the sustainability impact of your programmatic media purchases. The longer the supply chain, the higher the carbon emissions, so you should look at where reductions in your supply chain can be made.
In this era of skyrocketing ad costs, addressing ad wastage is more than just a savvy move – it's a necessity for any business wanting to stay competitive and see a solid return on their advertising investments.
Sure, the road to effective media management might seem like a tricky hike, but with the right guide, it's absolutely navigable. So whether you're using media agencies or buying most of your programmatic media in-house, why not join us on this journey? Together, we can help you cut down on ad wastage, and help your business unlock its true advertising potential.
Need help to start your media transformation journey? Let's chat! Schedule a consultation with us today and let Abintus help you take control of your advertising investments.
Remember, as one of our clients put it, partnering with Abintus is "absolutely the right decision" to take control of your ad costs and waste. We look forward to hearing from you!