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ISBA’s new research challenges the programmatic supply chain

May 8, 2020 | By Rande Price, Research Director – DCN @Randeloo

The promise of programmatic advertising has always been its ability to target the right audiences, in the right context, at the right time. Buy and sell side participants look to maximize advertising opportunities, at the best possible price, leveraging technology to efficiently and smartly manage decision making in a dynamic environment. Unfortunately, the truth is far from the promise. Today’s programmatic ecosystem is far from delivering on trust, transparency, and efficiency across the digital marketplace.

A groundbreaking new report from ISBA, the British advertiser group, Programmatic Supply Chain Transparency Study, offers an end-to-end analysis of the programmatic supply chain that uncovers many of the reasons programmatic is failing to deliver on its promise. ISBA, in partnership with UK publisher organization AOP, commissioned PwC to conduct this two-year-long study that outlines the deep complexities of the ecosystem and the revenue impacts on advertisers and publishers.

The findings overwhelming speak to the complexity and the need to reform the programmatic advertising supply chain.

Complex ecosystem generates tracking chaos

The study set out to track every impression. However, only 12% (31 million) of the total 267 million impressions were effectively identified through the supply chain.

In total, there were more than 1,000 distinct supply chains detected across the 15 advertisers. The 31 million tracked impressions were matched end-to-end across 290 supply chains to the 12 publishers. The multitude of supply chain combinations adds opaque layers and complexity to the programmatic marketplace.

Publishers receive only 51% of all advertising spend

The waterfall of advertising spend shows 34% of all ad dollars goes to agency fees, DSP and SSP fees, and tech fees. Unattributable costs account for 15%.

The 15% unknown delta – nearly one-third of the supply chain costs – represents winning bids in the DSPs that could not be matched to any gross revenue recorded in the SSPs. There are many possibilities for the unknown delta, such as DSP or SSP fees that aren’t visible to post-auction, bid shading or post-auction financing arrangements, foreign exchange rates or reseller participation. However, no data provided mapped to the 15% delta

The study included 15 advertisers, 12 agencies, five DSPs, six SSPs and 12 publishers and represents approximately £0.1 billion of the UK’s programmatic ad spend or nearly two-thirds of the AOP’s digital ad revenues.

The ISBA research demonstrates a clear need to reboot. The starting zone needs to include contractual reviews, standardization of taxonomies, definitions and data protocols with an overarching focus on transparency across the board for all participants. Further, if the digital marketplace is to thrive, the industry must find ways to drive a higher percentage of advertising spend to publishers.

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