If you’ve ever tried explaining programmatic advertising to your parents, then you know the industry is about as foggy as pea soup and as murky as the Dagobah system. There are publishers with audiences, and there are brands trying to reach those audiences—in between sits the tangled web of servers, exchanges, and vendors that make up programmatic advertising.
Industry orgs have consistently raised concerns about this lack of transparency, with one recent study finding that 15% of advertiser spend in the programmatic supply chain is “unattributable.” And according to new research published by the advertising research and consulting company Adalytics, fees collected by intermediaries in the programmatic supply chain (DSPs and SSPs) can vary widely. Like, very widely.
Some examples from the research:
- A “significant” amount of spend is going to vendors, not publishers. For a $10 ad bid, Adalytics found that, on average, up to 35% goes to the DSP and SSP.
- In some instances, ad-tech companies received up to 98% (!) of an ad buyer’s bid, while the publisher—you know, the one that made the content and has the audience—only received about 2%.
- Take rates, aka fees, vary wildly depending on the publisher. Some SSPs were charging lower fees for “made-for-advertising” sites, aka clickbait, compared to publishers with “niche but high-value audiences”...or what you might consider real newsrooms.
More numbers: For every fourth ad impression, at least 46% of ad spend goes to either a DSP or SSP, or sometimes both. On average, for half of all ad impressions, the “cumulative middlemen fee” going to vendors ranged from 22% to 45%, the report states.
But it gets weird. In some instances, a publisher received more payment for an ad impression than the cost of the actual bid; for example, a buyer could bid $9 for an impression, but a publisher would get paid $10.17. Why? Most likely because an SSP is subsidizing a bid to improve its win rate, theorizes Krzysztof Franaszek, founder of Adalytics.
Check your work
The report, which analyzed data collected via Adalytics’s own browser extension as well as proprietary data shared by advertisers and publishers with Adalytics, points out that publishers might be getting the raw end of the deal.
In fact, the opacity of the industry makes it difficult for publishers to even check whether their own contracts with third-parties are actually being upheld, Franaszek told Marketing Brew.
- To fact-check the report, he shared his results with four major publishers and media orgs to verify whether they were accurate and whether the fees were aligned with what was codified in contracts.
- One publisher, who he declined to name, found that the fees were “not equal” to what was agreed upon with a vendor in their contract.
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“If advertisers want to make sure their media buys are optimized, and if publishers want to make sure they are getting paid what they expect for their media inventory, they need to request, store, and analyze log files regularly,” Franaszek told Marketing Brew.
Adalytics didn’t name names in its report, neglecting to mention specific publishers, media agencies, or ad-tech companies. Though the study offers a peek behind the programmatic curtain of Oz, Adalytics isn’t privy to every contractual agreement signed behind closed doors. The report is only a snapshot.
Paul Bannister, chief strategy officer at CafeMedia, told us that although it’s “great research and shows a lot of the potential issues with the lack of transparency in ad tech,” more data is needed. “As Krzysztof would agree, his data isn’t at large scale, so we need way more info to dig in more.”
Zoom out: Franaszek has pretty clear advice—store logs and review them “with a fine-tooth comb.”