ANA Programmatic Supply Chain Study: “Cheap reach” is the name of the game
Recently the Association of National Advertisers (ANA) released an in depth analysis of the programmatic supply chain. The ANA represents some of the largest American advertisers and their study analysed $123 million of Ad Spend and 35.5 billion impressions.
The full study was 125 pages and can be found here. It is well worth reading but if you don’t have the time for the full version, below is a summary of the findings as well as the implications for advertisers.
The ANA found that only 36 cents of every dollar entered into a Demand Side Platform (DSP) reaches the consumer because AdTech fees, which they call “Transaction Costs” remove 29% of an advertisers budget. Non viewable, non measurable ads which which the ANA calls “Loss Of Media Productivity Costs” waste another 35% of each advertising costs:
The ANA estimates that globally advertising on the open web programmatic is an $88 billion global market and that by addressing the issues raised in the report, advertisers could realise at least at least $20 billion in efficiency gains.
Supply Chain Complexity
Despite the focus on in-housing over the past 5 years the study found that only 52% of advertisers have access to their DSP. On average buyers are trading through 19 Supply Side Platforms (SSPs) and for many the number was over 50. Some of these exchanges have very few direct relationships with publishers, for only 13% of inventory in one case.
For buyers trading through this many exchanges doesn’t add any tangible benefits and it dramatically increases the risk of an advertiser inflating the price they are paying for media by bidding against themselves. It also increases the amount of carbon emissions their advertising campaigns create, but simply it is both bad for business and the environment.
The ANA’s findings suggest for advertisers that gaining access to their buying platforms and rationalising the number of exchanges they work with would be of significant benefit. In terms of supporting this need this summer DPG Media released Ad Manager, a buying platform that offers direct access to all our inventory without any fees or supply chain complexity. By adopting this platform advertisers increase working media by 29% by removing all transaction costs.
The Myth Longtail Reach & The Rise Of MFA
But removing supply chain complexity isn’t the only issue for many programmatic buyers, inventory quality is another massive issue that creates what the ANA call media productivity costs. Their study found that on average large advertisers were trading across over 44.000 sites and apps, for some large advertisers this number rose to over 200.000 sites and apps.
The ANA quite rightly characterised the approach that advertisers were taking as “spray and pray” approach, the found that buying on the long tail brought little value in terms of incremental reach and went on to say that advertisers should focus on seller or domain inclusion lists, ditching exclusion lists which they call a “futile endeavour".
It is well known and documented that there is a huge amount of brand risk in the long tail of the web, but in the past few years a significant amount of low quality inventory that is often referred to as made for advertising (MFA) inventory has been made available for purchase. MFA sites often slip through poorly constructed brand safety controls and are a mix of clickbait slideshow and computer generated content. This low quality inventory tends to be cheap and viewable but has lots of ad clutter and little advertising value. Sadly the study found that 21% of impressions and 15% of spend was wasted on these low quality destinations.
Both advertising exchanges and buying platforms could do more when it comes to managing inventory quality, but there is a commercial incentive for them to carry this inventory as long as it is being purchased. With DPG Ad Manager buyers campaigns only run across our premium network of sites, so campaigns have the scale to reach the majority of the Dutch internet population without compromising on quality.
The ANA found that whilst buyers might be forgiven for thinking that they are safe from MFA sites buying through private marketplace deals (PMPs) unfortunately often they were not because the rise of multi-publisher PMPs meant that in some cases there is as much MFA inventory in these buys as in in the open marketplace.
Buyers that don’t adopt Ad Manager by DPG Media but instead choose to access our inventory through a direct booking or a private marketplace deal, can also reduce a significant portion of transaction costs and loss of media productivity costs and be assured that the inventory they are buying is high quality, professionally created content with high levels of viewability and engagement.
At this point you might ask the question why does this continue to happen? The ANA study found that for most advertisers "Cheap Reach" was the name of the game and within their study over half of all impressions were less than $3 and one third cost less than $2:
This certainly explains the significant amount of MFA inventory in media buys as this inventory typically costs less than legitimate inventory. The obvious take out for a buyer is to pay as much attention to inventory quality as they do clearing prices and headline metrics, when they work with sellers that are frankly an unknown quantity.
This would be especially rational given the qualitative interviews conducted by the ANA as part of the study found that whilst most had brand focussed goals:
Around a quarter of advertisers felt they had poor knowledge on inventory quality and only 46% tracked the websites they appear on for a given campaign.
So how can advertisers do this? Adopting a buying platform like DPG Media’s Ad Manager removes transaction fees from the supply chain and massively reduces media wastage costs, both of which maximise working media and can improve the performance of campaigns. Such an approach not only makes business sense but also dramatically reduces Co2 emissions from advertising too which is great from an ESG perspective.
Alongside these changes DPG Media feels it is important to upskill marketing teams in digital media as the media landscape continues to evolve and advertisers continue to invest more into the channel. If you would like to find out more about digital whether that’s programmatic, the changing privacy landscape or creative please reach out here.