Publishers Receive 51% Of Programmatic Ad Spend, So Where Does The Rest Go?

A new study has given rare insight into the complex programmatic advertising supply chain.

The Programmatic Supply Chain Transparency Study, conducted by UK advertising body the ISBA and PwC, reveals that on average, publishers end up receiving 51 per cent of programmatic advertising spend.

So where does the rest go?

The agency fee accounts for seven per cent, DSP fee is eight per cent, technology fee (demand side) is 15 per cent, SSP fee is eight per cent and technology fee (supply side) makes up one per cent.

Although the study provides industry-leading transparency into the programmatic supply chain, some 15 per cent of the advertising spend could not be attributed in the study.

This unknown data could be a result of anything from limitations in data sets to post-auction financing arrangements, the report says.

The study observed 267 million impressions and 2.2 billion lines of data over a 15-month period, with over 50 companies taking part.

“This supply chain complexity seems unlikely to be consistently in the best interests of market participants, an intuition corroborated by our findings that half of advertiser spend reaches publishers and that 15 per cent of advertiser spend – around one-third of supply chain costs – is unattributable,” said PwC Partner Sam Tomlinson.

“And it’s important to realise that this study represents the most premium parts of programmatic: the highest profile advertisers, publishers, agencies and adtech.”

The research found video to be the most profitable format for publishers.

On average, 65 per cent of advertiser video spend reaches publishers. This is higher than display (54 per cent), OMP (49 per cent) and PMP (54 per cent).

calls for action

Using the report as evidence, PwC and the ISBA have called on the industry to continue to work towards providing more transparency into programmatic.

The report recommends the standardisation of contractual and technology areas to facilitate data sharing and industry collaboration to investigate these unattributable costs.

“All market participants must contribute to industry evolution,” the report states.

“This includes: a shared understanding and application of ‘transparency’; contractual arrangements with standardised definitions; clear and consistent protocols for sharing data; careful monitoring of log level reports; supporting industry initiatives to investigate any unattributable costs; and implementing robust governance and compliance programmes.”

local response

Despite the report coming out of the UK, Australia’s advertising bodies have been quick to highlight the importance of such research.

“This is truly a landmark study that has major global implications. There are many differences from country to country in programmatic advertising practices, but the fundamentals are the same. The UK study shows that approximately 15 per cent of advertisers spend on programmatic, representing a third of ad tech supply chain costs is unaccounted for and the lack of transparent standards in the supply chain is preventing advertisers, media owners and buyers from getting visibility over this missing delta,” said AANA CEO John Broome.

“I congratulate ISBA, PwC and the Association of Online Publishers for this comprehensive analysis of the problem of unaccountability in the programmatic advertising space. I know our members will be grateful for the opportunity to learn more about the study and consider carefully the best options to achieve greater standardisation across both contractual and technology areas, so that we gain clear visibility over the value chain.”

IAB CEO Gai Le Roy also praised the efforts.

“It is pleasing to see the ISBA Programmatic Supply Chain Transparency Study recognise the importance of industry standards. The IAB locally and globally has been championing transparency in digital advertising’s value chain to ensure we have an efficient, effective and sustainable industry,” she said.

“We will review the findings and recommendations in more detail and work with our local members as well as other industry bodies to assess ways that the local market can learn and improve from this report. The Australian market is by nature very collaborative and the IAB is confident that we can be world leaders in driving adoption of transparency standards.”