UK landmark study into complex programmatic advertising supply chain raises big issues

Local industry associations have welcomed a new UK-based study into the programmatic advertising supply chain, saying the mammoth and complex research effort shows just how urgent it is for the industry to improve transparency.

The new ISBA / PwC Programmatic Supply Chain Transparency Study aimed to map out the programmatic advertising supply chain for the first time and was backed directly by advertisers. It took its cues from the World Federation of Advertisers’ Waterfall report as well as the ANA’s 2016 Programmatic: Seeing through the Financial Fog report, and also saw the pair working with the Association of Online Publishers.

The study, which took more than a year to complete, identified 1000 distinct supply chains. Across the 15 advertisers featured, the team were able to end-to-end match 290 chains consisting of 31 million impressions through to 12 publishers. The advertisers represented in the research represent about 100 million pounds in UK programmatic advertising spend and nearly two-thirds of premium publisher digital ad revenues and included British Airways, HSBC, Sainsbury’s, Tesco, Pepsico, Unilever, Vodafone and Royal Bank of Scotland. 

In his introduction, ISBA director of media, Steve Chester, said the report delivered the evidence required to insist all industry stakeholders, from advertisers to agencies, publishers, and adtech players, collaborate “openly, honestly and constructively around shaping a trading market that is transparent, fair, safe and predictable where all interests can thrive equally”.

The very real complexity of trying to map out the programmatic advertising supply chain was highlighted by the report as a reason for why standardisation is urgently required.

Importantly, the research also identified a significant portion of dollars remaining unattributed despite its efforts to gain transparency.

On average, half of all advertiser dollars only are reaching publishers through programmatic advertising, and 15 per cent of total advertiser spend, or around one-third of supply chain costs, is unattributable. Even in a ‘disclosed’ programmatic model, about one-third of supply chain costs remain undisclosed.

Other notable percentages clipped along the way included agency fees (7 per cent), DSP fee (8 per cent), demand-side technology fees (10 per cent), SSP fee (8 per cent) and a supply-side tech fee (1 per cent). 

However, the ISBA / PwC report also noted percentages were averages, with each component of the supply chain likely to significant vary. For example, in the best scenario, publishers were receiving up to 67 per cent of each advertising dollar spent.

PwC partner and report co-author, Sam Tomlinson, noted the report only canvassed the premium end of the programmatic ecosystem, meaning the real unattributable dollar figures were likely to be even higher.

“This study represented the highest profile advertisers, publishers, agencies and adtech. If examined, the ‘long tail’ would presumably further reinforce these findings,” he stated.

The report also highlights a raft of challenges in even reaching the numbers represented, including a lack of clarity around how parties share data, complex supply chains, access delays, a lack of data uniformity and inflexible data retrieval between buy and sell sides of deals.

Verification tools, while widely used, were also disparate, and included pre- and post-bid monitoring, pre- and post-bid blocking, exclusion lists, inclusion lists and use of ads.txt.

Related: Is programmatic advertising all it's cracked up to be?

Report: Two-thirds of digital media to be programmatic in 2019

Locally, industry associations were quick to applaud the study and its findings. Australian Association of National Advertisers (AANA) CEO, John Broome, described it as a landmark study with major global implications on the visibility and standardisation of programmatic technology and contracts.

“There are many differences from country to country in programmatic advertising practices, but the fundamentals are the same,” he said. “The UK study shows that approximately 15 per cent of advertisers spend on programmatic, representing a third of adtech 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.

“I congratulate ISBA, PwC and the Association of Online Publishers for this comprehensive analysis of the problem of unaccountability in the programmatic advertising space.”

IAB Australia CEO, Gai Le Roy, was equally pleased to see the ISBA’s Programmatic Supply Chain Transparency Study recognise the importance of standards to gaining an efficient, effective and sustainable industry. She particularly welcomed recommendations that IAB Tech Lab Standards, such as sellers.json and OpenRTB SupplyChain object, are adopted to improve transparency.

“IAB Australia recognises the challenges the complexity of the digital advertising value chain presents, however, programmatic advertising plays an important part in supporting an ad-funded open Web,” Le Roy said.

“Ad technology can be a powerful lever in improving automation and efficiency for publishers, agencies, advertisers and consumers. However, industry alignment around standards, harmonisation and collaboration should be used to address many of the issues identified in the ISBA report.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.