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Would you believe it if we told you that only 51% of digital ad dollars reach the publisher, or “working media”? We’ll dig deeper into that staggering fact in this article, but first…
The advertising ecosystem is calling for transparency, perhaps unsurprisingly, given the aforementioned data point. This rapidly growing awareness amongst advertisers and publishers alike is one of the many reasons Ogury organized an impressive panel of industry professionals at Cannes Lions 2022, where we discussed the ad tech tax and its influence on those on either end of the supply chain.
Transparency of the supply chain
There is an apparent level of distrust felt in the digital advertising industry. But where does it come from and why? With so many layers in this ever-evolving ecosystem, it’s easy to see why ethics may be questioned, and conflict may arise. To many players, the industry is over-complicating things. Jonathon Matthews, panel moderator and Ogury VP of Publisher Development US, suggested that the distrust may have started with major companies and organizations who own both supply and demand that didn’t consider the impact they would have on smaller publishers in the space.
Matthews also references that often, it’s either transparency to the advertiser or to the publisher, but it rarely goes both ways. Removing the middlemen may allow us to be a two-way highway rather than just one-way.
Oleg Korenfeld, CTO of CMI Media Group, asserts that the distrust began with a lack of education on the buy side. “It’s the unnecessary duplication of audiences. I feel like it’s the most expensive thing that we end up paying for. Reaching the same audience across multiple channels, not realizing it’s the same people,” he said. “I think the devil is always in the details. Transparency, clearly, it’s good. I look at transparency again, more on the educational side, because I also believe that there’s value in putting skin in the game; in creating some kind of optimization platform, and charging what you think you’re worth. For that, you can take whatever you think the value of your product is. And if it’s hitting my goals, I will pay for it. As long as we’re transparent about that, the trust is there.”
Bridging the Gap Between Supply and Demand
Mike Brooks, SVP of Revenue and Marketing at WeatherBug, believes that trust also stems from the inability to control bad actors, those who recognize ways to exploit the system and make money quickly through view-through conversions on below-the-fold inventory and click injection.
Below-the-fold is the portion of a web page that can only be seen when a user scrolls and, as such, is considered less premium. Whereas above-the-fold tends to be in much higher demand. A Google study found that ads above-the-fold had a 73% viewability, whereas ads below it had just 44% viewability. Click injection is an Android-specific ad fraud technique that seeks to achieve last-click attribution on CPI campaigns. Bad actors detect app installations and trigger clicks before it is complete to receive credit.
Agreeing with Brooks, Korenfeld said, “Unfortunately, it ends up being somewhat of the cost of doing business. Knowing that a percentage of the media that we’re spending will always end up in the wrong place.”
To Alex Payne, VP Ad Operations at Vice Media Group, the many moving parts have created a disorganized system. “There’s a feeling of a lack of control, particularly with big tech partners, the massive scale, the massive audiences that are accessible, the controls that are available,” Payne theorized. “But, by having so many, it almost feels like it could go out of control at any moment. If you aren’t pulling the right levels or applying the right settings.” Perhaps this lack of control has created this dynamic of distrust and over-complexity in the industry.
At what point do advertisers and publishers unite to find common ground? One where expectations are met, and the inner workings of either party are more black and white?
Transparency and the ad tech tax
What does transparency mean in regard to the ad tech tax? First, advertisers need to know where their money is being spent on its journey down the supply chain. And second, each vendor fee paid on that journey should be rationalized, and value explained. If not, the value exchange is unclear and leaves the demand side asking questions and distrusting.
The sheer need to know the difference between “working media,” or the portion of that ad dollar that went to displaying ads, versus “non-working media,” or the portion that went toward fees, is demonstrative of the growing gap between supply and demand, and the urgent need for a more streamlined process.
In May 2020, the Incorporated Society of British Advertisers (ISBA) and PwC released a Programmatic Supply Chain study that found that “the percentage of advertiser spend that reached publishers (“working media”) averaged 51%, [while] the unknown delta of 15% represents around one-third of supply chain costs.”
You read that correctly – almost half of a brand’s digital marketing spend is absorbed by middlemen before actually reaching the intended publisher. Worse, one-third of these fees are unaccounted for, making it virtually impossible for advertisers to truly justify where their money is going.
Korenfeld reiterated that publishers see a fraction of what advertisers are willing to pay in the first place. This raises the question of what the supply side would have given the demand side as far as quality if they saw a greater percentage of the original budget.
Today, trust and data go hand-in-hand. In fact, it has gotten increasingly difficult to have one without the other. When it comes to the ad tech ecosystem and all of the solutions on the supply chain, the demand side needs more confidence in the data that the supply side claims to have. Especially since traditional ad tech players rely on third-party data such as cookies, which will soon be a thing of the past.
“How do you ensure trust between the buyer and the seller?” Brook asked. “If WeatherBug is telling somebody ‘this is a seller-defined audience,’ how do they know that what we’re saying is true? There’s still that level of needing to be able to prove it somehow. And I think that’s one of the missing keys in the future of first-party data as applied to cookies. Maybe that’s a tech tax that needs to be created.”
Payne explained that in the past, Vice relied on third-party data for demographics, which he didn’t trust. However, once they made the shift toward first-party data and contextual advertising, those demographics were defined in-house, allowing more trust in what a user is doing across properties.
Matthews pointed out that Ogury has always talked about transparency. Ogury always knew that privacy was paramount, and that regulators and technology players would crack down on third-party identifiers. That’s why we rely on IDless and cookieless solutions.
Where do we go from here?
To Payne, the future of digital advertising will rely on trust. “I think we should decide whether we want to trust digital media as an advertising platform, because I certainly do. It feels at times like we don’t. We’re looking for a reason not to trust it. We’re looking for an erroneous impression or an invalid user. I think trust needs to be more intrinsic for it to really succeed as a medium.”
Learn more about the ad tech tax in this three-part series: