Accountability: the lost grail of programmatic advertising
The industry is currently at a critical inflection point.
It is widely accepted within our industry that the programmatic ecosystem has several material issues, including a distinct lack of access to data, inconsistent accountability, and a complete inability to follow money through the supply chain.
Yet, year on year, programmatic display spending sees rapid growth. For the year ahead, eMarketer forecasted a spending increase in the United States of 16.3%, rising to over $120bn in 2022.
The disappearing £2.6bn
In 2020, a joint study between the ISBA, the Association of Online Publishers (AOP) and PricewaterhouseCoopers (PwC) found that only 51% of media spending was put towards working media. More striking, though, was the other statistic uncovered: 15% of spend (£2.6bn) could not be attributed to anything within the supply chain.
This money could not be tracked or identified, and was siphoned off into a programmatic ether. There are numerous potential combinations of factors that could be responsible for this including low quality data or limited data, reselling between tech vendors, foreign exchange translations, and post-auction financing agreements. Often, access to data was obstructed or impossible, with hundreds of different supply paths to reach the same publisher.
The industry is currently at a critical inflection point. Marketers, and the industry as a whole, can no longer afford to turn a blind eye to the issue of accountability and transparency. It has become an endemic problem, and not only does it hamper marketers’ ability to assess and quantify ROI for their spending, it also fundamentally shows a level of waste within media that should not be allowed to continue.
With a cost-of-living crisis and a potential recession looming, brands and businesses will be looking to cut their spending wherever possible. In the current landscape, the missing 15% of ad-spending is unjustifiable and will ultimately land on the shoulders of consumers, as businesses are forced to rack up their prices to offset additional marketing budget.
A new study
The ANA has launched a new programmatic study with PwC, Kroll, and TAG Trustnet to delve further into this issue than any other study, and examine the entire programmatic supply path, from advertiser to consumer. Expected to release preliminary findings by late 2022, this could potentially drive brand growth by eliminating unproductive spending and will help force the issue of creating industry standards.
Depending on the level of waste exposed, the study could even pique the interest of regulators and we could see industry oversight bodies created to ensure that the programmatic ecosystem is properly policed, monitored, and has integrity and authenticity.
Currently, the world of programmatic is clouded, ambiguous, nebulous. The ANA probe will hopefully act as a cleansing beacon, cutting through and bringing clarity to programmatic buying, allowing advertisers to make decisions based on fact.
Whilst we await the results of the ANA probe and further industry-wide action, advertisers should be taking steps to mitigate the loss of funds through programmatic buying. Education is a key part of the issue and advertisers should look to partner with business, legal teams, agencies, trade associations, and academics to gain a better understanding of the ecosystem.
Agencies should also review their own media buying agreements and contracts with supply chain participants, holding them accountable and ensuring consistent, accessible data. Importantly, industry initiatives dedicated to developing consistent data taxonomies need support.
Silence is not a strategy.
To end on what might seem to some to be a slightly saccharine note – advertisers need to care. Billions of dollars are wasted and lost, with brands funding an opaque ecosystem. It is on the industry to fix itself.
Nick Swimer is a partner in the Entertainment and Media Industry Group at international law firm Reed Smith. His colleague Keri Bruce, another Partner at Reed Smith, also contributed to this article.