Is 50-Cents on the Dollar Good Enough for You?

When an advertiser spends a dollar on traditional radio, or print, or outdoor, again, virtually that entire dollar drives impressions that potentially reach the consumer.

But in programmatic, that’s not the case. In the 2023 landmark report, ANA Programmatic Media Transparency Supply Chain Study, a key finding was that only 36 cents of every ad dollar that enters a DSP effectively reaches the consumer, after accounting for both transaction costs (consisting of fees paid to DSPs and SSPs) and loss of media productivity costs (including non-viewable impressions, IVT, and spending on Made for Advertising websites). The finding that got the most attention was MFA activity – which accounted for 21 percent of all impressions among our study participants. And that caused many advertisers to reassess their own investment strategies.

ANA has now released the follow-up report, Understanding the Role of Direct Contracts In the Programmatic Supply Chain. The purpose of this work was to go deeper on the issue of programmatic media transaction costs in order to reduce those costs – which could also help reduce loss of media productivity costs.

We found that almost half (45 percent) of marketers contract directly with at least one DSP. Only 13 percent contract directly with any SSPs. Just over one-third (36 percent) contract directly with an ad verification provider. The top reason for contracting directly with programmatic supply chain partners is account and data ownership. A direct contract ensures that the marketer, not the agency, has primary ownership and access to the campaign data. Owning the contract allows the marketer to understand the data and insights including direct line of sight regarding important metrics such as fraud, viewability, brand safety, attention, and sustainability. Direct contracts also provide data portability in the event the marketer switches media agencies. The sequencing for direct contracts is most likely to be DSP first, then ad verification, and then SSP. Generally, a marketer must have at least a modest investment level in programmatic advertising to consider direct contracts.

The report provided a number of recommendations relevant to all marketers (whether one has direct contracts or not):

• Be aware of the specific DSPs, SSPs, and ad verification company being used for your programmatic advertising campaigns. Ask (often your agency) for the rationale for the use of each supplier.
• Ensure your client/agency agreement requires the agency to obtain and provide access rights to supply chain partner data (DSPs, SSPs, ad verification).
• Buyers should put controls in place to optimize spending and enhance media quality through SSPs. Five to seven SSPs are generally optimal, providing access to close to 100 percent of supply, while reducing bid collision (bidding on the same impression multiple times, which drives up costs).
• Leverage log-level data for transparency and optimization across all partners. LLD is the raw, unaggregated record of every event in the programmatic advertising process -- every ad request, every bid, and every impression served and offers the most granular and complete view of how ad impressions are bought and delivered.

Again, a key finding in the 2023 report was that only 36 cents of every ad dollar that enters a DSP effectively reaches the consumer. Now there is the opportunity for further improvement by following the recommendations in this report. We believe that the opportunity is for at least 50 cents of every dollar which enters a DSP to effectively reach the consumer.

So that is great progress – 50 cents on the dollar is better than 36 cents. But is 50-cents on the dollar good enough for you? Or good enough for your CFO?

As ANA has been advocating for years now, marketers need to take an active role in managing and optimizing their media investments. Internal expertise is required, even for mid-sized advertisers and absolutely for larger advertisers. Media is just too complicated, fragmented, and fast-moving for the CMO to manage, without that internal expertise. And with all due respect to agencies (and I worked at agencies for 20 years), it’s your money, Mr./Mrs. Client.

I am continually amazed that many marketers “don’t know what they don’t know.” Principal media is a great example there. So is programmatic advertising. To optimize your programmatic spending and to realize at least 50-cents on your programmatic dollar, heed the advice in this new report and play an active role in managing your media investments. Otherwise, you are throwing money away.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.