A major study has revealed the alarming extent of the labyrinth-like supply chain involved in online advertising, and reveals that around 50% of the money spent by advertisers is gobbled up by middlemen.
The two-year study, published by the Incorporated Society of British Advertisers (ISBA) and carried out by PwC, is the first to look in detail at the supply chain of online advertising, a market worth around £2 billion in the UK, and some £100 billion worldwide.
In addition to discovering that half a brand’s adspend never reaches the publisher, researchers also found they were completely unable to trace 15% of the money spent by advertisers.
“It’s important to realise that this study represents the most premium parts . . . the highest profile advertisers, publishers, agencies and adtech,” Sam Tomlinson, the PwC partner who led the study told FT.com.
“If examined, the ‘long tail’ would presumably further reinforce these findings,” he added.
Many publishers and advertisers will be unsurprised by the findings as they have long complained of poor value for money from the many levels of cost involved in programmatic advertising.
“The market is damn near impenetrable,” Phil Smith, ISBA director-general said. “As you start to break down the value chain for the impressions we have matched, the erosion of value is really significant.” He said the 15% of spending that was untraceable “was really shocking” and it was evidence of the need for shared standards and more transparency.
Fifteen advertisers took part in the study, including Disney, HSBC, Unilever and Nestlé. And data was collected from eight agencies, five Demand Side Platforms (DSPs), six Supply Side Platforms (SSPs) and 12 publishers, representing approximately £100 million of UK programmatic media spend.
The study lays bare the depth of the supply chain’s lack of organisation and complexity, the ISBA says. “A total of over a thousand distinct supply chains were found; across the 15 advertisers. Researchers were able to end-to-end match 290 chains (31 million impressions) all the way to the 12 publishers.”
Nigel Gwilliam, Director of Media Affairs at the Institute of Practitioners in Advertising, said: “This report highlights the complexity of the programmatic supply chain and exposes the vital need and action points required for greater data standardisation and transparency across the adtech ecosystem.”
Sourced from ISBA, Financial Times