The release of the advertiser-funded ISBA Programmatic Supply Chain Transparency Study, in association with the Association of Online Publishers (AOP) and carried out by PwC, marks the first time that programmatic advertising supply chains – the way in which advertisers and publishers are served by the programmatic ad delivery system – have been mapped from end-to-end, anywhere in the world, says ISBA.
The study builds on previous industry initiatives by the World Federation of Advertisers and the Association of National Advertisers in the United States. It sets out to identify each element of the supply chain, understand the services delivered and the costs applied at each stage, and provide a transparent picture by mapping supply chains from start to finish, using real market data. The intention was to provide a more transparent view of the UK programmatic supply chain, for the benefit of all participants and the industry as a whole.
Data was collected from 15 advertisers, eight agencies, five Demand Side Platforms (DSPs), six Supply Side Platforms (SSPs) and 12 publishers for the study, representing approximately £0.1 billion of UK programmatic media spend.
The study reveals the depth of the supply chain’s lack of organisation and complexity. A total of over a thousand distinct supply chains were identified; across the 15 advertisers, the PwC team of media/programmatic experts and data scientists was able to end-to-end match 290 chains (31 million impressions) all the way to the 12 publishers.
PwC encountered a lack of understanding and consistency among the ad tech suppliers as to how they could legally share data and what permissions were needed; a lack of uniformity on data storage and formatting; and the fact that data captured by a DSP for an impression is not equally captured by SSPs, which hindered impression matching. These challenges and complexities do not serve the principal interests of advertisers or publishers.
The major findings of the analysis of the ‘industry waterfall’ – where advertisers’ money goes – were that:
- publishers receive 51% of advertiser spend on average; and
- taking other visible costs such as DSP/SSP fees and other technology costs, 15% of advertiser spend – an “unknown delta”, representing around one-third of supply chain costs – could not be attributed.
- In response, the study makes two key recommendations for advertisers, publishers and the industry as a whole:
- standardisation is urgently required across a range of contractual and technology areas, to facilitate data-sharing and drive transparency; and
- industry collaboration is now required to further investigate the unknown delta.
To take these forward, ISBA, its members and partners will now:
- immediately convene a cross-industry taskforce to begin work on studying the causes of the unknown delta; and
- separately, shape an independently-led effort to work on standardisation and data sharing, to facilitate robust supply chain verification.
Phil Smith, Director General of ISBA, said: “The publication of this study marks an important moment in our understanding of online advertising supply chains. It is the first time anywhere in the world that an attempt has been made to map a system which is not capable of being audited.
“This process has been led by our members, advertisers who proactively sought to understand a problem and find a way forward. The challenge now is for industry to come together, as they will in the new taskforce, to drive industry standards and create transparent supply chains, to allow companies and consumers to benefit properly from online advertising.”
Graeme Adams, Head of Media at BT Group, said: “Being part of the ISBA/PWC study has allowed us to get into the detail of what goes on in the digital market, working with a group of like-minded tech and publishing partners. While digital display is an effective sales driver for us, the findings of the study are stark: there is a big hole in the value chain.
“We desperately need to see a common set of standards adopted and more openness in this market, so that every penny spent is accounted for. If this happens, we’ll invest more in the channel; if not, we will cut back and reshape our trading approaches.”
Richard Reeves, Managing Director at the Association of Online Publishers, said: “It’s phenomenal that we’ve been able to achieve an end-to-end study, and it’s thanks to the persistent appetite from the advertising industry and ISBA that we have finally got here.
“Programmatic trading has been a key influence for more than ten years, so the study is well overdue, but now provides a great starting point to generate greater communications around transparency issues and focus on removing the complexities within the supply chain. We already see a great willingness from the wider community to engage in addressing these challenges, and I am confident that through collaboration we can start to move closer to a fully transparent, more efficient ecosystem.”
Sam Tomlinson, Partner at PwC, said: “We would like to express our gratitude to everyone at ISBA and AOP, and to all the participating publishers, agencies, adtech, and particularly the advertisers who funded this study.
“The promise of programmatic is the ability to target the right audiences, in the right context, at the right time. All participants need confidence that the supply chain is acting to fulfil that promise which, in turn, requires industry-wide collaboration to drive the standardisation of data access and formatting. We hope this study can be a positive catalyst for change.”
Jon Mew, Chief Executive of the IAB, said: “Transparency in digital advertising’s supply chain is critical for its sustainable future and we thank our members for their proactive involvement in this study. Programmatic advertising is complex, but it is not a dark art and we shouldn’t lose sight of the valuable role it plays in supporting our open, ad-funded web. Collaboration will continue to be essential to shine a light on the value added at each stage of the supply chain.”