Heavy 'Tech Tax' Remains A Challenge For Programmatic Media Deals

So-called “tech tax” remains a major issue for global advertisers that are heavy users of programmatic media platforms -- costing nearly $30 billion a year.

Warc, the global publisher of advertising research, estimates that $63.4 billion in 2017 was spent on worldwide programmatic advertising platforms, but only about 40% ($25.4 billion) got to the “working media level.”

Warc says this means there is a “tech tax” of close to $30 billion. But this doesn’t include assumption of fraud -- which would lower working media dollars further.

If there is a 10% fraud assumption, that means $22.8 billion -- or 36% of the initial client investment -- is of “working media.” A 30% fraud assumption brings it down to $17.8 billion, and 28% for working media, per the researcher.

Of the initial programmatic worldwide client investment, 5% or $3.2 billion goes to the advertiser’s agency of record; 15% ($9.5 billion) to a trading desk; 10% ($6.3 billion) to a demand-side platform; 25% ($15.9 billion) to data/targeting/verification; and 5% ($3.2 billion) to an exchange.

The data -- from Warc, Magna Global, and the World Federation of Advertisers -- assumes a "one-size-fits-all" approach to programmatic buying; media deals and their programmatic tech components will vary.

1 comment about "Heavy 'Tech Tax' Remains A Challenge For Programmatic Media Deals".
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  1. Ed Papazian from Media Dynamics Inc, April 3, 2018 at 10:01 a.m.

    What a comparison with the way that "traditional media" is organized. The typical fee for buying and servicing a national broadcast TV buy is 1% while national cable and spot TV come in around 3% as there are more sellers to deal with and more spots---in the case of cable---to keep track of. The same gigantic differentials apply for radio and print media, relative to digital. Does this make sense?

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