Did GroupM's Programmatic Tax Stats Just Make The Case For Blockchain?

Do you want the bad news or the not quite as bad news about programmatic?

That's probably how most agencies will be phrasing the latest findings from GroupM that looked into the level of "programmatic tax." It has found that on average, demand-side and supply-side platforms each take around 10% of the budget passing through them. Combined, that's a pretty hefty 20%.

However, eMarketer is revealing that, as we probably all thought, accepted wisdom in the industry was that fees could be at least double that. There are quotes from insiders to suggest that this is what they're seeing, suggesting that this is an average picture and that there are still many instances of companies charging more than this. 

Not sure about others, but when I have talked to people in the space, the complaints about programmatic fees have generally suggested that each side was taking roughly what GroupM is saying is taken in combination. In other words, the 20% figure is about right, but it's taken twice -- once by the demand side and once by the supply side. 

One has to hope that the push for greater transparency has resulted in fees being reduced and that the 20% total -- and combined -- fee is now the more credible figure.

Even so, I suspect there are a lot of advertisers out there looking at even a 20% fee for placing ads as being a little on the high side. Okay, it's a lot better than the Wild West days of programmatic, when the fees may have been double. But a fifth of budget going to what are, effectively, marketplace fees will seem exorbitant to many.

Once the calculator is out and a trading desk's fee is put in to the equation, as well as the media agency's charge, and then perhaps some extra charges around brand safety and viewability measurement are factored in (if not already included), it's not too hard to imagine that many could end up paying more in fees than they do for media that is actually seen by their target audience.

This surely has to be an area of marketing tech that is ripe for disruption. If advertisers are pushing back on transparency and fees, and yet still the best part of half their budget goes on third parties and not media, that has to open up a very real need for a challenger who can restore some sanity.

Or, if least not sanity, maybe clarity? This is where blockchain has been touted as being a cure, or at the very least, a light to shine on where budgets go in digital marketing. 

For me, whether it intended to or not, GroupM has just made a compelling case for use of the technology, or something similar, to reveal to advertisers where their budgets are going, and to whom. If the best-case scenario is that the platforms take a fifth of spend, before an agency, its trading desk and it ad tech providers are paid, then the case is made. The case is compelling. 

2 comments about "Did GroupM's Programmatic Tax Stats Just Make The Case For Blockchain?".
Check to receive email when comments are posted.
  1. LuRae Lumpkin from LLNYC Agency Worldwide, May 22, 2018 at 10:10 a.m.

    As a former GroupM Executive, I’ve committed to bring media buying transparency while fighting ad fraud with  The digital ecosystem has become so complicated for brands and advertisers, it’s time to open the kimono with Blockchain.

  2. Gary milner from The Simpler Way, May 22, 2018 at 2:39 p.m.

    Nothing new in this article. If brands are still unsure of the fees they are paying that's sad. The cost has to be balanced against the costs of traditional buys that may contain poorer targetting, media cpm padding and higher manpower costs. 

Next story loading loading..