How Will Improvements To Programmatic Ads Help Publishers?

Publishers typically receive about half of the money that brands spend on digital advertising after a chain of middlemen collect their fees, a recent study found. While the report may be maddening to cash-strapped publishers struggling with falling ad revenue, it does highlight the importance of direct ad sales in capturing a bigger portion of ad dollars.

The Incorporated Society of British Advertisers(ISBA), a U.K. trade group representing 3,000 brands, last week published a report that partly unraveled what happens after an advertiser spends money on a digital ad placement.

In matching the information provided by advertisers, agencies, programmatic platforms and publishers, it found 51% of ad spend reaches digital media outlets and 15% vanishes somewhere in the supply chain.

The programmatic marketplace is a complex network of companies that broker the price of digital media placements among thousands of publishers. These companies have worked together to crack down on fraudulent activity and to improve brand safety. But more work needs to be done to improve transparency, as the ISBA report suggests.



Among the intermediary fees, study author PwC estimated that 7% goes to media agencies, 8% to a demand-side platform, 10% to a demand-side technology fee, 8% to a sell-side platform and 1% to a supply-side technology fee. The fees can vary, based on the individual contracts among the companies in the supply chain, making direct cost comparisons more difficult.

Publisher revenue ranged from 49% to 67% of ad spend among the 12 media outlets that participated in the study.

Those publishers included Bauer Media Group, Dennis Publishing, ESI Media, Guardian Media Group, Mail Metro Media, News UK, Telegragh Media Group and TI Media.

The ISBA is setting up a cross-industry task force to take steps to improve the transparency of the supply chain and data-sharing that help to improve the efficiency of the marketplace. Whether their work will put more money into the pockets of publishers remains to be seen. The amount of programmatic ad inventory can vary greatly among publishers, depending on their market specialization.

I'd like to say publishers deserve more money because producing high-quality is expensive, but I also don't adhere to the labor theory of value.

Publishers still need to confront the realities of the marketplace and how much advertisers are willing to pay to reach their audiences. But any improvements to the programmatic supply chain are a welcome development to advertisers and publishers that depend on their sponsorship.

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