Programmatic Still Sucks For Marketers -- Big Time!

I have written many columns about digital media transparency, and so have many others. The whole industry has been turned upside down by revelations about digital brand safety, ad transparency and ad fraud. The Association of National Advertisers, the World Federation of Advertisers, the Interactive Advertising Bureau and many other industry organizations have conferenced and argued on the topic. It has been a hot-button issue for at least five years. 

And still, nothing has changed.

You may have heard about the dramatic and damning report from Incorporated Society of British Advertisers, the ANA’s counterpart in the United Kingdom, called “ISBA Programmatic Supply Chain Transparency Study, in association with the Association of Online Publishers (AOP) and PwC.” PwC collected data from 15 advertisers, eight agencies, five demand-side platforms (DSPs), six supply-side platforms (SSPs) and 12 publishers, offering an attempt at complete transparency of the programmatic food chain. 



The conclusion is not pretty: The middlemen in the industry still eat up about half of dollars invested in programmatic, which is about the same number as was reported five years ago in a different study.

What's even worse is that 15% of budget disappears into what apparently is the first known manmade black hole. Or as ISBA puts it: “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.” Could. Not. Be. Attributed.

Sure, ad tech costs money. You have to build it and maintain it. You have to hire people and build systems and invent or license technology -- that's all fair. But at a cost of almost 50% of every dollar? And 15% disappears in such a confusion manner that even PwC, with full access to everything, cannot figure out where it is going, and who ends up with it?

On top of that, the 50% that does reach publishers sadly may not reach the actual publishers, and therefore actual consumer eyeballs. On March 27 of this year, Mediapost’s Advanced TV Insider Karlene Lukovitz reported on the latest ad scam, called “Monarch.” She writes, “In this one, the alleged scam -- in which Roku and premium publishers are again victims, not beneficiaries, stresses Pixalate -- exploited over a dozen Roku apps in an apparent scheme that appears to have OTT/CTV advertisers including political ad groups, luxury automakers and CPGs.”

So marketers thought they were buying premium, and therefore safe content, because of the name-brand publishers. 

There are countless other examples where criminals did the same and scammed the digital ad industry out of billions of dollars. 

What is the industry to do?

Stop buying through programmatic?

Put cash in envelops and bring it directly to publishers in person?

None of this will work, obviously. And I get that it is difficult to get outraged when COVID-19 eats up every minute of every day. It is hard to get angry when jobs are disappearing, budgets are frozen or cut, businesses are going bust, and we are nowhere near done with 2020 yet. 

But think what would happen if advertisers could recoup half of the black hole? Or 30%? For now, the 15 advertisers participating in the ISBA study are probably actively doing just that. And so should you. Perhaps, a few jobs might be saved as a result -- because, rather than feeding a black hole, you could be paying a salary to someone who does actual work in the ad food chain.

5 comments about "Programmatic Still Sucks For Marketers -- Big Time!".
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  1. Bob Coyne from Nexstar Media, May 15, 2020 at 2 p.m.

    The precipice is, the time, knowledge, and expertise using programmatic.
    Until you can hire someone in house to learn it and manage it....Using Middlemen is the best way.  There are hundreds of programmtic products and platfomrs avaiable to advertisers.
    If you can show results with their budgets, i.e. form fills, telephone calls, and website engagment, i.e purchases, then you have done them a valuable service that they would not otherwise have had the ability to do.  Everbody has a markup.  PWC has a markup!  This is capitalism.  Sincerely,

  2. Charles Cantu from RESET DIGITAL, May 18, 2020 at 11:53 a.m.

    We have solved this solution quite elagantly (if I do say so myself).  If anyone is serious about leveraging a real solution.  Please reachout to 

  3. Craig Mcdaniel from Sweepstakes Today LLC, May 18, 2020 at 7:30 p.m.

    Maarten, Grreat points.  If I were to tell you that 100 percent of the ad fraud could be eliminated and 20 to 30 percent or more savings could be obtained by changing the ad distribution management? You might think I was pulling your leg or flat out nuts right?

    The best way to clean up the problems you mentioned is to go back to Over the Counter and private ad networks.  The reason is in publishing of promotions we hand place all ads. The bad guys/hacker cannot defeat us because they get past our security and replace the URL's. Programmatics has more holes than Swiss cheese in their security. 

    Second If the advertisers who have worked with me directly found they don't have to paid the very high middle man fees.  I am not pitching my business but pointing out that their are far better ways by working with real people instead of the slot machine type of robotic system now in place.

  4. Michael Hubbard from Media Two Interactive, May 19, 2020 at 1:21 p.m.

    So I read several different takes on that study - and all seemed to imply that the blackhole was bad for the publishers moreso than the marketers.  You seem to be implying the other way around.  While I, like most others, prefer to have total transparency, a number of people have pointed out the lack of general knowledge in the space which creates these middleman opportunities.   The best solution is in-house, and self managed so you control your inventory sources - but for those that feel they're being ripped off by programmatic - you don't have to look too far back to where you had zero control of your ad targeting, or had to buy an entire website to hit 10% of your target audience, or were paying CPM's in the $30-$40 range.  Programmatic has created a wealth of opportunities for those that understand the capabilities.  While there are some drawbacks and tech bugs that still need to be worked out - I think saying it still sucks for marketers is a bit of an exageration - as I for one wouldn't go back to the old way of buying media without the technology.

  5. Craig Mcdaniel from Sweepstakes Today LLC, May 20, 2020 at 1:08 a.m.

    One more solution that was the foundation of online ads.  16 years ago, programmatics were not around. For the publishers we had what was called "Ad Rotators" to distribute the ads on our websites.  This was the equiivalent of a ox turning the waterwheel compared to today's distribution methods.  

    However the Ad Rotator couldn't be hacked or cheat anyone beause the ads were hand placed into the program. We didn't see fake ads and the advertisers knew what they were getting. Yes, there was human to human contact mainly through email. 

    I am a supporter of old school and I would be happy to go back to the what works. Programmatic does have it advantages, they also have more than their share of nightmares as well.

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