• by Laurie Sullivan  @lauriesullivan, April 11, 2024

Philip Inghelbrecht, CEO and co-founder of Tatari, shared data Friday to show just how much brands could save when buying television media direct rather than programmatically.

The hidden fees of programmatic are part of a larger ongoing trend, so identifying them is not necessarily new or groundbreaking, but Inghelbrecht released the numbers because he believes the continued increase will stifle growth in the television space unless more advertisers buy direct from publishers.

Tatari found that the numbers for a TV campaign running through some TV ad-buying platforms often add hidden fees that inflate cost, especially when it runs through a demand side platform (DSP).

By adding publisher, supply side platform (SSP), data, ad measurement, ad serving, demand-side platform (DSP) and service fees, the costs can inflate a hypothetical $10 inventory CPM to a $20.56 full-cost CPM.

“That's a tax rate of more than 100%, which makes personal taxes look like a bargain,” Inghelbrecht said. "Perhaps it's time to ask for an audit on all the taxes."

Inghelbrecht has a history of identifying trends. He co-founded Shazam, one of the most widely used music apps in the world, which Apple acquired in 2018 for $400 million.

He also is a founding employee and former president of TrueCar, and ran business development at Rockmelt, which Yahoo acquired. He also led sports and entertainment partnerships for Google and YouTube.

Going direct can remove the SSP and measurement fees, as well as reduce data, ad serving fees and service fees, bringing the full-cost CPM to $13.95, according to Inghelbrecht. At least at Tatari, but similar companies are likely to lower costs buying direct as well.

The DSP can talk direct to the publisher, bypassing the SSP brings down hidden fees. “Advertisers love programmatic because of the sheer automation, but at what cost,” he said.

eMarketer estimates that after more than quadrupling during the last four years, CTV ad spend is heading for more moderate growth rates in the low double-digit territory.

Still, CTV grew more than three times as fast as mobile, and programmatic ad spending on desktop and laptop computers came in flat last year. Despite its relatively small share of the total programmatic market, about 2 in 5 new programmatic ad dollars will go to CTV.

Going direct also provides cost savings because it aligns brands and publishers, brings transparency and eliminates brand-safety concerns. The brand knows the impressions it buys and where they come from. It eliminates fraud. There can be fraud in programmatic buying, but not in direct buying, according to Inghelbrecht, and it fosters stronger partnerships between advertisers and content providers.