• by Laurie Sullivan  @lauriesullivan, December 12, 2024

The effective reach of ad buys on DSPs (demand-side platforms) has improved this year -- thanks to a reduction in the amount of MFA (made-for-advertising) sites bought -- but it still represents a minority of the ad dollars spent, according to a new study released Thursday by the Association of National Advertisers.

The study, the 2024 "Programmatic Transparency Benchmark," estimates 44% of ad dollars spent on DSPs effectively reach consumers, up from 36% estimated in a 2023 ANA benchmark study.

The increase means more dollars are being put to work rather than being wasted. Considering the $104 billion open web programmatic marketplace, this improvement in productivity translates to an additional $8.2 billion in ad spending.

The primary driver, according to the study, is a reduction in ad spending directed to Made for Advertising (MFA) sites.

Since the 2023 study, the median spending on MFA sites has declined from 10% to 1.1%, with the average declining from 15% to 6.2%.

This shift reflects a growing focus on more efficient and higher-quality ad placements.

The ANA released these findings with TAG TrustNet in its 2024 Programmatic Transparency Benchmark Study. This year the analysis includes connected TV (CTV). It highlights the sector's rapid growth and provides a complete view of programmatic media buying.

The number of domains and apps also declined, from 44,000 to 22,634 -- reflecting a trend toward more refined and secure ad placements, according to the data.

The average number of supply-side partners (SSPs) used in 2024 is slightly above the 2023 level of 19, suggesting significant room for further optimization.

Mobile and tablet devices dominate programmatic ad spend and collectively account for 44% of the total ad spend. CTV follows with 28%.

Desktop ads account for 26% of the total spend, and out-of-home (OOH) advertising and other miscellaneous devices comprise the remaining 2%.

The growing prominence of CTV in programmatic advertising is underscored by the fact that 80% of marketers in the study now use this platform. It is being hailed as a performance channel now easily measured to reach key audiences. 

An analysis of CTV ad spend as a percentage of total programmatic spending revealed three distinct marketer segments. High CTV investments have become a subset of marketers who allocate more than 20% of their total programmatic ad spend to CTV. Moderate CTV investments refer to a group of marketers who allocate between 2% and 10% of ad spend. Some still do not invest in CTV. This ranges from zero to 60% in CTV ad spending.

The data also shows that 97% of CTV ad spending was transacted through a Deal ID, described as a unique identifier that privately connects buyers and sellers to facilitate inventory purchases.

These transactions were spread across an average of 3.64 SSPs, with inventory being sourced from an average of 491 domains and apps. It means a small number of large SSPs dominate the supply landscape. From a pool of more than 9,000 domains and apps, most ad spending is concentrated among a select group of publishers, the report states.

The top 20 domains and apps include Disney, Hulu, NBCU, Paramount, Roku, and Samsung TV Plus. They represent 70% of total CTV ad spending, while the top 75 domains and apps represent 90%.

Private marketplaces also are gaining on open marketplaces. In the 2023 ANA study, 59% of programmatic ad spending from participating marketers was allocated to the open marketplace, with the remaining 41% directed to private marketplace deals.

The latest analysis reveals that only 41% of programmatic ad spending is directed to the open marketplace, while 59% goes into private marketplace deals. There is an 18-percentage-point swing.

The average CPM paid by advertisers has risen to $5.82, up from $2.23 in the 2023 ANA Study.

Advertisers need to balance the pursuit of low-cost inventory in programmatic media with a focus on ad quality — ensuring ads are viewable, fraud-free, and brand-safe.

It emphasizes the importance of context -- especially an emphasis on ad quality. Advertisers are more willing to accept higher CPMs to ensure higher ad quality.

The entrance of CTV also has changed things. CTV typically commands higher CPMs than other devices, contributing to the overall increase.

The average CPM for private marketplace inventory reached $7.46 -- notably higher than the $3.26 CPM for open marketplace inventory -- indicating a strategic shift toward premium, controlled environments.