• by Joe Mandese  @mp_joemandese, 7 hours ago

Two years after the Association of National Advertisers (ANA) benchmarked the relative cost of programmatic ad spending, the share of working media dollars has improved 14%, but still remains a minority of the gross cost of programmatic buys: about 40 cents on every dollar spent, finds an updated study being released this morning.

The study finds the vast majority -- 59% -- of programmatic still goes to extraneous overhead, including ad tech supplier transaction costs and bogus traffic, though there have been improvements in both over the two-year period, including:

• Demand-side platform (DSP) transaction costs.

• A marked decrease in programmatic ad buys on so-called made-for-advertising (MFA) sites: down from 15% of total programmatic spending to just 0.4% in the current study.

To help industry pros get their minds around the concepts, the ANA this morning also is introducing two new ways of indexing the relative value of programmatic advertising buys -- the "TrueAdSpend Index" and the "TrueCPM Index" -- which are modern day ways of saying "working media dollars" and "effective CPM," respectively.

You can see the net effect of the TrueAdSpend index in the graphic above, which shows it currently is 41% of overall programmatic ad costs, up five percentage points from the ANA's 2023 benchmark study.

The graphic below shows how the ANA computes the TrueCPM, or effective cost-per-thousand of average programmatic advertising buys. It shows there currently is a 37.8% "opportunity" to improve the underlying cost of programmatic advertising buys, which the ANA estimates equates to $21.6 billion in "unrealized global media value" that can be derived from weeding out bogus impressions, including invalid traffic, unmeasured and non-viewable advertising impressions.

“There remains significant room for improvement,” states ANA CEO Bob Liodice, adding, “Implementing the ANA’s recommendations -- such as reducing the number of supply path partners and tightening domain lists -- can substantially enhance these outcomes.”