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Will Three Times Be the Charm?


The ANA, WFA, and ISBA have all done studies showing that billions of dollars of brand investments in digital and programmatic advertising are being wasted, despite advertisers clamoring for a solution. Reed Smith's Keri Bruce and PwC's Sam Tomlinson discussed why the industry needs to fix its measurement issues now to avoid ongoing inefficiencies.

In 2017, four organizations — the ANA, the Association of Canadian Advertisers (ACA), global marketing and media consultancy Ebiquity, and ad tech company AD/FIN — collaborated on a study titled "Programmatic: Seeing Through the Financial Fog," providing an in-market analysis of programmatic advertising at the transaction level.

The report analyzed the data of seven companies, spanning 30 major brands in auto, banking, beauty, consumer packaged goods (CPG), fashion, and travel with $36.4 million in spending. The report analyzed the buy-side only, with estimations made on the sell-side.

Key findings of the report were as follows:

  1. An average of 58 cents of each dollar went to purchase media inventory, while an average of 42 cents went to supply chain data and transaction fees.
  2. Companies had a lack of understanding about programmatic advertising in general.
  3. With regards to the execution of programmatic advertising, companies had both a lack of access to data and variability in data formats.

Others have also investigated the world of programmatic advertising. A new study in 2020, conducted by PwC and published by the Incorporated Society of British Advertisers (ISBA) in collaboration with the Association of Online Publishers (AOP), marked the first time that programmatic advertising supply chains had been mapped from end-to-end. Over a 15-month period, more than 50 companies were involved, with 2.2 billion lines of data reviewed and 267 million impressions observed. This led to 290 unique supply chains matched with 31 million impressions.

The study revealed the following insights:

  1. Publishers receive 51 percent of spend.
  2. 15 percent of spend could not be attributed.
  3. Only 12 percent of the buys could be traced end-to-end.
  4. On average, brands appeared on 40,000 websites and interacted with more than 1,000 distinct supply chains.

In addition, the study highlighted some of the challenges of programmatic advertising, such as:

  • Chicken and egg permissioning: This refers to a lack of clarity and understanding over how parties share data and who needs to grant permission for it, with up to four different parties requested to confirm their approval over one data set for one part of one supply chain.
  • Access delays: Many advertisers had almost 300 distinct supply chains reaching only 12 publishers. With a lack of communication between advertisers and publishers in the ad supply process, it stalled the overall campaign timeline and wasted money.
  • Data formatting and fidelity: A lack of uniformity across the supply chain on whether data is stored on a log level or on an aggregated basis led to a number of problems in data matching. Inconsistencies across parties in data formatting (names, currency, device type) further increased these challenges.
  • Inflexible data retrieval: The data captured from a demand-side platform (DSP) for an impression is not matched on the sell side. Impression matching cannot easily be performed at the campaign level due to missing information in datasets.

Generally speaking, the study posited that complex supply chains led to opacity. It should be noted that this study focused on premium programmatic (in which marketers buy guaranteed ad impressions in advance from publisher websites). It did not address spend lost to viewability, fraud, or brand safety, but did consider the costs for tools to handle these issues.

Regulation and Investigation of Programmatic Advertising

As digital ad spending continues to rise ($283 billion worldwide in 2018, projected to reach $517 billion worldwide in 2023), brands and publishers cannot afford to waste dollars on programmatic spend. The stress on the demand and supply sides of programmatic advertising has been exacerbated in recent years by tightening regulations on the use of consumer data, consumer privacy rights, and on business practices of dubious legality. Multiple players in the ad tech ecosystem are being investigated, including those in Ireland, France, the U.K., and the U.S.

Consider the following timeline:

2018 – The U.S. Department of Justice began a probe into media buying, with subpoenas issued in 2019.

2019 – The Information Commissioner's Office (a U.K. privacy regulator) published its "Update Report" on real-time bidding (RTB), criticizing the RTB supply chain's poor data and privacy practices as a violation of the General Data Protection Regulation (GDPR).

2020 – A bipartisan Congressional letter was sent to the Federal Trade Commission (FTC), urging it to investigate digital advertising.

2020 – The Competition Market Authority (U.K.) published a report noting competitive imbalance in the programmatic marketplace.

2020 – The Department of Justice launched a probe into online platforms and anti-competitive behavior.

Keri Bruce of Reed Smith and Sam Tomlinson of PwC offered the following recommendations to brands to improve their programmatic practices:

  1. Partner with your business and procurement teams, agencies, trade associations, and other experts.
  2. Review your media buying agreements:
  • Are there non-disclosed services (i.e., services where the advertiser is unable to review/audit underlying costs)?
  • Ensure there is a clearly delineated process for non-disclosed services.
  • Carefully scrutinize "terms of art" (words or phrases that have a special meaning in a specific context).
  • Require your data to be separated from other client/customer data.

3. Ensure your suppliers participate in key industry initiatives/certifications and programs, such as:

  • Media Rating Council (MRC) Certification
  • Trustworthy Accountability Group (TAG) Certification
  • Sellers.json and OpenRTV Supply Chain Object

4. Establish a clear process for data access and sharing throughout the ecosystem and agree to consistent data taxonomies and definitions.

5. Work with your agency partners to help make data sharing easier and an ongoing practice.

6. Stay attuned to industry efforts to create standard industry terms — be willing to participate.

7. Stay up to date on privacy issues in ad tech.

8. Educate yourself on programmatic.

According to Bruce, if you are a brand, key questions to ask of yourself are:

  1. What are your current and future plans for programmatic and new media technologies?
  2. How strong is your agency programmatic team?
  3. What supplier vetting process is in place internally and through agency partners?
  4. Who are key supply chain participants? What are approval rights?
  5. What reporting is required by your agency/suppliers?
  6. What are key data flows?
  7. Do your audit rights adequately address the supply chain? Can you get end-to-end data?
  8. What accountability and transparency standards apply to your media partners, including agencies and publishers? What are they doing to help?
  9. Do you have an inclusion/exclusion list for media partners? What is your approach to brand safety?

Given the lost amount of money, the pressure of maintaining business relationships with clients, the responsibility of protecting shareholder value, and the increasing levels of accountability to Congress, Bruce recommended brands conduct a due diligence review of their programmatic advertising methods.

CLE Material


"Will Three Times Be the Charm?" Keri Bruce, Partner at Reed Smith LLP; Sam Tomlinson, Partner at PwC. ANA 1-Day Conference: Law and Public Policy, 9/15/20.

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