- A significant chunk of the money marketers spend on programmatic advertising is lost to factors like fees and sketchy or nonviewable web traffic, according to the Association of National Advertisers’ (ANA) updated assessment of the channel.
- The trade group’s anticipated follow-up to a report first released in June reveals that just 36 cents of every dollar that enters a demand-side platform (DSP) effectively reaches the end consumer, with the rest swallowed by a “cost waterfall.” Ad-tech transaction costs eat up 29% of that spend, while 35% is wasted on unmeasurable or low-value environments like made for advertising (MFA) sites.
- The ANA’s complete findings suggest that marketers could realize $22 billion in efficiency gains if they adopt more hygienic programmatic strategies, a figure representing one-quarter of an open web market valued at an estimated $88 billion.
The ANA’s “enhanced” report on the state of programmatic advertising, which stretches over 120 pages, reiterates transparency problems present in the initial batch of research, but with additional and revised stats regarding the amount of waste present on the channel and the potential benefits that could be unlocked if the industry improves its practices. The trade body representing brand marketers also shared more detailed advice around adopting inclusion lists versus exclusion lists, optimizing supply-side partners and focusing on more private programmatic marketplace deals.
One area where the ANA has seen progress is its campaign against MFA sites, or websites that use sensationalism and clickbait to drive traffic and vacuum up programmatic dollars. Surveys conducted in September and October found that 21% of marketers now track MFA activity as part of their programmatic campaigns and 33% plan to do so in the future. Agencies have also stepped up their efforts in this area. WPP’s GroupM media investment arm in August teamed with programmatic supply chain management firm Jounce Media to create added protections against MFAs for clients.
Still, MFA ad supply accounted for almost 30% of all web auctions around the mid-year point, up from just 5% in 2020, according to the ANA. Advertisers participating in the research spent, on average, about 15% of their programmatic budget on MFAs, but some directed as much as 42% toward junk domains.
Another point the ANA has honed in on is the potential need for marketers to consolidate where they spend their money on programmatic. That means working with a smaller number of partners and culling the amount of websites that get blanketed with ads. Part of the problem stems from an industry knowledge gap: Only about half (46%) of marketers said their brands track the number of websites used for programmatic campaigns.
Estimates from the ANA indicate that the average campaign runs on 44,000 websites, producing diminishing returns. The report stated that working with just 75-100 trusted sellers that reach a few thousand quality websites would achieve the desired outcomes while cutting down on fraudulent or nonviewable traffic. The ANA’s prior report stated that a few hundred websites would suffice.
ANA leadership also noted that marketers could take a more active role in their stewardship and understanding of the data that powers programmatic advertising.
“Marketers are not fully skilled in optimizing the management of their data,” said ANA President and CEO Bob Liodice in a statement. “Of critical importance, marketers are even less skilled in securing log-level data — a principal pathway to effective decision-making and driving growth via programmatic activities.”
The ANA worked with 21 marketers from a variety of industry verticals to uncover these insights. Mondelez International, Molson Coors, Walgreens, State Farm, Shell and Nissan were among the participants. Additional collaborators on the project include Lemonade Projects, TAG TrustNet, Reed Smith and Kroll, along with a number of ad-tech and supply chain firms.