By Chris Jacques
Over 90% of your digital advertising budget is purchased programmatically today. But do you know what % of your budget actually buys any ads?
If you don’t, you’re not alone. Neither does your media agency. Nor do most other marketers.
That’s why ISBA (The Incorporated Society of British Advertisers) engaged PwC to find out the answers: to reveal what happens to marketing budgets along the programmatic supply chain.
Incredibly, it took PwC two whole years of investigation to get some of the answers (but not all).
Yes – it took two whole years – even though PwC had the full support of some of the world’s most respected marketers, media agencies, tech exchanges and online publishers.
And here’s what they (eventually) discovered:
Out of every US$1 that an advertiser spends on programmatic advertising – on average:
7% goes in fees paid to their media agency (fees which are commonly packaged in indecipherable proposals designed to minimise the chance of competitive comparison).
8% goes in fees paid to the DSP (the Demand-Side Platform – which enables agencies and advertisers to buy inventory from Supply-Side Platforms and Ad Exchanges)
10% goes in Demand-Side Tech fees (mainly ad serving, verification tools and data)
8% goes to the SSP (Supply-Side Platform) that enables digital media owners and publishers to sell ad space through real-time bidding (RTB)
1% pays for Supply-Side Tech fees (whatever those are)
15% goes… ‘WHO KNOWS WHERE?’… Seriously…. NOBODY knows where it goes!
PwC and ISBA call it ‘The Unknown Delta’. And after two years of analysis and investigation throughout every part of the programmatic supply-chain…they still had no clue where this 15% goes!
All they could say about this massive missing 15% was this:
“In our sample of 31 million matched impressions, the winning bid in the DSP often does not match the gross revenue recorded in the SSP.
“This ‘unknown delta’ averaged 15% of advertiser spend, ranging from 0% to 86%, with the majority from 2% to 23%.”
Yes – you read that sentence correctly: Up to 86% of your entire budget just evaporates. It disappears into nothingness. The only thing we know – is that it doesn’t pay for any advertising at all. None. Nothing. Nada. Zilch.
Oh…and finally (if you’re not on the phone to your media agency already):
Just 51% of your budget goes (eventually) to pay for any advertising.
Yes – that’s right:
HALF OF YOUR ADVERTISING BUDGET DOESN’T BUY ANY ADVERTISING AT ALL.
It disappears into the pockets of sleezy, automated parasites that feed throughout the sordid underbelly of the programmatic supply chain. (And, presumably, allows their owners to purchase an occasional Maserati or a boob-job for their mistress).
How can you prevent these vermin from stealing your budget?
It’s simple. Forget the ‘spray & pray’ approach of programmatic buying.
Instead, choose to work only with sellers and publishers you can trust to give you the data and transparency you need to make smart business decisions.
In other words – stop being an idiot.
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