Programmatic Advertising “Rife with Waste,” But Also Potential Billions in Efficiency Gains

The Magazine Manager blog has covered the basics to bringing programmatic advertising to your sales teams. What we haven’t done is break down how programmatic advertising plays out in the wider $88 billion global market.

The Association of National Advertisers (ANA) is taking a shot, releasing what it’s calling a “first look” of a larger study on open web programmatic advertising and analyzing 21 participating advertisers and their $123 million in ad spend and 35.5 billion impressions between September 2022 and January 2023.

Unfortunately, the findings aren’t all rosy.

Those clickbait Made for Advertising (MFA) websites/eyesores that we all stumble upon are causing legitimate issues in the programmatic world, accounting for 15% of all ad spend, according to the ANA Programmatic Media Supply Chain Transparency Study.

(Source: Association of National Advertisers)

ANA calculates that as $13 billion of industry-wide waste — and graciously casts that $13 billion as “minimum efficient gains from course correcting” — but considering the 21% of impressions also sucked up by MFA sites, that’s quite an inefficient shadow currently being cast. Still, the ANA sees the light.

“As we follow up with the complete report, we are confident there will be opportunities to drive a total of at least $20 billion in efficiency gains for open web programmatic advertising,” the ANA says.

Some of the ANA recommendations for advertisers include taking more responsibility and providing “more active stewardship” of their investments; creating direct data access contracts; demanding that MFAs be excluded and prioritizing “inclusion” lists, and streamlining the number of sites used. 

In its study, the ANA found that the average advertiser ran campaigns on 44,000 sites, but said they can “reach a high percentage of target audiences using a few hundred websites.”

“Streamlining the number of websites used will diminish the risk of purchasing non-viewable and fraudulent inventory,” the study says.

In its breakdown of the breakdown, MediaPost calls the ecosystem “rife with waste” and says the study’s methodology “illustrates part of the problem.” Beyond the big-money example, MediaPost points to the fact that only 21 of the original 67 companies that agreed to participate in the study were ultimately able to due to issues (legal or otherwise) of getting access to log data. Advertisers don’t often put specific data rights in their contracts, MediaPost says, and without the best information, they could overpay.

“It isn’t easy and will require some elbow grease to fix and getting in the weeds of log-level data in order to identify and remove the unsavory content from programmatic media buys,” writes MediaPost’s Joe Mandese, “but the ANA’s insights — and those much-needed steps outlined in its recommendations — couldn’t come at a better time, as a new generation of AI-generated news and information publishing makes the process of MFAs so much easier to proliferate.”

Here’s hoping those recommended steps (and that potential $20 billion in efficiency gains) will drive the marketers on the right programmatic path forward.