A new study released this week suggests that the current ad-tech ecosystem is not only detrimental to publishers, but it harms all involved in it due to a lack of accountability. The UK’s ISBA and their research partners at PwC spent over a year assessing data from all points of the programmatic advertising equation and reached some conclusions that should give pause to all involved.
The real showstopper finding is that publishers are receiving, on average, 51 percent of what advertisers are spending on programmatic advertising. They also found that across the study, 15 percent of the spend from advertisers is an “unknown delta” that can’t be attributed to a specific part of the supply chain. One estimate of the programmatic marketplace for 2020 totaled over $70 billion — if this 15 percent were redirected to publishers, that could generate over $10 billion in publisher revenues alone. The report also visualizes how the ad-tech companies are siphoning revenues from publishers.
In terms of the study’s recommendations, the authors specifically call on advertisers to work to understand how they can better help increase publisher revenue. The whole ecosystem (including publishers) are encouraged to dig deeper into understanding the unknown delta, and publishers specifically are encouraged to “better manage their relationships with ad-tech to improve revenues.” However, the study authors don’t provide any suggestions as to how to do this.
It’s worth noting that these numbers are averages, meaning that individual publishers could be seeing even less than the average 51 percent PwC assessed from their advertiser spend. This suggests that advertisers who want to both support news publishers and reach their target audiences in brand-suitable environments could transition to direct buys from publishers. Additionally, the study only included larger publishers and groups, including Bauer Media Group, News UK, The Telegraph and The Guardian, so the specific benefits to more local publishers may be even smaller than the paltry 51 percent.
This study should act as a clarion call to publishers, advertisers and the ad-tech community that the system as it stands does not work as it should. Publishers and advertisers alike should work on improving their understanding of where their dollars are moving and get comfortable asking more questions of their technology partners. Meanwhile, ad-tech vendors should consider what they can do to improve the system in which they operate. With more research of this type being done, both sides of the buy-and-sell equation could come to realize that a return to direct relationships might be a more efficient and effective way to reach the right customers with the right message.