In the wake of the ISBA + PWC Programmatic Supply Chain Transparency Study release, there was immediate focus industry-wide regarding two factors:
1) Who was getting most adversely impacted along the waterfall—focused primarily on publishers receiving 51% of advertiser spend on average, and;
2) The mysterious “unknown delta”: unattributable costs making up 15% of advertiser spend.
While these are certainly interesting data points, given my current focus on tech stack architecture for enterprise clients I was taken aback by another issue—how difficult it was for the data to be accessed in the first place.
The Spend Waterfall
My opinion is that the breakdown will be bespoke to the customer, and that “ad tech tax” is an oversimplification (MightyHive CEO Pete Kim also wrote about this at length on our company’s blog). Since each element is necessary for the ecosystem to function, optimization of this breakdown should be set up to improve ROI—starting with transparency into where exactly media spend is going.
The Unknown Delta
I prefer to take a more hopeful view on the importance of the scandalous 15% figure because the potential causes were outlined in the study (below)—meaning we have a jumping-off point for continued investigation.
- Limitations in data sets
- DSP or SSP fees that aren’t visible in the study data
- Post-auction bid shading
- Post-auction financing arrangements or other trading deals
- Foreign exchange translations
- Inventory reselling between tech vendors
As PWC has confirmed in numerous interviews, there is no single smoking gun amongst these. However, without access to data, advertisers, agencies, publishers, DSPs, and SSPs will be hard-pressed to start identifying where these scenarios occur and begin to make the unknowns known. Data collection for the study occurred for three months and overall the study ran a full nine months longer than planned due to difficulties accessing needed data!
Next Steps for the Industry
After the study’s release, Phil Smith, Director General of ISBA, stated, “The challenge now is for the industry to come together, as they will in the new taskforce…to allow companies and consumers to benefit properly from online advertising.” Subsequently, Nigel Gwilliam, director of media affairs at The IPA, proposed The Joint Industry Committee for Web Standards (JICWEBS) as “the obvious body to facilitate this collaboration.”
JICWEBS is comprised of four UK trade bodies: IPA, ISBA, AOP, and IAB UK. The inclusion of IAB is encouraging, especially since Trustworthy Digital Supply Chain is a longstanding pillar of the IAB Tech Lab. However, there has been nothing publicly released about specific next steps for a new taskforce to take actions directly influenced by the study data.
Of course, these things take time. One of the potential causes of the unknown delta is inventory reselling between tech vendors, which is now addressed by the continued evolution of ads.txt, first launched in June 2017. The latest release from July 2019, sellers.json and the supplychain object, validates the complete financial path with the ultimate goal of “transparency into the origins, paths, and legitimacy of ad inventory.” It has yet to reach widespread industry adoption; this illustrates the lead time required to solve just one of the elements of the unknown delta.
That said, I do have some thought starters for publishers and platforms in the near term.
Immediate Areas of Focus
- Data Aggregation. MightyHive works with many brands looking to offboard media buying operations from agencies and bring them in house. A step in this process that often seems to require an inordinately heavy lift is piping data into whichever data visualization tools and/or cloud environments are necessary for performance analysis. One example is lack of transparency into changes to the data format with little advance notice, e.g. API calls that have been utilized previously being rendered irrelevant due to a product update or changes to the fields available in log files. Taxonomy was addressed numerous times in the study, and it’s my perception that many tech companies are in the dark as to whether data is coming back “null” for the advertiser unless the advertiser pushes for changes. My guidance would be increased proactivity and visibility into the roadmap as it pertains to data formatting, as much as privacy concerns will allow.
- Data Availability and Freshness. Some challenges in this area are lag times in receiving data that make the data set unreliable, e.g. receiving log files from one partner every 24 hours versus every 12 from another. It’s entirely possible that one partner could appear to outperform the other if data isn’t represented equally, thus jeopardizing the credit assigned to the partner with a lag time. Similarly, there is a lack of consistency in data retention. Publishers and platforms should be asking relevant questions to ensure they’re at parity with the competitive set and if not, perform the cost-benefit analysis necessary to assess whether or not to make investments in their product.
- Thought leadership. I find that these elements are often undersold in comparison to “shiny new objects.” From a thought leadership perspective, I always want to hear about ways in which someone my client is considering for partnership has a proven track record of early adoption as it relates to industry best practices. To harken back to the sellers.json example, TripleLift used it to teach buyers how to find exchanges that add value, while The Trade Desk gave exchanges an ultimatum to either post a sellers.json file or get dropped as a partner—with only two months of lead time. In a similar vein, any instance where tech was modified based on client need in the form of case studies or whitepapers are increasingly valuable sales collateral.
Ideally, these small steps can help make the industry more transparent and effective as we await larger-scale changes from industry bodies. With continued effort from every corner of the industry, the necessary changes may manifest more quickly if there is increased focus on making improvements from all participants in the supply chain.