Who doesn't love a good funnel?
Today, we're going to make a nice colorful funnel using the latest data from some of the ad industry's most reliable sources to trace a dollar spent for programmatically-bought display advertising on its exciting journey from your pocket to the bank accounts of middlemen, con men, crooks, and the Bermuda Triangle.
Adtech was created to make the buying and selling of online advertising so much more efficient. Today, about $350 billion dollars is spent on online advertising. 70%+ of it is bought programmatically. It turns out it has been wonderfully efficient for the lads and lassies in the adtech industry. Not so efficient for losers like you and me. Let's see how it's working...
As the above graphic shows...
- You start with a dollar to spend
- Your agency gets a 7¢ fee
- Technology and targeting fees take another 27¢ (DSPs, SSPs,and WTFs)
- 15¢ mysteriously disappears into the "unknown delta." No one knows where the "unknown delta" is. My guess? Jupiter or North Korea.
- 30% of the ads you buy won't be viewable
- About 20% of the stuff you buy will be fraudulent
- Only 9% of your display ads will be viewed by a real person for even a second. Bastards.
- Blogweasel math notwithstanding, looks like your dollar bought you 3¢ of real display ads viewed by real human people.
Covering my ass
As I'm sure you know, no one in the comical online "metrics" business can agree on anything. Consequently, to minimize the torrent of abuse I'm going to get from agency and adtech apologists, I have taken the numbers in the above illustration from the most reliable sources I could find:
- The first four items come from the ISBA and PwC's, Programmatic Supply Chain Transparency Study
- Item 5 comes from Integral Ad Science
- Item 6 comes from AdAge and Spider Lab's report, Combating Ad Fraud in the Age of COVID-19
- Item 7 comes from Lumen Research
Covering your ass
Oh, and be sure to ask your agency about these numbers. And when they say, "We have systems in place..." ask to see the systems, have them explained to you, and get their version of how much value you're getting from a programmatic ad dollar. Should be good for a few laughs.
Some notes on the funnel
It's important to note that the ISBA study alluded to in points 1 through 4 above only reported on the highest quality tip of the iceberg—the most premium end of the programmatic marketplace.
Even at the premium end, only 12% of the ad dollars were completely transparent and traceable. An astounding 88% of dollars could not be traced from end to end. Imagine what the numbers must be like in the non-premium end.
- The "unknown delta" represents about a third of the fees that programmatic buyers pay. This money just evaporates. No one can figure out where it goes. Not even a famous blogweasel.
- I have used 30% as the factor for non-viewable ads. Some research reports it as high as 50%.
- I have used 20% as the fraud number at the publisher end of the funnel. Even if fraud at this end is only 10%, the math still comes out at about 3% viewable ads by real people.
- How many people actually view a display ad? The IAB defines a "view" as 50% of an ad's pixels seen for one second. Huh? Even by this ridiculous standard only 9% of online ads are "viewed."
Bob Hoffman is the author of several best-selling books about advertising, a popular international speaker on advertising and marketing, and the creator of 'The Ad Contrarian' newsletter, where this first appeared, and blog. Earlier in his career he was CEO of two independent agencies and the US operation of an international agency.