Arvind Hickman
Jan 18, 2023

‘Unknown delta’ discovered as programmatic supply chain transparency improves

The latest ISBA/PwC report on premium programmatic supply chain shows increases in transparency and value, but 'walled gardens' are a barrier to progress.

‘Unknown delta’ discovered as programmatic supply chain transparency improves

Much of the fog that has clouded programmatic advertising – at least in the premium exchange side of the industry – has been lifted, according to the second ISBA Programmatic supply chain transparency study carried out by PwC.

In 2020, a UK PwC/ISBA study that went deeper into the supply chain found that for every $1 spent on programmatic advertising, only 51 cents went to the publisher where the ad was served and 15 cents, labelled the “unknown delta”, could not be linked to any parts of the programmatic supply chain, which includes media agencies, demand-side platforms, demand- and supply-side tech vendors, supply-side platforms and publishers. 

In 2022, the “unknown delta” was reduced to only 3 cents and 65 cents went to publishers (see graphic below).

The 2020 and 2022 studies analysed where advertising investment was spent on 1.3 billion ad impressions served on websites from News UK, the TelegraphIndependentGuardian, Bauer, Future, Haymarket (publisher of Campaign) and more.

The new study found a much larger proportion (58% in 2022 versus 12% in 2020) of impressions could be matched throughout the various steps that go into a programmatic advertising journey, including when a brand wants to pay for an impression to how it is targeted, auctioned and served on a publisher’s website.

Programmatic advertising, the process of automating the buying and selling of ad inventory in a real-time bidding system, has for several years been under scrutiny over whether advertisers are getting value on their investment and whether the manner in which it is traded and tech vendors provide services, such as targeting and brand safety, lack transparency.

“The consistent theme in our new research is real progress, but there is still a way to go,” Sam Tomlinson, PwC’s media and internment leader, who led the research project, said.

“If I was an advertiser, I would be investing in well curated, fully auditable private marketplaces with premium publishers. It is clear that is the direction of travel and what big advertisers should be thinking about. If I was a publisher, I would be thinking carefully about which SSPs I wanted to work with… do you want to work with long-tail SSPs?” 

Tomlinson told Campaign that tech vendors at the premium end have improved operationally in terms of how they manage their own data and share it, which helped PwC chip away at the known delta that plagued the 2020 report findings.

He added: “We don't have all the UK premium publishers included in our research... but the data we’ve analysed suggests that the long tail (of poorer quality programmatic ad impressions) is longer than it should be.”

Tomlinson also said there is still work to be done by the industry and programmatic supply chain components to improve data access and quality.

Broadcaster Channel 4 was among the brands that took part in the study and has welcomed its findings.

Emily Latham, Channel 4’s head of digital marketing and martech, said: “This study is another important step to drive transparency and quality control within the programmatic ecosystem. The findings not only bring confidence to our buying approach at Channel 4 but also have been instrumental in helping us mature our strategy in this space.”

ISBA head of media Clare O’Brien added: “Overall, we very much welcome these findings. The match rate improvements alone, reflect the reforms which have already been implemented throughout the programmatic supply chain by some vendors and agencies in the last two years.

"That the unattributable delta in this specific Study was reduced to 3% provides the industry with the proof point that confirms that transparent practice works for all stakeholders."

A 2016 study by the US industry body Association of National Advertising Managers (ANA) first called out a lack of transparency in programmatic advertising. PwC and ISBA’s initial UK report in 2020 found the lack of transparency and the amount of adspend going to publishers and the “opaque” nature of programmatic was similar to the ANA’s initial findings.

This new report shows that – at the premium end of the market, at least – steps have been made to provide greater transparency and value in programmatic advertising investments.

This turnaround has been welcomed by advertisers and tech vendors, but with important caveats. A further study, also handled by PwC in partnership with the ANA, is taking place in the US market.

The study did not cover programmatic advertising from Meta (including ads on Facebook and Instagram) and Google’s YouTube. It covered impressions served in open and private marketplaces.

PwC said the findings applied to operators that they considered “premium”, a mix of open and private, marketplaces in which greater transparency exists over advertising investments. Additionally, in the 2020 study, tech vendors could provide only aggregated data rather than the log-level data that was provided for the most recent research.

What the research has unearthed is that industry collaboration between tech vendors, agencies and publishers has allowed PwC to obtain better quality data to analyse and match between the demand and supply side compared with the inaugural report in 2020.

“The study shows more media budgets are reaching publishers, which is fantastic, and a decrease in the challenges in matching data. It also shows, therefore, a really good example of cross-industry collaboration that is driving real results,” according to Oliver Whitten, the chief operating officer of Adform, a demand-side platform (DSP) that took part in both PwC/ISBA studies.

Whitten admitted that the findings of the initial PwC/ISBA report were a “shock to the system” for the industry and that it “jolted” vendors and supply chain participants to improve. He also encouraged marketers to “understand where their budgets are going and what the costs are” from premium marketplaces versus those that supply long-tail inventory.

Tomlinson, and others who spoke to Campaign, admitted there was still a large proportion of programmatic advertising spent in “walled gardens” that did not take part in this study.

One industry source, who wished to remain anonymous, told Campaign: “The referencing of walled gardens is a good example of [what needs to improve further] because there are very large players in the market that take large chunks of tech fees and owns the supply and preferences that. I think that's not necessarily always visible to a marketer.“

The overriding sentiment is that much-needed progress has been made in the premium side of programmatic advertising, but further improvements across the board are still needed.

Campaign UK

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