Media Management

The ANA Programmatic Media Supply Chain Transparency Study: What Procurement should do next

The new study from the US Association of National Advertisers (ANA) into the Programmatic media trading market shines a spotlight on a media eco-system where advertisers lose 64% of their investment in inefficiencies.

The report, based on real life data from 21 advertisers, shows that only 36% of the money being spent programmatically in the Open Web reaches an audience.

Download the full report

There can’t be any other industries where the people who are spending their budgets only get roughly one third of their money in value returned.

The new study investigates the inner workings of both the daisy-chain of the agency, ad tech and publisher eco-system and the real-world effectiveness of advertising exposure that follows.

This is the first such report of its kind, and it confirms that the result of high transaction costs and factors that limit the amount of advertising seen is that roughly $22 billion of value globally is being lost.

We now have a benchmark. Advertisers can now compare themselves to the 64% value loss and see how they perform.

More importantly, however, they can work out how to improve their performance whatever their position versus this benchmark.

The majority of the ANA study is devoted to actions advertisers should take to make their Programmatic investments more effective and accountable. The playbooks in the study provide an efficient guide through the various elements of Programmatic and how to eliminate inefficiencies.

These actions are ones that Procurement personnel can implement right away, beginning with a set of questions to ask of the partners involved in implementing activity.

The 15 questions include:

• Whether Made-for-Advertising websites are included. They provide very little value for most advertisers.
• How many websites are being used. The average campaign in the study ran across 44,000 when most of the reach achieved could be attained on less than 5,000
• Whether inclusion, rather than exclusion, lists are being used. The former limit the domains used and lead to less invalid traffic (eg fraud) and are safer environments for brands.
• Whether direct inventory supply-paths are being optimised. Much wastage can be reduced by cutting out unnecessary or wasteful links in the chain. At the same time, direct contracts can be secured with the other parts of the supply-chain currently not included.
• How many supply-side platforms are being used. The advertisers in the study bought through an average of 19 when a maximum of 7 is more efficient and effective.
• The extent to which the advertiser experiences ‘information asymmetry’, where there is inadequate data available to monitor and measure auction performance.
• Whether the advertiser’s media agency is acting as principal or agent. The rise of ‘inventory media’ bought on a principal basis is a major source of transparency loss of value being bought.
• Whether the agency is buying on the open market or within Private Marketplace deals. The ANA study analyses these in detail and shows the differences in overall performance.
• Whether the advertiser has a strong picture on the true value of the quality being bought. The study exposes the fact that low price often leads to invisible advertising but high pricing is not an absolute guarantee of quality.
• If log-level data is being used to track money and data throughout the entire daisy-chain to ensure full matching of performance metrics.
• The extent that ad fraud is being minimised through better buying practices and technology.

The full report runs to 125 pages and provides practical advice on how to ask these and other crucial questions, with helpful guidance on how to implement solutions.

The solutions are designed to help advertisers overall but many are the province of Procurement as they require a strong contractual framework, financial rigour and the ability to track and audit money and data.

Most advertisers should review their commercial relationships as a result of this study and tighten up their supply-chains accordingly.

One key recommendation in the study is that advertisers should equip themselves with the necessary resource to fully understand how the Programmatic market works. This may take the form of internal personnel or external consultants, depending on the level of expertise needed. The recent webinars that Media Marketing Compliance conducted on the subject of media transparency concluded that internal resource was often needed to account for the needs of different teams within the advertiser.

It should also be stressed that contractual rigour is needed and that this entails a strong culture of contract compliance. It is often the case that contracts go unmonitored in respect of the detail of programmatic execution, and this is a common gap in advertiser set-ups.

The ANA study is an important milestone in the journey to overall media transparency and is extremely valuable to advertisers who want to eliminate the inefficiencies of the current market.

About the author

Nick Manning is Founder at Encyclomedia International, Non-Exec Chairman, Media Marketing Compliance, commentator, investor, writer.