Programmatic Buying: What's the Key to Extracting Value?

A dentsu response to the ANA Programmatic Media Supply Chain Transparency Study.

Authored by Josje van den Bos , Global Head of Addressable Media, dentsu, Richard Nicolson , Head of dentsu Media Exchange, Global Addressable Media team, dentsu, Zac Selby , Global Programmatic Director, Global Addressable Media team, dentsu and Jody Veerman , Client Partner, Global Addressable Media team, dentsu.

The Association of National Advertisers (ANA) have released a comprehensive Media Supply Chain Transparency Study, following on from a “First Look” version released in June of this year.?

A main tenet of the report is the fact that only $0.36 of every $1 that enters a DSP “effectively reaches the consumer”. The bulk of this loss ($0.35) comes through loss of media productivity, with the remainder coming through transactional costs ($0.29).

The below summarises the report, provides dentsu’s point of view of the implications for advertisers, and shares recommendations that can be implemented to address the challenges at hand. We address loss of Media Productivity with recommendations on media quality, as well as transactional costs with recommendations around Resellers and Supply Paths.

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Inventory Quality

The ANA report found that an average campaign delivered spend across 44,000 websites, but 86% of impressions came from only 3,000 sites. Furthermore, when going beyond these 3,000 sites, the inventory had 100% higher fraud rates, and inferior viewability scores. This demonstrates a high level of wastage and therefore budget inefficiencies due to a ‘spray and pray’ approach to activation taken by some buyers.

Additionally, sites that were made-for-advertising (MFA) saw 15% of spend directed to them. This is because MFA sites on average have a higher viewability score, higher video view-through-rates, and a cost per thousand views (CPM) that are 25% lower.

Why is this a problem? MFA sites are generated to game media metrics to have the appearance of a quality site; however, MFA sites are 50% less likely to be attributed to driving a sale, according to research. This likely correlated to a poor user experience, as MFA sites generally have; a high ad-to-content ratio, video ad placements that autoplay with the sound off and auto-refresh placements.

So, while MFA inventory may give the appearance of a quality site, dentsu recommends avoiding this high clutter inventory due to its inability to move the needle on impactful outcomes such as brand lift and performance objectives.

The ANA study showed that the proportion of all available impressions for MFA sites was 5% in 2020 and that this has now grown to 30% in 2023 – as such, it is critical that we mitigate occurrences of delivering on MFA inventory. To avoid this, dentsu recommends the below actions:

• Work with your agency/team on increasing transparency on the domains you’re buying.
• Work with your agency/team to work with a set of trusted publishers and is proactively finding and excluding inventory that does not drive value for your campaigns.? The end goal is an inclusion list tuned to your quality metrics.
• Reframe how you evaluate value and price within your activations. When you remove MFA from your buying, you will be increasing the quality and therefore cost (CPMs) of your media buy.?This value will be delivered back to you in the form of working media and quality engagements.

Resellers and Supply Paths

Now that we’ve addressed inventory and ad placement quality, it’s vital to acknowledge the reports insights around the route taken to access supply.

Dentsu always aims to mitigate the sum of intermediaries within the supply chain. ?When a large amount is present, advertisers forfeit a portion of their working media to the technology fees. The? ?route to the desired supply can become inefficient and the real-time bidding (RTB) mechanism is slowed down, thus creating cost inefficiencies.

Therefore, curating a direct route to supply is pivotal to unlock cost efficiencies and extract more value from media investments. Dentsu recommends actioning this by:

• Partnering with some key SSPs to give you more control over your spend across the selected and trusted publisher set.
• Through SSP and agency partnerships, establish a direct path to your supply by removing resellers. This process can be enhanced through a strict process or product to ensure compliance.?
• Create and maintain a direct relationship with every participant in your media supply chain, especially the SSP providers that your media is being transacted through.?

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Measurement

With the inventory and the route to that inventory addressed, the report also highlighted that there is a lack of visibility due to data access. This is problematic as a lack of visibility inhibits meaningful measurement to be accessed and optimisations to be applied.

Therefore, it is critical to ensure that buyers have full access to the data they require to action informed decision making. ?Gaining access to reporting functionality that details activity at the site level is crucial, as that can provide the accountability necessary to ensure healthy media buying practices. Going a level deeper, the ANA recommend gaining access to log level data (which can be an expensive undertaking) and using this to match transaction-level data at the DSP, SSP, and ad verification provider level.???

Whether through aggregated reporting, or log level data, once secured, it is vital to create and implement a KPI to evaluate impression quality. The elements that could make this up this quality score could be IVT, viewability or brand safety. ?Other KPIs include sustainability, diversity, equity, and inclusion (DEI). This data can then be used to include or exclude inventory through a certain supply path, using a supply process or product.?

Finally, another critical KPI advertisers should be considering is carbon emissions. The report showed in two ways how a non-optimal supply chain can heavily contribute to carbon output. In terms of inventory quality, MFA sites produce 26% more carbon than their non-MFA counterparts. By cutting out these sites, the estimation given is that carbon could be reduced by 56%. Secondly, inventory supply paths that employ multiple resellers, or ‘hops’, see an increase in carbon due to an increase in processing volume. By eliminating these advertisers can also help to reduce the impact on the environment.?

While there is an array of success KPIs that will differ on an advertiser level, dentsu recommends taking the below actions so that buyers have a clear view of what they are transacting and how to effectively tailor this inventory:

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• Establish a clear set of KPIs for measuring inventory quality and consistently optimise to improve the quality of the inventory and supply paths your campaigns are using.?
• Ensure you are only working with partners that have adopted the latest industry standards for measuring viewability, brand safety, and fraudulent traffic (IVT). Implement pre-bid and post-bid features to ensure this is adhered to.?

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Conclusion

The ANA report has revalidated the importance of being in control of and efficiently governing open exchange supply and technology partners utilised. The programmatic buying methodology grants a deeper level of visibility, which sometimes can be eye opening but is ultimately advantageous as it provides buyers with visibility and control which is not afforded to other buying approaches.

When deployed correctly, programmatic technology enables advertisers to extract tremendous value from their investment due to the level of customisation possible. Therefore, to avoid the wastage highlighted in the report and to extract the maximum value from your media investments, a supply and curation process and/or product is recommended to be utilised across all activations.