Programmatic CPM Benchmarks - CTV, OLV, Display - What did you pay?

Advertisers, do you know what you PAID in programmatic for CTV ("connected TV"), OLV ("online video"), and display ads? Of course you do, because every month, the media agency you use relentlessly bills you for the media you purchased, plus a lot of other unnecessary services like legacy fraud verification, viewability measurement, SPO ("supply path optimization"), carbon-emissions reduction crap, etc.

But,

do you know what you BOUGHT? What the hell do I mean? Let me explain.

If you placed a bid of $10 in your programmatic media buy, we know from 5 previous industry studies that only 50 cents on the dollar goes to publisher for showing your ads. That blended average actually hides a much more nefarious problem where DSPs ("demand side platforms") take up to a 99% cut and SSPs ("supply-side platforms") take up to a 99% cut. How is that possible? It's possible because you, the ad buyer, never sees what the publisher got. And publishers, the ad sellers, never see what you bid. Opacity by design. The exact opposite of "transparency" which has been talked about for years now. It is opaque, because it would be embarrassing for the adtech middlemen if you ever found out just how much "toll" they took. DSPs and SSPs don't take 99% cuts all the time. But their algorithms are designed to maximize their OWN profit on every single bid request that passes through their system. So they take as much as they can on every transaction. The blended average take-rate is reported to you at the end of the month so you don't see those excessively greedy take-rates. Oh, you never asked your agency to show you documentation about bid price versus price paid? Well, don't you think you should ask?

"What you PAID for is not necessarily what you BOUGHT"

Let me put your mind at ease ... NOT. Let me actual show you what reality looks like, using data measured by FouAnalytics. What you see below are the MOST ideal conditions, similar to what the latest ISBA study looked at (only "well-lit" neighborhoods).

In the data tables below you see three types of ads purchased through programmatic exchanges -- CTV, OLV, and Display. On the left side you see the BID_PRICE, which is what the advertiser bid. In each case you see the distribution of values. For example, $11 - $15 is the CPM range in that bucket. The green color coding shows the highest volume bucket. The right side shows the PRICE_PAID in CPM. The way to understand this is within this DSP, the BID_PRICE is what you paid, and the PRICE_PAID is what the DSP extended to the next party in the supply chain, likely an SSP. We can't see any further steps beyond this. So we don't know if there are other parties taking cuts.

But looking at just this one step, in the CTV data, you can see that most of the bids are between $22 - $26. And on the right side, you can see that the majority of the CPMs paid were between $17 - $21. This implies a take rate of 20% - 25%. This is not too bad.

When you look at the OLV data, you can see the first 2 buckets show that bids range from $0 - $18. That seems reasonable for online video ads. But the price paid, for the first 2 buckets show $0 - $1.15. This implies a take rate of up to 94%. Your first thought is "that's not possible." And your second thought is "that's not happening to me." But, are you sure? and how do you know, if you've never asked your media agency what the publishers got, out of what you paid. Oh, that data is "really hard to get?" I wonder why.

Now, let's look at the final type of ad - display. Most of the bids are in the $0 - $2 range. Most of the price paid is in the $0 - $2 range. Again, this is a perfect illustration of how aggregated, rolled-up data hides the insights. Using these blended averages it suggests a take rate of $0. But obviously the DSP doesn't take 0% since they answer to VCs or Wall Street every quarter.

I know today is the Saturday before the Memorial Day holiday on Monday in the U.S. So I will leave it here. Hopefully this helped raise awareness of the difference between what you PAID and what you BOUGHT. If the middlemen are taking 50% or more of what you PAID, and only a rounding error to $0 was extended into the exchanges as a bid, what do you think you COULD buy, and what do you think you actually bought? Right, fake sites that can accept $0.001 CPMs, and still be profitable, because they are fake sites. And if the bid you extend into the programmatic exchanges are below real publishers' bid floors, you won't get ANY of the inventory of real publishers.

See: DSPs take up to 99%, and SSPs take up to 99%. How?

Solution? Buy direct from the media seller, real publisher. That way you avoid all of the hidden or unknown take rates of all the middlemen above. If you can't or won't do that, then at least cut out as many ad exchanges from your buy as possible (e.g. from 45 to 3) and shift budget to new campaign lines that are based on whitelists/inclusion lists. That way you avoid 99% of the fraud/fake sites.

Happy Saturday, Y'all!

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