About wasting cheese and ad spend. But mostly the advertising bit.

If you paid ￡10 for cheese, and the person behind the counter gave you a block of cheddar worth ￡3.60 you'd be pretty pissed off.

You'd be very curious where the other ￡6.40 went, and justifiably so. You'd never shop in that cheesemongers again.

But with digital media there seems to be a much greater tolerance when it comes to getting terrible value for money.

The report from Association of National Advertisers into the Programmatic Media Supply Chain showed that less than 36 cents of every dollar would effectively reach the consumer.

The report highlights that transaction costs (primarily DSP and SSP fees) account for 29 percent of the ad dollar. This is very high, but generally fairly transparent and therefore more rationally tolerable.

However, there are staggering 'loss of media productivity costs', which refers to non-viewable and invalid impressions as well as non-measurable and Made for Advertising ad spend. These account for 35 percent of the ad dollar.

In an increasingly complex media landscape, understanding where your ad spend goes has never been more important. Yet, the media supply chain is often murky and riddled with inefficiencies. Supply chain transparency is not just about knowing where your money goes—it's about ensuring that your media dollars are working as hard as they can for your brand.

The dominance of programmatic buying has made this issue even more pressing. Between the advertiser and the final placement of an ad, there are often multiple intermediaries—agencies, ad tech platforms, data providers—all of whom take a cut.

This is particularly apparent within any open marketplace buying, where advertisers forego visibility on where their ad gets shown, instead putting faith in a data provider that assures the buyer that the target audience will reached.

However there are numerous examples where people have dug into seeing how these data partners define and categorise audiences. For example Arielle Garcia , Director of Intelligence at Check My Ads Institute , found that "she was both a man and a woman, worked in food service, agriculture, but was also a defence contractor, an engineer and was simultaneously below the poverty threshold and classified as high income."

But unlike with our obvious fury at the cheese vendor, much of the ad market seems to tolerate the wasted spend.

But why?

?? In part this is because it's somewhat normalised, with beneficiaries of the inefficiencies reluctant to kill their cash cow.

?? It is also because we are suckers for the path of least resistance, and there are quite straightforward ways in which the metrics of cost efficiency can be spun to make it look like things are going well.

?? And at a structural level, it is also because the market dynamics are concentrated around too small number of major players, and there isn't much space for new entrants to challenge the status quo.

How can we counter this?

1. Transparency: Without transparency, it’s impossible to hold agencies and vendors accountable for how your budget is being spent. Demand log level data for your campaigns as a minimum, so you know where your ads ran. But also ask the tough questions about 3rd party data accuracy. By what criteria is a user defined as 'in market for a car', or a 'senior business decision maker', or even 'male or female'?
2. Efficiency of a short supply chain: The shorter any supply chain is, the less room there is for working spend to be lost to skimmers and intermediaries. This is true for media as it is for palm oil, cocoa, minerals etc. Cutting out intermediaries allows for more efficient media buying, ensuring more working media. And when you know exactly where your dollars are going, you can eliminate unnecessary fees and intermediaries, ensuring that more of your budget goes towards actual media placements and business outcomes.
3. Focus on business outcomes: From point of inception, the goal of any media plan should be to drive business outcomes. Ensure that your partners are optimizing for the metrics that matter to your business—whether that’s sales, brand awareness, or market share—rather than just focusing on short-term efficiencies. A 20% improvement in CPM is meaningless if the ads aren't seen by humans.
4. Fund the world you want to live in: The open web is a heady mix of brilliant and diverse niches and nooks, of quality journalism and world class research. It is also home to the depths of humanity. Hatred, disinformation, incitement to violence and self harm. Advertisers can choose to spend with partners that will help them meet their business objectives while also ensuring the best of the web is funded, and the worst of it is starved of resource. When brands have full visibility into how their media dollars are being spent, they can make more informed decisions and ensure that their investments are aligned with their business objectives and personal values.

If you want to get insight into how to get more cheese or advertising for your money, please do follow me Dan Gee and feel free to challenge, question or think along with stuff I write.

References:

ANA Programmatic Media Supply Chain report - https://www.ana.net/miccontent/show/id/rr-2023-12-ana-programmatic-media-supply-chain-transparency-study

Mi3 article about Arielle Garcia and Check My Ads - https://www.mi-3.com.au/18-06-2024/ex-um-privacy-chief-lifts-lid-google-has-captured-trade-associations-and-holdcos

La Fromagerie - https://lafromagerie.co.uk