What advertisers paid vs what publishers got. You should ask.
Most folks have in their minds that 50 cents on the dollar go to middlemen in programmatic channels rather than to publishers for showing ads. This figure comes from the 6 previous industry-wide studies on "supply chain transparency."
The reality of the situation is much worse -- less than 10 cents on the dollar goes to publishers for showing ads. Often this is not adequately captured in the waterfall charts shown in the previous studies, as many of them make assumptions about agency take rates and other rates as percentages. Those assumptions don't take into account hidden or undisclosed markups when agencies do what is known as "principal trading" where they take ownership of the ad inventory ahead of time (i.e. similar to buying something at wholesale), and resell it to their own clients without disclosing the mark-up (i.e. similar to selling something at retail). Grocery stores are not required to disclose to their customers the wholesale prices they paid for the oranges they sold to the consumer at $3.00 per pound.
To address this issue in programmatic, let's look at several different sources of data. From this Adalytics blog post https://adalytics.io/blog/cpm-bid-data, we can see what CPMs advertisers paid, compared to the CPMs publishers got. Consider this preliminary data and directional only.
If you glance at the average CPM that advertisers paid ($6 - $10, with a high of $18 CPM) and compare it with the average CPM that publishers got ($1 - $2, with a high of $2.46), it is clear that publishers are getting only 10 cents on the dollar. 90% of the CPM advertisers paid goes into the pockets of middlemen, including the media agency. That's like a 90% tax, not a 50% tax.
Next, let's look at the "price paid" macro as reported by Xandr. If you are running ads on Xandr and are using FouAnalytics in-ad tags, the PRICE_PAID macro tells you the "price paid" in CPM (USD). For example, the first row means $0.00 - $0.70 (70 cent CPMs). 92% of the impressions had a $0.70 or lower CPM paid to the SSP (that means the publisher gets 15 - 20% less than that, after the SSP's cut). Since we know what the advertiser paid the agency to buy programmatic media for them (around $10), this data implies that less than 10 cents on the dollar was actually spent on media. 90% of the dollar went to the media agency and other intermediaries. Obviously the client/advertiser didn't know about this before.
Did you know that only 70 cents CPMs were being bid on your behalf by your media agency? Of course you didn't if you thought you paid $10 - $15 CPMs to your media agency.
So what?
Have your media agency show you documentation of what CPM bid they extended to the marketplace on your behalf. For example, if those reports show they bid $1 CPMs or less on your behalf, and you know you paid the agency $10 CPMs, then you know that 90% of your dollar went somewhere else. Of course you are going to get crappy ads on crappy sites and apps if you're only paying $1 CPMs for the media, even though you paid $10 CPMs to your media agency.
If the media agency won't show you this (or doesn't know how to pull such a report for you), that should tell you something too. Advertisers can save at least half of their digital media budgets by working with a media agency that discloses what CPMs they extended on your behalf, and does not mark-up the inventory without telling you. Or you can effectively DOUBLE your working media by using a media agency that acts as your agent, acting on behalf of your interests, rather than being a grocery store which buys ads at wholesale and sells them to you at retail so they don't have to disclose the markup.
If you're running ads on Xandr, you are welcome to use FouAnalytics in-ad tags to see what CPM was actually paid on your media. Then you can easily compare it to what CPM you know you paid. Having seen many such examples over the years, you're eyes will be opened. Guaranteed.
Yeah, I said the silent part out loud, as you know I do.
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Happy Saturday, Y'all
Further reading:
What you didn't know you didn't know - https://www.dhirubhai.net/pulse/what-you-didnt-know-dr-augustine-fou
Falsified video ad completion rates - https://www.dhirubhai.net/pulse/falsified-video-completion-rates-easy-dr-augustine-fou
YouTube, Display, DOOH, Preroll & Mastheads | DV360, AD SERVER, Excel | Campaign Optimization & Insight Generation | Open to Opportunities | CM360 | Cross Channel Marketer with GA4 & Google Tag Manager Skills
1 年Then why not buy a pmp deal directly with publishers?
Product Development Engineer at DATA ABSTRACTION
1 年As long as USERS do not own the platforms they use for free they will remain the product. What you are doing is enabling the system to be slightly more fair to some of the stakeholders but are doing nothing for the USERS who are "we the people" of this planet. Using your skill and knowledge of the market I would be extremely happy is you started to look for ways to join forces with any others (there are many struggling with the task) of creating a social media system that works in favour of the USER. If you create a system that is sustainable where the USER owns the system and profits a little or even just breaks even from opt in advertisement critique AS A SERVICE to advertisers it would change the face of the internet. Obviously you would want to do this low key at first because it would cause massive pushback from your peers and the entrenched market place. There are already a number of alternate sites and even if some are corporate owned or have evil goals if your system was open and resilient you could offer it to any takers. Some potential partners Mastodon, Gab, CoDidact that could use skilled input on shifting to 100% USER ownership with ethical advertising. A life goal for you if you want it .
professionally curious. adrielhampton.com
1 年Shell games.
Entrepreneur | Founder | CEO | Human | Business Leader | Trusted Advisor | Mentor | Transformation Specialist | Two-time Campaign Asia Leader of the Year | Visionary | Empath | Humble and Caring People Person
1 年Great post. It genuinely surprises me just how few people understand this. Experienced marketers, and to be fair, most people within agencies I have spoken to, just have no idea. Unfortunately most of the people who do understand this are the ones with a vested interest in keeping the system as it is, and keeping everyone else in the dark. That's how they enrich themselves, after all. Can you imagine how much more efficient and effective media could be if money was spent with honest players and tracked and measured properly? Now if only there was an alternative ??