In a diplomatically-worded report, yesterday the Association of National Advertisers (ANA) published its updated study: “Programmatic Media Supply Chain Transparency Study: Complete Report.” The report follows and updates its early 2023 “First Look” release on the same subject. The report paints a dark picture of the programmatic media supply chain, showing that at most 36 cents of every dollar spent on programmatic media by advertisers actually reaches the publisher. “Transaction costs" eat up about 29% of every dollar, while ”loss of media productivity costs" account for roughly 35% – amounting to about $22 billion. The latter category consists of “Made For Advertising” (MFA) websites, non-viewable videos, theft, fraud, or other “non measurable losses.” This “loss of media productivity” is characterized as a shared problem of the entire industry. Advertisers are blamed for not having contracts that permit examination of log-level data that would allow them to root out this waste.

The study, carried out by Kroll for the ANA, involved 21 marketers and 12 supply chain companies, all of whom volunteered to participate. Although the sample was narrow, the ANA and its consultant believe the results can be extrapolated to the larger market.

A few other bombshells emerge from the study:

1. The average programmatic media campaign ran on over 40,000 websites, a huge number. The ANA speculates that 5,000 websites would be sufficient. See the next bullet below for one of the problems with this.
2. MFA sites gobbled up 21 percent of impressions and 15 percent of spend. This is evidence of fraud, pure and simple. Humans do not like MFA sites and generally do not buy anything advertised on MFA sites.
3. “Exclusion lists are largely ineffective in practice" because “attempting to exclude individual sites from the vast expanse of millions of sites, with new domains being created every day, is a herculean and futile task.”
4. “It is important for advertisers to know when their agency is purchasing media for them as an agent versus selling them inventory on a non-transparent basis or that has been acquired as a principal.” This is a longstanding concern that apparently still plagues the landscape.

The ANA places part of the blame for this sorry state of affairs on advertisers themselves. By throwing money at an opaque supply chain, by squeezing dollars in pursuit of lower CPMs, and by failing to demand accountability, advertisers inadvertently nurture the conditions giving rise to the astronomical “inefficiencies” that the Study observed. For example, the ANA recommends that “[t]he ‘cheapest’ media may not be the ‘best’ [i.e., safest and most effective] media. Be prepared to accept higher CPMs…"

Will this report change behaviors? It's hard to say. Until marketers are willing to spend more up front on the right contracts, and persistently to exercise audit rights, they are going to continue to get defrauded.

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