It's Leaches All The Way Down
The State of Digital Advertising
Last year PwC investigated where the money goes in digital advertising, at the behest of the Incorporated Society of British Advertisers (ISBA). This wasn’t an easy task, as a single programmatic ad placement can involve 20 different players, each taking a cut.
PwC found that a whopping half (49%) of digital ad spending is syphoned off before it reaches publishers. They tracked spending to agencies, demand exchanges, supply exchanges, and a slew of ad tech vendors. But most alarmingly, 15% of digital ad spending, a third of what gets syphoned off, is a complete mystery. Even through an audit, PwC couldn’t account for where it went.
This 50/50 split of “non-working” and “working” dollars in digital media echoes the famous observation from 19th century retailer, John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
And the 51% that actually reaches publishers has its own host of problems, including bot fraud. The World Federation of Advertisers (WFA) estimates that ad fraud will become the biggest market for organized crime by 2025.
This is totally bonkers, and brings to mind the words of WOPR from the end of the film WarGames: “a strange game … the only winning move is not to play.”
“What if marketers allocated a portion of their media spending directly to publishers… They will run your ads for you — just like in 1995. The marketer could conceivably pay far less overall dollars AND the publisher would definitely get multiples more dollars.”
“As we all chased the Holy Grail of digital, self-included, we were relinquishing too much control — blinded by shiny objects, overwhelmed by big data, and ceding power to algorithms.”
Hmm, cutting out middlemen… maybe it is time we got back to doing that.
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