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May 6, 2020, 1:35 p.m.
LINK: medianut.substack.com  ➚   |   Posted by: Joshua Benton   |   May 6, 2020

Our old friend Josh Sternberg — he’s a good media/advertising reporter/editor, you should hire him! — is writing a newsletter called The Media Nut that’s worth a subscribe. Today he noted a new study that showed the extent to which obscure, inscrutable ad tech companies have been able to take advertisers’ money before it gets to the publisher.

Ad tech. Two little words that cause so much headache, heartache, and according to a report published today by the Incorporated Society of British Advertisers (ISBA) and the Association of Online Publishers (AOP) and PwC, bewilderment. (If not a little anger.)

Tracing the advertising spend supply chain — from 15 brands, eight agencies, five DSPs, six SSPs and 12 publishers — the report found:

  • “publishers receive 51% of advertiser spend on average; and
  • “taking other visible costs such as DSP/SSP fees and other technology costs, 15% of advertiser spend — an ‘unknown delta,’ representing around one-third of supply chain costs — could not be attributed.”
  • The industry, both the buy- and sell-side, has long known of the existence of the ad-tech black hole. Now, with this report, and with this fancy visual, we can put some kind of number behind the old Wannamaker quote: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

Here’s that fancy visual:

(DSP = demand-side platform, SSP = supply-side platform.)

Josh goes on to have some good analysis that’ll primarily be of interest to advertisers and the ad industry. But for publishers, the mere fact that half of the cash vanishes before it reaches them — 15 percent of it to, I dunno, werewolves? — should be enough to prompt some evening brown liquor. Google and Facebook have built giant businesses serving as middlemen between publisher and audience. But don’t forget about the anonymous ad tech firms who profit as middlemen between publisher and advertiser.

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