A recent report from the Association of National Advertisers (ANA) sheds light on the issue of waste in programmatic advertising, revealing that at least 23% of the $88 billion spent annually by marketers on automated digital ad buying on the open web is being squandered.

The study emphasizes the significance of prioritizing value over cost in ad placements, as many advertisers focus solely on expenses, leading to poor placements on low-quality websites. With prominent brands like Coca-Cola, Walmart, and McDonald’s among its members, the ANA’s findings have spurred discussions on improving ad quality, transparency, and sustainability in the programmatic advertising landscape.

Unveiling the challenges:

Programmatic advertising has become increasingly complex, involving multiple vendors from the ad, media, and technology sectors. Marketers collaborate with various partners to target their desired audiences online. However, it has become challenging to track the allocation of advertising spending accurately. The report analyzed $123 million in spending from 21 advertisers on open-web programmatic advertising. The ANA report highlights that sellers possess more information about media inventory quality than buyers, resulting in substantial waste within the programmatic supply chain.

Concerns and consequences:

The report raises concerns about the widespread distribution of ad campaigns across approximately 44,000 websites. This practice is alarming due to the vast volume of websites involved, especially considering that legitimate human web traffic is typically concentrated on a smaller number of reputable sites. Furthermore, “made for advertising” sites with low-quality content, including fake news, conspiracy theories, and spam links, receive 15% of advertising spending. These sites often employ intrusive ads and autoplay videos to maximize ad revenue. Such placements not only harm the advertiser’s reputation but also diminish the effectiveness of programmatic advertising as a valuable tool for driving results.

The call for quality and transparency:

To address the issues highlighted in the report, the ANA emphasizes the need for marketers to prioritize quality media buys. While seeking low-cost inventory is tempting, it often leads to ads that go unseen or unmeasured. Advertisers must strike a balance between cost efficiency and ad quality, which includes factors such as viewability, fraud prevention, and brand safety. The report suggests advertisers take a more active role in their media investments instead of relying solely on agency partners. By demanding exclusion of “made-for-advertising” sites unless specifically desired, advertisers can improve the quality of their media while also promoting sustainability.

Industry-wide collaboration and accountability:

Industry professionals have also expressed the importance of collaborative efforts to address these challenges. Some experts propose adopting commercial arrangements that align incentives with campaign performance rather than solely based on media spend. Advertisers can inquire about programmatic partners and demand greater transparency from ad-tech partners regarding ad placements and domain selection. Agencies, too, should take a more active role as advocates for their clients, driving effectiveness and transparency.

The ANA report serves as a wake-up call for the advertising industry, highlighting the need to address waste and poor ad placements in programmatic advertising. Advertisers must prioritize quality over cost, demanding transparency and accountability from all stakeholders. By actively engaging in their media investments and excluding low-quality sites, advertisers can enhance the effectiveness of programmatic advertising and promote a more sustainable advertising ecosystem. The industry as a whole must work together to drive positive change and ensure that programmatic advertising realizes its full potential as a valuable tool for reaching and engaging target audiences.

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