Just to get our blood pumping, let’s look at a few key facts about online advertising. Then we’ll come back in later chapters and get into some depth on these facts.
I have tried to gather these facts from the most reliable sources available.
According to a study by the Incorporated Society of British Advertisers (ISBA) and PwC, half of programmatic ad money is being siphoned off by adtech middlemen before it pays for a single ad.
A report by the ANA (Association of National Advertisers) in 2023 claimed that 25% of programmatic ad dollars are wasted. Projecting this over the total spend on programmatic advertising would mean that over $130 billion is wasted. Let me emphasize that by “wasted” the ANA doesn’t mean that it is poorly conceived or executed advertising, it means that the advertiser is being screwed out of 25% of what he thinks he has bought. As we progress, you will see why I believe this number is very low.
According to Juniper Research, ad fraud alone cost advertisers $84 billion in 2023. They reported that 22% of all digital advertising spend was attributed to fraud. The ANA study just mentioned above did not include ad fraud in its calculation.
Juniper predicts that in 2024 ad fraud will reach $100 billion.
The ANA says that about 15% of programmatic ad dollars are eaten up by MFAs (useless 'made for advertising' websites.) Again, I suspect the actual number is higher. Other reports have it at over 20%.
Ads from an average programmatic campaign by a "sophisticated" advertiser will appear on over 40,000 websites. This makes accurately monitoring an online campaign virtually impossible. And it makes the programmatic ecosystem Disneyland for crooks.
According to the ISBA report, 80% of the websites that programmatically purchased ads will run on are "non-premium" websites. "Non-premium" is a nice British way of saying "crap."
Websites are built so that, on average, only about 75% of ad slots that are for sale are within the viewable area. This means that at least 25% of the time advertisers are bidding on ad slots that will turn out to be invisible. That’s $130 billion worth of invisible.
Integral Ad Science (IAS) says that in total between 30 and 50% of display ads are "non-viewable." "Non-viewable" means the ad loaded outside the screen's viewable area; or the ad didn't render in time for a viewer to see it; or multiple ads are stacked on one another; or one of several other factors.
According to the above-mentioned study by the ANA, only 36¢ out of every online ad dollar gets from an SSP (sell side platform) to a consumer.
According to Lumen Research, only 9% of online ads get even one second of consumer attention.
Reports that agencies receive from suppliers, and reports marketers receive from agencies about the reach, cost, and efficacy of their campaigns are highly unreliable. More about this later.
The Association of National Advertisers says that the programmatic media buying ecosystem is “riddled with material issues including thin transparency, fractured accountability, and mind-numbing complexity.” According to the CEO of the ANA, “We believe this lack of transparency is costing advertisers billions of dollars in waste.”
Two things are apparent from these facts. First, we must be double-counting some of the bad stuff. Even programmatic advertising can’t be more than 100% waste. Second, whatever the true extent of waste is, it is staggering (for more on this, see The Programmatic Poop Funnel.)
Let’s sum up with a quote from the director-general of the ISBA, “The market is damn near impenetrable.”