The Internet Mystery of the Disappearing Ad Dollar

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Writers continue to gripe about transparency and ad tech’s complexity. Their worries were amplified this month once the Guardian’s CRO, Hamish Nicklin, revealed that in sometimes the writer just got 30% of ad dollars spent programmatically.

The Guardian case raised a number of issues: Are these lows yields typical? Who’s getting all of the money? And so what can be achieved to ease the issue?

In this segment of unsolved mysteries, they tried to answer those questions. As Nicklin put it, it’s important for publishers to shed light on the disappearing ad dollar. “A lot of the money that [advertisers] think they are giving to premium publishers is not actually getting to us,” he said.

So, is this a normal occurrence?
Many resources weren’t surprised to find out that 70 percent of advertising dollars disappeared by the time they reached the Guardian. “In some cases, it might be even worse,” said Todd Garland, founder  and CEO of digital advertising network BuySellAds.

But many sources said they thought 70 percent is an outlier. Vin Paolozzi, SVP of development at Magna Global stated that yields this low have become “more and more rare” as writers  transfer from open exchanges to private markets.

Hearst’s Mike Smith said intermediary fees tend to range between 20 percent and 30 percent. And that “the Guardian should be challenged to publish their results so we can examine them.”

Whether fees are 20 percent or 70 percent, it’s worth breaking down and locating where the money goes.

The Break Down
Michael Collins, President of cross-channel programmatic system Adelphic, highlights the writers usually can easily see the clearing price about the exchange’s costs as well as the exchange, but that’s all. But customers usually have visibility completely from what the clearing price on the exchange is. Because intermediary fees are often hidden to publishers, it’s really difficult to even calculate a percentage like the Guardian did, said Justin Festa, VP of revenue for LittleThings.

A brand’s agency could possibly charge 5 percent. The company runs on the trade desk that requires a 15 percent cut. And a buying platform requires another 10 percent. The company may also use services to supply extra information about the advertisements, like a third party data provider, viewability and attribution serives, which total up to 25 percent. After that, a SSP requires 15-percent, which leaves only 30 percent for the publisher.

After being unable to peg the last 10 percent to a specific intermediary, one source said, “My inability to answer your question is a product of the lack of transparency. There are amazing profits in the ambiguity that ad tech has created.” Another source said, “I have heard of different SSPs who take advantage of bidding and skim a few percent off the top.”