3 Ways the Murky Programmatic Industry Made Strides Toward Progress in 2023

The industry shortened supply chains, spotted low-quality inventory and advertised in new places

The industrywide practice of complaining about the programmatic ecosystem might be as commonplace as not leaving the couch for five days during the last week of December.

Programmatic advertising has been called out for not being transparent, being wasteful, violating people’s fundamental rights to privacy and depleting the power of independent publishers, among other allegations.

But this year, people working at brands, agencies, ad-tech firms and publishers took critical steps to make the industry a little bit better.

So, as we all sit down for some nice quality time with our phones and computers this week, the programmatic machinery will still be tirelessly working, noting our attention and selling it to advertisers. But Adweek has spotlighted some of the ways ad tech has made progress in an industry known for clinging to bad patterns.

Pruning supply paths

This year, an array of companies took steps to make the supply path between publisher and advertiser shorter, cutting down on wasted dollars and carbon emissions along the way.

Publishers have long been willing to rack up ad-tech partners if it would make them an extra buck, but this year, Insider reassessed its ad-tech partnerships to reduce carbon emissions, and Salon cut out resellers and saw its revenues rise.

Ad-tech firms offered new solutions to make supply-path optimization a reality, sometimes out of necessity. Supply-side platforms PubMatic and Magnite debuted new tools to buy premium video like connected television without a demand-side platform. Yahoo shuttered its SSP and laid off one-half of its ad-tech workforce, only several months later to become a DSP that offered a direct connection to the sell-side through its SPO product, Backstage. And buyers are increasingly working to cut out agencies in their contracts with ad-tech providers, in a ploy to reduce ad-tech taxes and own valuable signals.

These steps can work toward creating a programmatic supply chain that matches advertisers’ goals with publisher supply.

“When you eat a lot of sugar, the human body just gets less responsive,” said Ratko Vidakovic, founder of ad-tech advisory firm AdProfs. “The more the supply side shouts and creates these duplicative bid requests, the less DSPs listen to it, because they know it’s from the same ad opportunity.”

Nonetheless, bid duplication is still widespread, such that any given bid request from an SSP only has a 1% chance of being monetized.

Rooting out low-quality media

New evidence came out this year proving an unsaid truth about programmatic: Low-quality inventory is rampantly available throughout programmatic buying mechanisms, and advertisers are buying it, sometimes inadvertently, but sometimes on purpose.

In response to new research, buyers and ad-tech firms took real action.

In June, the Association of National Advertisers’ first programmatic transparency study found that 15% of ad spend went toward made-for-advertising websites, spammy publishers that aren’t fully fraud but do not publish content designed to be read, merely landing pages to monetize.

Following this research, several SSPs worked to limit their supply of MFA this year, and GroupM launched an initiative to protect advertisers against this inventory. Four trade bodies came to a definition of MFA sites so the industry can be united on how to find these publishers and avoid them.

Additionally, a slew of research from ad-tech research firm Adalytics found quality issues within Google’s vast inventory, including YouTube ads ending up in low-quality placements and on kids’ channels, even though advertisers wanted to be in neither location, and search ads landing on pornographic, sanctioned and pirated websites.  

Google denied Adalytics’ allegations, but instead of shrugging their shoulders, many buyers redirected their YouTube spending strategies to avoid the unsavory pockets of inventory that Adalytics surfaced. And later, when buyers learned that they couldn’t avoid placing their ads on potentially low-quality search partner network sites via Google’s AI-driven buying tool, Performance Max, the platform abruptly let them, responding to buyer demands.

Still, previous solutions to ensure thoughtful media buying, like viewability and private marketplaces, have not fully solved the internet’s quality problem and may have even exacerbated it. And buyers continue to be frustrated with transparency on Google.

More places to advertise

Advertisers gained access to more surfaces this year.

Intuit launched a media company aimed at helping brands target its QuickBooks small business customers. The New York City Subway expanded into programmatic buying. And United Airlines is mulling selling targeted advertising, The Wall Street Journal reported.

These developments not only expand the places ads can reach people, but, coupled with rising investment in retail media and CTV, can give power to publishers outside of the walled gardens, said Robert Webster, global vice president of strategy at marketing consultancy CvE.

“From CTV to retail media, the independent sector is fighting back and growing in importance,” he said.

Still, new media entrants are not yet perfect advertising solutions, with growing pains around standardized reporting and transparency.