The Digital Advertising Supply Chain Needs To Be Simplified

By Doug Huntington, CEO, FatTail

Explain the supply chain of digital advertising to the average person, and their head will quickly spin. The advertiser works with an agency, which works with an omnichannel buying platform or demand-side platform, which relies on an ad server, which sends the buying request to a publisher ad server or supply-side platform, which finally allows the ad to show up on the property of a publisher, which uses other technology, such as an order management system, to record transactions. As many as 10,000 vendors may now participate in the transaction between publisher and buyer.

This process is too complex, expensive, and prone to error. Advertisers and publishers, the two key parties in the transaction, do not have clarity into whom they’re paying, for what, and how much. Manual data entry fosters inaccuracy. Overselling or underselling inventory is likely. Advertisers are saddled with brand safety issues, and publishers’ inventory is commoditized as advertisers buy audiences without regard for the high-quality content environments to which those audiences gravitate.

Advertisers and publishers have a tremendous amount to gain from a simplified supply chain. But to many, it may be unclear what simplification looks like. So, let’s consider what a more direct — though still automated — future for digital advertising would entail and how advertisers and publishers would benefit.

How to simplify digital advertising transactions

Instead of navigating the baroque supply chain that exists today, media buyers should be able to access direct publisher inventory in a single destination. Publishers should be able to display their products, inventory, and pricing in this forum. Advertisers can survey it and, with the help of buying partners, navigate it. Publishers will be able to avoid the commoditization that comes with putting their inventory on the relatively low-margin open programmatic market. 

When advertisers see the inventory available to them, it should be electronically identical to the inventory publishers are selling. Then, when insertion orders are created, they can be seamlessly connected to the publisher’s workflow, the order can be executed, and reconciliation will already be ninety percent settled.

The benefits go beyond financial savings (which would be likely to stem from reduced complexity). Centralizing deals and accelerating publisher-advertiser transactions would also offer the opportunity to avoid the complex process of reconciliation across many intermediaries that leads to accounting errors, inventory selling mishaps, and wasted time. 

It is difficult to overstate how much time publishers and advertisers, plus their partners, would save if everyone shared a uniform digital record of available inventory and orders upfront. Publishers often struggle with reconciliation due to seemingly minor discrepancies like a publisher calling a section “elections” and an agency calling it “politics.” With a universal destination for deals, those inconsistencies can be eliminated from the beginning, freeing up advertising professionals to spend their time adding value, not making sure it isn’t wasted by logistical errors.

How digital advertising simplification would benefit advertisers and publishers

Some publishers may fear putting their pricing, inventory, and products into a widely discoverable destination because they don’t want buyers to take advantage of them on price if they have a lot of unsold media. But as long as they maintain control over what types of inventory they show to each of their different channels and partners, they should have the control they need to avoid unwanted transparency. 

By facilitating direct deals via a single, industry-wide destination, publishers can more completely own the relationship with buyers, who won’t purchase their inventory via third-party programmatic targeting without even knowing whose content they’re buying. This increases the value of publishers’ first-party data, and it offers them the opportunity to get more of each dollar for every transaction that takes place. Plus, by making it easy to buy media across publishers, the sell side will get more of overall global ad spend by reducing the efficiency edge of the walled gardens — and providing premium, contextually relevant context that the walled gardens cannot replicate.

Advertisers will also benefit from simplification. Every advertiser has suffered the experience of placing an ad buy via the open market just to find that their ad has shown up next to brand-unsafe content or on a site full of belly fat ads. Going directly to publishers will illuminate the high-quality content environments where advertisers want to speak to their audiences, diminish reconciliation issues and fraud, and ensure that each dollar spent goes to media, not gratuitous fees.

The bottom line: simple sells

Very little of ad spend goes to premium publishers. Meta and Google alone account for the majority of digital ad spend. That’s not only because they offer audiences at scale. It’s also because they make it easy to buy those audiences. 

If publishers want to better compete with the tech giants, they need to make it easy to buy their inventory at scale. That means reducing the complexity of the advertising supply chain and pooling inventory so that advertisers can easily find it and buy it across publishers.

We’re moving into 2023. For the last ten years, digital media professionals have wondered whether the new year would bring a solution to seemingly intractable issues such as fraud, brand safety, and a lack of transparency. Simplification is a foundational solution that can affect all those downstream issues. By enabling direct deals at scale, the industry can alleviate all those long-standing pain points.