Ad Tech: It’s Worse Than We Thought

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Building the technology that underpins the online advertising ecosystem is a lucrative business. The two largest online advertising companies, Alphabet and Meta (parent companies of Google and Facebook, respectively) are also some of the most valuable companies that have ever existed. But many other companies have found success in the ad tech market, earning money by inserting themselves into advertising transactions that once took place between only advertisers and publishers. However, three recent developments suggest that ad tech – which already has many known flaws – may be negatively impacting publishers even more than previously understood.

The black box of ad technology, particularly “brand safety” tech, has long been suspected to cause harm by needlessly scaring advertisers away from supporting news with their ad buys. We now have even more insight into the harm caused to advertisers and publishers by these unscrupulous middlemen, supporting our previous call for advertisers to walk away from this system.

The first notable finding centers on the fees siphoned away from publishers. Research conducted by Adalytics found that the fees taken by the “supply chain” range from 22-45 percent, with an average of 35 percent of ad dollars taken from publishers. In some extreme cases, demand-side and supply-side platforms (DSPs and SSPs) take 98 percent of an advertiser’s spend, leaving a mere two percent for publishers. The study also highlights how in the complex, auction-based system, some SSPs deliberately take a loss on some bids, “juicing their overall win rate.” Publishers are trapped in a system controlled by companies with few motives beyond winning, so that they can continue to take their cut on sales.

Even ad tech companies that claim to be looking out for advertisers and publishers do not seem to be acting honestly. “Brand safety” companies prey on advertisers’ concerns about where their ads will run, providing little benefit to brands while cutting off publishers from revenue that could be reinvested into newsgathering and distribution by encouraging keyword blocking. A joint statement from the News Media Alliance and Digital Content Next in 2020 explained:

Fact-based, reliable journalism supports the online ecosystem by providing readers with invaluable information and advertisers with high-quality content and access to these readers. Keyword blocking threatens this symbiotic relationship at the worst possible time.

This threat made it more difficult for news organizations to report on Covid-19 and the January 6 riots, and will make it more difficult in the face of hostilities in Ukraine.

Beyond harming news publishers, many brand safety tools don’t even do what they promise. On March 8, The Wall Street Journal reported that Gannett inadvertently reported inaccurate information about the location of ad placements to its advertisers. In a fully programmatic and machine-led marketplace, no individual advertiser can see every live ad, and reporting is vital for their tracking. However, Gannett’s error – which was widely agreed to not be malicious or fraudulent – highlights another flaw in the system. “Brand safety” companies sell tools and earn money from advertisers and publishers on the promise of avoiding just this type of mistake through careful monitoring and reporting. However, the brand safety trackers failed to flag this issue for months. As Matt Rogerson, head of public policy at Guardian Media Group tweeted:

Implicit in his question was why these companies should earn millions of dollars.

The brand safety companies – while not doing what they claim to – have found new ways to drain value from publishers. A March 10 report in Morning Brew details an additional form of abuse – ad tech companies scraping publisher data and selling contextual advertising segments based on it without permission. Contextual advertising – where the content of the story matters more than the reader’s data profile – is seen as one potential way for publishers to earn back some control in the marketplace with the disappearance of audience-based cookies. This scraping is, according to the trade groups quoted by Morning Brew, “not only a violation of publisher terms and conditions, but also the potential infringement of basic intellectual property rights.” Publishers seemingly can’t win, even with their own assets.

The harm that ad tech companies cause to publishers is now clearer than ever. They take away publishers’ ability to earn enough on advertisements to support the expensive, important work of gathering and sharing real news, waste their dollars with fraud and sell useless “safety” tools that don’t make things safer. And in an age when disinformation is rampant online and information warfare is fueling actual war in Ukraine, choosing to support real news outlets directly and advertising alongside high-quality news can literally save lives.

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