ANA’s Programmatic Study, The "Tsunami of Crap" and The Future Of The Open Web

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Following on this summer’s release of a report highlighting the scale of wasted on MFA (“Made For Advertising”) sites, which catalyzed a heightened degree of industry focus on the previously little-understood category of publishers, the ANA (the Association of National Advertisers, the primary trade association for US marketers) published the full edition of its Programmatic Media Supply Chain Study this week.

With a focus on inventory bought through what I would generally characterize as the “open web” (publishers and aggregators of ad inventory outside of the walled gardens, most of which is now traded programmatically), the report highlights many of the sectors inefficiencies and flaws from a marketer’s perspective.

There are many recommendations intended to help marketers optimize how they buy media programmatically, including a focus on inclusion lists of 75-100 preferred sellers, buying through direct sales paths, establishing direct contracts with DSPs and SSPs to secure access to data and the need to prioritize value over cost. 

However, I think the takeaway that will probably resonate more than any other is the finding that “only 36 cents of every ad dollar that enters a DSP effectively reaches the consumer.”

Conceptually, there shouldn’t be anything wrong if only 36 cents if it provides the buyer with value they couldn’t otherwise get on their own.   Personally, I look at chocolate, where a dollar of spending on a product from a manufacturer focused on an exploitation-free product with “fair pay” to farmers probably leads to significantly less than 10 cents in the pockets of the product’s producers (personally I don’t mind paying for my cacao and sugar to be turned into a consumable product and then wrapped and shipped to a store). In that context, 36 cents to a producer of a product probably isn’t all that bad! But I digress.

More generally, large marketers are overly focused on notions of “working” and “non-working” spend, where they look to deploy as much spending to publishers as possible and drive down spending on intermediaries, independent of the value that the intermediary provides .

Unfortunately for web-based publishers, I think that even if marketers succeed in reducing what they perceive as “waste,” I’m doubtful that most of those publishers will ever notice much of a benefit.  This is because the report comes as two separate issues are poised to dramatically impact the open web’s traditional content producers.

First, the deprecation of what’s left of third-party cookies is upon us.   As Google has conveyed, the most widely used Chrome browsers will begin to disable the third-party cookies that I believe most marketers still use to manage their campaigns beginning in the first quarter of next year – i.e. next month.   While some have conveyed skepticism around whether or not Google will actually follow through with its plans, the closer we get to this date, the more likely it is to occur.   

Second, as illustrated by last week’s news that Arena Group’s Sports Illustrated used an undisclosed AI-generated “author” to produce AI-generated “content” (and Futurism’s reporting that Arena’s TheStreet behaves similarly alongside “barely-disclosed” AI-generated content elsewhere (at Red Ventures’ CNet and Bankrate), we are now beginning to see, in Brian Morrissey’s words a “tsunami of crap” (or, less politely, as Peter Kafka described it, a “tsunami of bullshit”) on the open web.

While it’s true that challenges with targeting in a post-cookie world may be solved via better first-party data from publishers and marketers, contextual targeting or through the approaches under development from Google, The Trade Desk and others, third party cookie deprecation necessarily will cause marketers who rely on cookies to reassess many of their budgeting choices.

They will do in the wake of the ANA’s recent reports and at a time when consumers are likely to increasingly notice that an un-curated open web will be increasingly cluttered and less desirable to visit, making MFA-equivalent sites even more prevalent than they are now.  Sure, top-tier publishers – many among the 75-100 that the ANA recommends marketers focus on – will probably continue to produce original, widely-read human-generated content. If their content remains differentiated from what’s available on the open web, those publishers should benefit on a relative basis at least.

In this world, will the decreasing number of publishers who continue to produce human-generated content provide advertisers with enough campaign reach or observable performance-based outcomes to justify the effort to allocate a growing share of budgets to these publishers? 

With retail media is still ascendant for many marketers, and AI-driven performance-based campaigns primarily sold within walled gardens (using user IDs wherever possible) providing what will be perceived as superior “outcomes” – with essentially all of the working spend going to the “publisher” - I’m skeptical.    To be sure, there will be open web-based publishers who have unique scaled data assets (such as Yahoo, with its email-based IDs) and publishers who are must-reads for valuable consumers (such as the New York Times, WSJ, or FT among others) who will do fine.   But the primarily ad-supported open web, including many of its largest ad-supported publishers?   I’m skeptical that most of those publishers will do as well in terms of pure advertising revenue growth - in fact, decline may be much more common.  While my most recent forecast for “open web” advertising shows expectations for mid-single digit growth, most of this is due to growth that will accrue to digital out-of-home and open connected TV, which may be increasingly managed as one pool of inventory for many marketers.

Source: Madison and Wall

For most open web publishers, there will still be pathways to growth. For example, I think many of them will be able to focus more on alternative revenue streams, such as subscriptions (which may have the co-inciding effect of producing more valuable audiences for marketers), e-commerce / affiliate revenues, content licensing, events or other sources of revenues. But those who want to continue to prioritize advertising will need to recognize the unique data and scale game required to succeed in advertising and grow in the quarters and years ahead.