Programmatic vs planet: Both can be winners
Opinion
Programmatic is a major source of advertising’s carbon emissions, but it doesn’t have to be this way. A new approach can bring both sustainability and commercial benefits.
We’ve spent the last decade getting to grips with programmatic. Billions have been invested and, despite well-documented issues with transparency and ad fraud, these issues have yet to be solved.
And there’s a new challenge threatening programmatic advertising: sustainability. There is irrefutable data to show that programmatic is one of the most significant and growing contributors to our industry’s carbon footprint.
In early 2023, Scope3 noted that the majority (60%) of carbon generated by programmatic advertising comes from “ad selection emissions”, resulting from complex programmatic supply chains.
More recent data from Cedara backs this up, blaming the programmatic supply chain for 77% of total carbon emissions, compared with just 1% when ads are bought directly.
The reason programmatic is problematic is down to the complexity of the bidding process and supply chain. Every time a bid is sent from a demand-side platform to an supply-side platforms, it’s adding carbon to the atmosphere.
This process happens multiple times during each ad call. Across the entire industry, trillions of these bids are sent and this is rising every year, as more brands make the shift from fixed to biddable, data-enabled buying.
Programmatic’s complexity, and the potential for multiple layers and multiple partners, makes it a carbon dioxide generator.
Poor-quality programmatic is a profit centre
Programmatic buying’s climate impact will worsen if brands continue to increase their investment into the ecosystem as it stands today, without a fundamental review of how they use the medium and find ways to remove complexity in the solutions used.
The problem is also being compounded by the usage of “principal media” — programmatic inventory controlled by holding companies. Principal media is often colloquially known as “black box media buying” — a typically non-transparent way to secure cost-efficient digital media at higher agency margins, but it also limits the ability for advertisers to optimise their programmatic supply chain and reduce carbon emissions.
According to a recent Association of National Advertisers report, agencies are increasingly “aggressively recommending principal media solutions, often as a result of reductions in traditional agency compensation”.
The motivation for holding companies to promote principal media to their clients is obvious, as they can increase the profit of their operations against the backdrop of declining agency fees. Madison and Wall’s analysis of one holding group’s accounts showed that 5% of its overall client billings came from principal-based buying — with much higher profitability when compared with staffing revenue generated.
Pushing principal-based buying adds to the climate problem while agencies profit from it. As a result, marketers and brands are often getting less effective media and losing the ability to address other known programmatic issues around transparency, ad fraud and wastage.
Nick Manning: ‘Principal-based media’ is bad for the whole industry – here’s why
It doesn’t have to be like this
Continuing to push for greater transparency in the programmatic process brings clear commercial benefits as well as those relating to the reduction of carbon from the media supply chain.
For example, Scope3 has repeatedly highlighted the carbon contribution of ad fraud and made-for-advertising websites. In the US, 58.8 grams of CO2 emissions are wasted on fraud for every 1,000 impressions. With an estimated 500bn monthly impressions, it estimates that 352.8K metric tonnes of emitted CO2 is wasted on fraud every year in the US alone.
Brands and media directors may not be acting because of a lack of experience with the detailed workings of programmatic, a perceived impact to cost-per-mille trading targets and the fact that sustainability metrics are still not seen as business-critical. You won’t get fired for having a carbon-heavy media plan.
In fact, removing high-carbon-emitting placements and properties from your media plans not only reduces carbon emissions, but it also removes non-working media (ie. low-attention, high-clutter, fraudulent inventory) and improves overall media productivity.
Programmatic advertising has well-documented performance upsides and is currently how most digital media is bought. However, for the sake of the planet and media productivity, we cannot continue to accept non-transparency, low quality and poor governance when it comes to programmatic buying.
Simplifying processes
An easy step that every brand can take is to review its supply chain to optimise and simplify processes and suppliers. This will result in leaner supply chains, reducing programmatic carbon impact and ultimately increasing commercial efficiencies. Due to its lack of transparency, brands should reconsider their use of principal media.
I’d also urge brands to take this one step further by reducing or even stopping spend on the long tail and made-for-advertising sites, which have little impact on marketing effectiveness, but a massive impact on our planet.
Further, I am excited by the prospect of larger players changing their approach to programmatic. For example, Disney recently said it’s looking to stop using supply-side platforms in favour of direct sales. This means fewer bids and, in theory, a simpler buy.
Greater focus on quality media will ensure you are moving in the right direction. One way to do this is to move more programmatic buying to private marketplaces, where the quality of the inventory is uniformly higher and the volume of bids will be lower.
Finding alternatives
Finally, it’s also worth considering working with an independent advisor or consultancy that will be able to evaluate your programmatic approach and media supply chain. Independents have the advantage of being media- and platform-agnostic, and are well-placed to suggest alternative, more climate-friendly solutions that also deliver transparent and quality inventory.
At the Responsible Marketing Agency, we’ve been increasingly asked to review agency approaches to sustainable programmatic buying approaches and the third-party technology used to measure and reduce carbon footprint.
While I recognise there are barriers to making these changes, there are also huge commercial benefits in addition to environmental ones. Changing the programmatic landscape is one of the single biggest ways you can contribute to reducing the climate impact of our industry. So why not act today?
Hannah Mirza is founder and CEO of Responsible Marketing Agency