Inefficiency – the silent killer throttling programmatic progress in digital advertising
Opinion
The CRO at programmatic platform Limelight explains how improving trading intelligence, transparency and supply relationships can reduce waste and propel programmatic performance.
More money than ever is being pumped into digital advertising. Today, the global programmatic industry is worth just over $700bn, and is projected to reach $800bn by 2028.
But behind this growth lies a structural problem: as increasing numbers of programmatic platforms and solutions flood the market, we’re seeing a stark reduction in efficiency. This creates waste, reduces transparency and increases environmental costs for brands, publishers and advertisers.
Publishers face reduced yields, while advertisers face inflated costs and limited visibility into value. At the same time, duplicated and unnecessary bid requests increase the carbon footprint of every campaign.
Addressing inefficiency must be a priority for the next phase of programmatic advertising. Only through increased trading intelligence, operational transparency and the development of new relationship capital will the programmatic space be able to demonstrate its potential. Platforms like Limelight are spearheading this change, with tools that build trust through effectiveness and efficiency to drive performance.
Where inefficiency comes from
The programmatic supply chain can be convoluted, often involving multiple adtech platforms. Each impression may pass through several intermediaries before reaching a buyer, adding cost and complexity.
As a result, the increased latency and cost create systemic inefficiency and reduce value. Inventory yo-yos between resellers and SSPs, often feeding back into the market and synthetically exaggerating volume – subsequently reducing yield for advertisers and publishers.
In addition, sellers and publishers regularly offer inventory in ways that are misaligned with what buyers are actually looking for – from ad format size to geography and everything in between.
This misalignment reduces trust, and buyers may subsequently act cautiously, thereby missing great opportunities. Meanwhile, those who bid aggressively experience lower match rates, resulting in wasted impressions.
The repercussions are serious and far-reaching, with an ISBA study of programmatic flows in the UK finding that publishers receive only 65% of advertising spend. The rest is simply unaccounted for.
Furthermore, research by French specialist GreenIT demonstrates how this waste drives the industry’s carbon footprint. According to GreenIT, the digital sector is responsible for about 3.4% of global greenhouse gas emissions – comparable to the aviation industry.
So there can be no doubt that inefficiency poses economic, environmental, and reputational risks and must be tackled.
How to reduce inefficiency
To combat inefficiency, programmatic platforms must focus on three areas: trading intelligence, operational transparency and building relationship capital. Let’s take them one by one:
Trading intelligence
Trading intelligence is the practice of using data to make better bidding decisions, giving buyers clearer pre-bid signals so they can create an optimised, well-informed strategy.
Again, this also helps them focus on reducing waste and correctly identifying quality and pricing campaigns.
Integrating SPO (Supply Path Optimisation) and real-time inventory segmentation allows buyers to optimise out poor performing sources, target high-yield results and determine a campaign’s goals – then optimise effectively in that direction.
Operational transparency
Closely linked to trading intelligence is operational transparency. Programmatic transparency is about providing buyer insights that are easy to understand, action and use. This isn’t about simply supplying buyers with a mountain of incomprehensible data, but about working together to understand what a supply path means in terms of a campaign’s conversion probability, viewability, or fraud, for example.
Building programmatic platforms that are accessible, reliable and consistent builds mutual trust between all parties and drives performance.
Relationship capital
Speaking of trust, building relationship capital between buyers and suppliers will create a cycle that engenders experimentation and testing.
Trust, credibility and a willingness to try different strategies and technologies are vital for developing new programmatic tactics that will drive performance.
The role of AI
The elephant in the room here is AI, and the extent to which it can be used to streamline workflows and drive positive programmatic outcomes.
The truth is that AI is a tool, not a marketing proposition. It should be used primarily to boost trading efficiency, results, and transparency, but it is only as powerful as the environment and context in which it operates.
When AI is supplied with clean data, the right incentives and human oversight, it will produce long-term gains. But it cannot fix supply-chain inefficiencies (or any number of other common issues) without decent signals and human guidance. In fact, if provided with unreliable data, AI can exacerbate existing inefficiencies.
Today, programmatic inefficiency is no longer a hidden byproduct of scale – it is the silent killer of performance, eroding value at every stage of the supply chain. Left unchecked, it will continue to inflate costs, suppress yield and undermine trust across the ecosystem.
The next phase of programmatic growth will not be defined by more platforms, more data or even more AI. It will be defined by how effectively the industry removes friction.
That means fewer intermediaries, clearer supply paths and smarter decision-making grounded in transparent, high-quality signals.
Brands and agencies that connect with the right programmatic partner will navigate these waters safely. Through ever-evolving tools, platforms like Limelight offer marketers the chance to trade more effectively, with greater transparency, building vital relationship capital. With the right platform, they can seek out the best value, find quality supply and evolve as channels, measurement and identity shift.
Trading intelligence, operational transparency and stronger supply relationships are not incremental improvements but the foundations of a more accountable and efficient marketplace. Get them right, and programmatic delivers on its promise. Get them wrong, and inefficiency quietly continues to drain performance, investment, and progress.
The choice is simple: eliminate the inefficiencies throttling the system, or allow them to keep silently killing its potential.
James Macdonald is the co-founder and CRO at programmatic platform Limelight.