IAB’s Fee Transparency Calculator Will be Revealing

Last week the ad tech industry, which has been hit lately with layoffs, lack of funding, and consolidation, got another shock when the IAB released its programmatic fee transparency calculator , dealing a body blow to the obfuscation that has made it impossible for media buyers to calculate how much of their ad budgets actually made it to the publisher. Wary advertisers who guessed they were paying an “ad tech” tax will now be able to calculate how much they’re paying in fees to every intermediary in the buying process.

When programmatic buying and selling took over the advertising industry, which wasn’t so long ago, an entirely new group of startup companies emerged to help both buyers and sellers automate their processes. As you might expect, there were very few media buyers that were experienced in buying through real time bidding, especially when it came to something that wasn’t performance or wasn’t remnant. As a consequence, the first couple of years saw media buyers essentially buying blind — not knowing where their ads appeared (indeed, if they appeared), whether they were brand safe, or whether they reached the intended audience.

Programmatic buying pretty much drove prices down to the floor for digital publishers, too, because they had no way of “proving” that their inventory was premium.  So premium sites were later to adopt programmatic — until the industry invented “programmatic premium.”

The problem of efficiency took a while to solve, but the industry did get it solved. However, the cost to solve it turns out to be higher than anyone wants to pay, as multiple intermediaries each take a piece of the dollars that pass between advertiser and publisher.

Amid all the other turmoil in the advertising industry around issues like fraud, viewability and ad blockers, calls for greater transparency into the buying process grew louder, and an IAB Programmatic Working Group came up with the fee calculator, a first-of-its-kind tool that advertisers, agencies, and publishers can use to analyze the costs of ad technologies and services that are commonly applied within programmatic executions. Better understanding of the fees each party incurs should allow for greater pricing transparency across the supply chain.

The tool asks users to input planning rates and budgets by channel, and then select the ad technologies that are being applied. Once that information is entered, the calculator tabulates the overall cost of the ad technology layers and their percentage share of the effective CPM.

The following ad technology layers are default fields included in the calculator, with the option of adding additional technologies/services based on individual buyer or seller implementations: 

  • Ad serving
  • Campaign management
  • Data/targeting
  • DMP technology
  • DSP technology
  • Pre-bid evaluation
  • Post-bid evaluation
  • Verification platform

Fortunately for our customers, we recently built an end-to-end private buying platform that allows them to bypass these intermediaries,  not only saving money but also lowering the risks of malware, spyware, and fraud.