Lacking financial incentives, sustainability remains a hope, not a promise, in digital advertising next year

climate change revenue

Sustainability is currently up against a myriad of other challenges that face the digital advertising industry when it comes to which focus will take priority in 2024. And while the ultimate incentive to address the industry’s carbon emissions issue is pretty clear — ahem, global catastrophe — there are not currently sufficient incentives nor sufficiently coordinated efforts to rally advertisers, agencies, publishers and ad intermediaries around the issue.

While many agency, ad tech and advertiser voices have started talking about the need to prioritize sustainability, going as far to include questions about carbon emissions in request for proposals (RFPs), SSP execs and buyers agree that it doesn’t appear that much is being done yet to actually incentivize sustainability and cohere industry members’ individual efforts to cut carbon emissions.

“This feels like yet another thing that publishers are being saddled with the custody and are unilaterally being the responsible party to solve [the problem] when, frankly, we’ve been put in this position by the nature of the programmatic ecosystem,” said a programmatic revenue exec at a media company who spoke on the condition of anonymity. 

Other media execs told Digiday they share the same sentiment, revealing that they’re feeling particularly frustrated because it seems as though publishers are being asked to pull the bulk of the weight when it comes to reducing carbon emissions from the programmatic supply chain via supply path optimization (SPO). And what’s more, they think that sustainability is just the latest term being thrown around by marketers as a publicity stunt that they’re expecting publishers to handle.

“Suddenly, [the industry] made this the biggest issue, but right now it feels more like a negotiation tactic than anything else,” said a second publishing exec during an anonymous roundtable discussion on the topic of sustainability within digital advertising at the Digiday Publishing Summit in September.

The first exec argued that the programmatic system was built to drive down CPMs to historic lows, causing publishers to “scramble for any additional monetization opportunities they can find,” which, while creating excess carbon waste, is necessary for revenue.

“The frustration is that SPO is being looked at at the publisher level via our ads.txt files and reseller lines. So it’s suggesting that if we send one request to [an SSP] via a direct line [and] nine other ones via a reseller, that is the problem for sustainability — we’re sending 10 times too many requests to that exchange. But that exchange is then potentially sending that opportunity to thousands of places,” said Justin Wohl, CRO of Salon, TVTropes and Snopes. “The scale of data transmission is really insignificantly changed at the publisher level relative to the behavior of SSPs.” 

Some SSPs, agencies and ad tech companies argue, however, that they are putting in the work to reduce carbon from their business practices. So they, in turn, are putting the blame on a lack of standardization in carbon emissions measurement for decreasing the influence of sustainability on advertising budgets. Thus, some degree of confusion is left around how much can be done — and currently is being done — to get the digital advertising industry on board with reducing emissions. 

Therefore, incremental steps like traffic shaping, removing the worst offending publishers from their offerings and eliminating useless bid duplication are a few things that ad exchanges have started to do. 

At the end of the day, though, these are just baby steps until a universal approach to measuring emissions is created, which will ultimately allow buyers to effectively spend their clients’ budgets based on emissions. 

Incremental improvements from SSPs

Some of the strategies to reduce carbon are also the same strategies being done to simplify the chaos that is the programmatic marketplace, like traffic shaping and SPO. 

Magnite, a global sell-side platform, announced a deal with digital advertising optimization provider Greenbids this month that will match buyers with the more sustainable option when they select digital inventory through Magnite’s ad exchange. According to Julie Selman, head of EMEA at Magnite, the company was selected as Greenbid’s first SSP partner because of the work the platform had already done in reducing its carbon emissions via traffic shaping.

As part of the deal, Magnite will share its traffic shaping data with Greenbids to continually optimize the least emission-creating campaign solutions that still perform at the same level as non-sustainability-optimized options.

In early tests, Selman said that campaigns associated with Greenbids saw a 24% reduction in carbon emissions while still delivering the same performance to the advertiser.

One of the larger hold-ups coming from SSPs and DSPs is bid duplication, which has been criticized as spammy behavior within the ad tech world, but Gus Quinzani, Nexxen’s now-former senior director of business development, said it’s such a common practice amongst ad servers and not always done with malicious intent. 

There is the “tech-can’t-handle-it outlook on it,” Quinzani explained, saying that if there is a 90-second ad slot available on CTV, for example, sending a couple 30-second bids, a 60-second bid and a 90-second bid all for that same slot might just make better business sense, especially if the ad servers aren’t aligned on how that time slot is segmented. 

“The more [bids] you send out, the more probability that you’re going to get a bid request that makes you money. So it’s just a matter of why you’re doing it,” said Quinzani. However, if someone is just “duplicating it because you’re just trying to take two shots at it? That’s adding to carbon emissions and that’s something that everybody [should be] combating against. That’s what MFAs do.” 

Conflict of revenue 

Sharethrough currently has two low-emissions offerings in the market: its Low Emissions Set, which “is basically just excluding high emissions publishers,” and its green private marketplaces, which offset remaining carbon emissions, said chief product officer, Curt Larson.

And while Larson said he would like to be able to incentivize publishers to reduce their carbon emissions to be included in these offerings, the industry isn’t quite at the point where lower carbon emissions unequivocally yields more money for the publisher. He would not disclose what the current average CPM or RPM are for publishers in the Low Emissions Set compared to the standard set of Sharethrough’s publishers.

“I would like to be able to tell publishers, ‘Hey, would you get included in our Low Emission Set? You get a lot more revenue.’ And I can see that today, but it’s not dramatic enough to show them what they would need to change their behavior,” said Larson. “We can’t expect too many people to take actions that are too far against their financial incentives.” 

The momentum to get people to actively shift their thinking around sustainable media equaling more revenue will ultimately come from the buy-side shifting budgets toward publishers, SSPs, DSPs and other ad tech partners who are practicing lowering emissions, Larson argued.

The buy-side is definitely interested in knowing how many carbon emissions are created because of ad campaigns, according to Kristofer Doerfler, director of innovation and regenerative media lead at CMI Media Group, a subsidiary of WPP. And while client budgets are not currently spent based on that data, Doerfler said his team has started “optimizing out of [working with] the truly worst offenders.” 

However, “we are still not looking to transact off of emissions data, probably even still next year,” said Doerfler. 

https://digiday.com/?p=527122

More in Media

Teads’ M&A rumors are firming up with a deal to merge with Outbrain

The latest installment of ad tech M&A activity is leaving some industry folks surprised.

Publishers’ Privacy Sandbox pauses settle into a deep freeze following reports of poor performance

Publishers aren’t ready to press play yet on dedicated Privacy Sandbox tests.