IAB releases a calculator to show how much ad spend goes to...

IAB releases a calculator to show how much ad spend goes to programmatic ad tech fees


How much of that ad buy went to ad tech vendors and how much ended up funneling to the publisher? That’s long been a thorny question in programmatic ad buying as technology solutions have multiplied, with each vendor in the supply chain taking a cut for its services along the way. To help bring transparency to the fees involved in programmatic, the Interactive Advertising Bureau (IAB) released a Programmatic Fee Transparency calculator for media buyers and publishers to add up the fees involved in executing ad buys.

“Some refer to the misunderstood fees associated with services as the ‘ad tech tax’,” said Jason White, General Manager and Vice President, Programmatic Revenue, CBS Interactive, and Co-Chair of the IAB Programmatic Council in a statement. “It’s time we cut through the confusion, dispel the misnomer of ‘ad tech tax,’ and help practitioners on both sides of the fence manage and appreciate these valuable assets. As a result, this should improve trust and increase liquidity in the marketplace, which will provide a healthier ecosystem for all buyers and sellers.”

To use the calculator, enter in media plan information for display, video and native advertising, including CPMs and budgets, then choose any of the default advertising technology options listed (ad serving, campaign management, data, DMP, DSP, etc.) and add any other services. When you select a technology or service, you’ll be asked to input cost model information — percent of media, flat fee or CPM. Below is a screen shot of the calculator’s Buyer Technology Layers.

iab programmatic fee calculator

The calculator then tabulates Media Plan Totals and Execution Costs as well as total receivables for the publisher while showing a breakdown of the costs of each technology and service layer and its percentage share of the effective CPM.

“This calculator will be invaluable to both buyers and sellers in understanding the anatomy of a programmatic ad request or response,” said Joe Laszlo, Vice President, Industry Initiatives, IAB. “The programmatic ecosystem is diverse, complex, and fast-changing. Clarity around processes and intermediaries is critical if we’re going to drive further growth for the programmatic marketplace.”

(Some images used under license from Shutterstock.com.)

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