Executive Summary

For years, advertisers and publishers alike have complained about the “tech tax,” the programmatic fees they see as eating into media budgets. But programmatic trading requires infrastructure and partners just to function—let alone effectively. And those partners have to get paid.

How much are advertisers paying for the “ad tech tax”—the programmatic fees collected by ad tech firms to facilitate or complete ad transactions?

We estimate that US advertisers will spend almost $12 billion this year on the fees that make programmatic display transactions possible, including payments to demand-side platforms (DSPs), supply-side platforms (SSPs), and other technology and service partners.

Are programmatic fees getting higher or getting lower for advertisers?

As a share of programmatic display ad spending, programmatic fees are getting lower, little by little. But the absolute level of spending on programmatic fees is going up, due to healthy increases in programmatic display spending outside social networking sites.

Is the “ad tech tax” really a problem? What about transparency?

Whether the current level of programmatic fees is a problem depends on who you ask. Publishers would like to see more of those dollars. But media buyers have mostly moved on from considering media as a proxy for audiences and believe that at least some of the fees associated with automated trading are worthwhile. The bigger problem is in transparency, both in terms of costs and ad placements—including the possibility for fraud.

WHAT’S IN THIS REPORT? This report presents a new estimate of US advertiser spending on programmatic fees and explores the problems of the ad tech tax and the lack of programmatic transparency.

KEY STAT: We estimate that almost one-third of US advertiser spending on programmatic display ads this year will end up with tech intermediaries and other programmatic partners, rather than publishers.