Only 28% of programmatic ad money reaches 'working media'
Of the $63.4bn spent globally on programmatic advertising last year, only $17.8bn is estimated to have made it to the 'working media' level.
The new findings, supplied by WARC, show that in worst-case scenarios just 28% of advertiser money is going where it's needed - with adtech middlemen, fraudsters and agency fees extracting the majority of the money from the supply chain.
In best case scenarios - which assume ad fraud levels of only 10% - the level of investment reaching working media rises to $22.8bn, or 36% of total investment.
The news chimes with the revelation at the end of 2016, that, again in worst case scenarios, for every pound an advertiser spends programmatically on the Guardian only 30 pence actually goes to the publisher.
"There's leakage," the Guardian's chief revenue officer, Hamish Nicklin told Mediatel at the time. "The money that goes in is not the same as the money that goes out.
"There are so many different players taking a little cut here, a little cut there - and sometimes a very big cut. A lot of the money that advertisers think they are giving to premium publishers is not actually getting to us."
It is well-established that the online ad ecosystem is wildly complicated with thousands of technology companies creating a complex market with little accountability.
The challenge for advertisers and publishers is to understand who justly deserves a cut of the adspend, and which businesses are able to deliver real value within the supply chain.
Programmatic is still in a strong growth phase. WARC states that two in every five dollars (39%) spent on advertising in the US last year, across all media and formats, were traded by machines. This rate has doubled over the last five years.
However, there are wider concerns over viewability, fraud, brand safety and ad effectiveness, suggesting brands could be wasting budgets.
The World Federation of Advertisers (WFA) believe 55% of investment goes towards the 'tech tax' - the money spent on trading desks, demand side platforms, ad exchanges and data, targeting and verification services.
WARC drew a consensus from media buyers, and while the rate of tech tax varied between markets, agencies and stacks, the outcome broadly aligned with the WFA estimates.
The tech tax would equate to around $30bn - $34.9bn.
Meanwhile, The Association of National Advertisers (ANA) estimates that around $6.5bn was lost to ad fraud worldwide last year. However, total losses could have been cut to $700m if the entire industry had adhered to safety guidelines.
"The boom in programmatic advertising over recent years has exposed major flaws in the ecosystem, including heightened brand risk, impression and click fraud, and poor viewability and dwell time," said James McDonald, data editor, WARC.
"This has led advertisers - who collectively paid $30bn to 'middlemen' in the online ad supply chain last year - to reassess the way they invest and keep pressure on the industry to clean up its act."