Challenges

Programmatic media is operationally efficient, but economically difficult to reason about, particularly on the open web. The challenges facing advertisers and publishers today are not isolated failures or the result of individual bad actors. They are the cumulative outcome of market structures that reward scale, speed, and abstraction more than shared economic understanding.

One of the most persistent challenges in programmatic media is the gap between what advertisers spend and what publishers ultimately receive. Independent industry research has repeatedly shown that a meaningful portion of advertiser spend does not arrive at publishers as working media, and that reconciling spend end to end remains difficult even when participants cooperate.

While data quality and standards adoption have improved, full reconciliation remains the exception rather than the norm. Costs are distributed across multiple intermediaries, embedded into CPMs, and rarely examined collectively. What is often described as the murky middle reflects a system where economic attribution is fragmented by design rather than by accident.

Over the past decade, the industry has invested heavily in brand safety, fraud detection, and viewability. These efforts were necessary and, in many respects, successful. Advertisers gained tools to avoid unsafe content, reduce invalid traffic, and enforce baseline quality controls. Verification became table stakes, and brand risk became more manageable at scale.

What these investments did not solve was economic integrity.

Brand safety answers the question of where ads should not appear. It does not explain how much of an advertiser’s spend ultimately funds media versus intermediaries, nor does it describe how value is distributed along the supply chain. An impression can be brand safe, viewable, and fraud free while still being economically inefficient or heavily intermediated.

In practice, the industry became far better at validating endpoints than at understanding pathways. Verification focused on the moment of delivery, not on the sequence of transactions that led there. As a result, advertisers gained confidence that their ads were safe, but not necessarily confidence in what they were paying for or how much working media reached publishers.

Economic integrity remains harder to measure, harder to standardize, and harder to enforce, particularly when supply paths are long, CPMs are bundled, and bilateral reconciliation is constrained.

As programmatic media has matured, large agency holding companies have evolved into clusters of specialized legal entities that support a wide range of commercial models across markets and platforms. These structures enable firms to offer services related to programmatic execution, retail media activation, data, and technology at scale while navigating local regulations and contractual requirements. At the same time, they can make it harder for advertisers and publishers to understand exactly how value is captured across affiliated entities and supply chain partners.

In theory, intermediaries may operate as agents, earning fees for services, or as principals, taking ownership of inventory and bearing inventory risk. This distinction matters because it determines how revenue is recognized and how risk is distributed. Accounting standards such as ASC 606 require programmatic entities to evaluate carefully whether they act as principals or agents in their arrangements, a decision that directly influences whether revenue is reported on a gross or net basis. dart.deloitte.com+1

In practice, public financial disclosures from major agency holding companies tend to emphasize working capital items such as receivables, payables, and media-related accruals rather than significant media inventory assets at the consolidated level. This pattern suggests that broad based ownership of media inventory is not the dominant economic model reflected in those financial statements, consistent with industry norms for revenue recognition in programmatic arrangements. dart.deloitte.com

This does not mean principal activity does not exist. Rather, many economic outcomes commonly associated with principal trading can be achieved through combinations of service fees, performance-linked compensation, data and technology markups, and other forms of consideration embedded within media execution. These forms of revenue can be recognized as service income or performance compensation without the holding company carrying inventory on its balance sheet.

Industry research highlights that the economic opacity in programmatic supply chains contributes to information asymmetry and misaligned incentives for advertisers. For example, the ANA Programmatic Media Supply Chain Transparency Study underscores how difficult it can be for marketers to access log-level data and fully understand the flow of dollars through intermediary layers, a challenge that can obscure how value is allocated across the chain. Adslot.

The growth of retail media networks has amplified these dynamics by combining premium inventory with proprietary data and closed-loop measurement in seller-controlled frameworks. These environments can create economic value that is hard for advertisers to benchmark independently and that may be realized through affiliated entities without reflecting traditional principal risk. This trend parallels how programmatic activity has evolved generally: tools and technology have enabled advertisers to optimize transactions while downstream economics remain complex and multifaceted. dart.deloitte.com

From the advertiser perspective, separating the cost of media inventory from the cost of services, technology, and data can be challenging because CPMs and other pricing signals often bundle these components together. For publishers and retailers, it can be difficult to assess how advertiser demand is being valued relative to total spend flowing through the system when multiple affiliated entities participate economically. Public studies have repeatedly shown that price and value in programmatic supply chains are not one to one, and that inefficiencies persist despite advances in data access and transparency. Adslot.

These dynamics do not imply persistent misconduct or undisclosed behavior. They reflect how modern media economics have evolved in ways that make agent versus principal distinctions less intuitive, even when formal agency relationships remain agent based under accounting standards. Understanding these structures and how revenue is recognized is critical for advertisers and publishers seeking better economic line of sight. Without clarity on how compensation is structured across affiliated entities, it becomes harder to evaluate efficiency, compare buying models, or understand where value is created and retained within the media supply chain.

Retail media networks have emerged as one of the fastest growing segments in digital advertising and are now a major revenue stream for many retailers. Their rise reflects real value. Retailers control high intent environments, first party purchase signals, and closed loop measurement that advertisers find compelling. For many brands, RMNs offer access to demand closer to the point of sale than traditional open web media.

At the same time, retail media has amplified several of the economic challenges already present in programmatic markets.

Retail owned inventory is often among the most valuable in the ecosystem. It sits at the intersection of commerce and media and is supported by proprietary data signals that are not independently observable. As a result, pricing for retail media frequently reflects not just media value, but assumptions about data quality, purchase influence, and attribution that are difficult for advertisers to verify or benchmark externally.

In practice, this has created new forms of high value inventory arbitrage. Media that would historically be valued primarily on placement or reach is now bundled with data access, closed loop measurement, and retailer specific insights. These components are rarely priced separately. Instead, they are embedded into CPMs or CPCs that combine inventory, data, and margin into a single economic signal.

For advertisers, this can make it difficult to understand what portion of spend is paying for media versus data versus access to a retailer ecosystem. Performance may appear strong, but the incremental value of the data itself is often unclear, particularly when measurement is controlled by the same entity selling the media.

For retailers, the incentives are rational. Retail media has become one of the highest margin parts of the business, often outperforming core retail operations. As these networks scale, pressure grows to maximize yield from premium inventory and proprietary data, reinforcing bundled pricing models and limited economic transparency.

RMNs also interact with the broader programmatic ecosystem in ways that compound complexity. Retail media inventory increasingly flows through programmatic pipes, while programmatic tactics are adapted to retail environments. This blurs the boundary between open web buying and retail owned media, further complicating advertisers’ ability to compare value across channels.

The result is not that retail media is ineffective or inappropriate. It is that the same structural issues seen elsewhere in programmatic markets now operate at higher price points, with fewer external reference signals, and greater reliance on trust in seller provided data and measurement.

As retail media continues to grow, it highlights a broader industry challenge. When inventory, data, and measurement are tightly coupled and sold together, economic integrity becomes harder to assess, even when performance appears strong. Without clearer frameworks for understanding what advertisers are paying for, high value environments can unintentionally reinforce the same confidence gaps that already exist elsewhere in digital media.

The open web’s liquidity makes it easy for large volumes of low value supply to persist. At scale, substitution becomes the dominant force. Inventory that is plentiful and inexpensive can be replicated endlessly, while differentiated environments struggle to maintain economic signal downstream.

For advertisers, this can manifest as spend absorbed by inventory that meets technical and brand safety requirements but delivers limited durable value. For publishers, it creates downward pressure on yield as quality is abstracted into interchangeable supply. The system optimizes for availability and throughput, not for sustained value recognition.

Even when advertisers want to buy more deliberately, supply path complexity makes that difficult. The same underlying impression is often offered through multiple routes, intermediaries, and auctions simultaneously.

From the buyer’s perspective, this increases redundancy and decision noise. From the publisher’s perspective, it fragments demand and reduces control over how inventory is packaged and priced. What appears to be a competitive marketplace at the surface often masks inefficiencies beneath, driven by parallel auctioning and duplicated access to the same supply.

A core constraint on progress is the lack of shared economic visibility between advertisers and publishers.

Across much of the programmatic ecosystem, contractual terms restrict the ability of buyers and sellers to directly share detailed spend and revenue information with one another. While these provisions serve platform and market design purposes, they prevent bilateral reconciliation of outcomes.

Advertisers see CPMs and performance metrics without insight into publisher yield. Publishers see revenue without visibility into buyer side pricing. Even when both sides are motivated to learn, they are often forced to rely on platform mediated reporting rather than shared economic evidence. The parties with the greatest interest in understanding outcomes are frequently the least able to compare them directly.

Another underappreciated challenge sits inside advertiser organizations themselves, the disconnect between media teams and procurement.

Media teams are accountable for outcomes, performance, and brand impact. Procurement teams are accountable for cost control, contracts, and vendor selection. When procurement decisions are made without deep understanding of how programmatic markets function, pressure is often applied to reduce visible fees rather than to evaluate total economic outcomes.

When agency fees are pushed down, margin does not disappear. It relocates. It re emerges through media throughput, principal based buying, proprietary ad networks, and programmatic entities designed to scale spend efficiently. These models make it easy to move budget quickly, pace campaigns, and fund technology, data, labor, and margin directly out of media budgets.

Operationally, this works. Economically, it obscures what advertisers are paying for and how much of their working budget actually reaches publishers.

Pitch consultants and advisors are often seen as potential counterweights to these dynamics, but they operate under constraints of their own. Many are engaged to optimize procurement outcomes or reduce headline costs, not to challenge deeper structural incentives embedded in media execution.

Pushing aggressively on open web programmatic liabilities, such as resale economics or margin embedded in CPMs, can create friction with agencies, platforms, and even clients who depend on the existing system to deliver scale and performance. As a result, much advisory work focuses on optimizing within the system rather than questioning how the system allocates value.

This reflects the limits of influence in a highly interdependent market, not a lack of awareness.

Publishers face a different, but equally limiting, challenge. Many are acutely aware of downstream margin extraction and the gap between advertiser spend and publisher yield. Yet access to demand is existential.

Agencies and platforms control significant portions of advertiser budgets, and demand can be redirected quickly. Even absent explicit retaliation, the perceived risk of raising economic concerns encourages caution. Insights that could inform healthier market behavior often remain private rather than shared.

Given that many of these issues are widely recognized, a reasonable question is why they continue.

Performance often remains good enough to sustain investment. Brand safety and fraud controls provide reassurance at the surface. Complexity offers flexibility and optionality. Accountability requires cross party cooperation that is operationally expensive and commercially sensitive.

The system functions, even if it does not always function intelligibly.

For advertisers, the result is reduced confidence that a CPM reflects media value rather than a bundle of unknowns. For publishers, it is reduced confidence that demand is truly valuing differentiated environments rather than treating inventory as interchangeable supply.

For the open web, the consequence is a gradual erosion of trust, not because ads are unsafe, but because economics are opaque.

These challenges are presented as context, not as dead ends. In future writing within the Perspectives section, this site will offer practical observations, best practices, and recommendations aimed at improving economic understanding and decision making for advertisers and publishers operating within today’s constraints.

Brand safety addressed where ads should appear. The next phase of progress must address how value moves through the system and whether buyers and sellers can engage with it confidently.

Understanding the challenges is not the end of the conversation. It is the point where better conversations can begin.