The Hidden Costs of Programmatic
The Arbiter, Vol 1., No. 9
As the market for performance media has gotten deeper, wider, and more complicated, many agencies have been sold on the ease of automation. The simplest way to buy digital marketing is through one-stop programmatic ad platforms, which in turn often transact through DSPs, the convenience stores of the digital ad market. But choosing ease over experience, nuance, and complexity comes with a premium price tag. New data shows that in some cases, that reliance on convenience is costing advertisers an arm and a leg.
According to numbers obtained by MediaPost, brands that buy their ads through programmatic platforms are paying more than double the markup for Connected TV ads compared to what they would pay using an agency to buy the same ads directly from publishers. That’s because the platforms and DSPs are tacking on a combined tax of “more than 100%,” according to Shazam co-founder and serial entrepreneur Philip Inghelbrecht. On a CTV placement offered by a publisher for a $10 CPM, DSPs are adding multiple fees — SSP fees, service fees, measurement fees — that bring the actual brand cost to a CPM of $20.56.
And it’s not just Connected TV: Programmatic fees have been a black box for years. As early as 2017, Digiday was warning marketers that DSPs sometimes played “fast and loose” with fees and markups—touting low fees to advertisers, though public filings later revealed their margins to be as high as 66 percent. In a 2024 study, the Association of National Advertisers reported that “the hidden costs of programmatic media [reduces] marketers’ true ad spend [to] a mere 36 percent of their total ad spend.”
For most advertisers, bringing programmatic in-house just isn’t an option: The costs in tech stack and marketing expertise—not to mention the sheer complexity—are too high. So what’s the solution? Brands need to get smarter about the total delivered costs of their advertising—and understand the hidden cost of automation.
Gupta Media’s approach protects advertisers and reduces their total advertising cost. That’s because we work harder and smarter to find every efficiency for our clients, including buying directly from publishers — an approach that realizes a significant discount on the same ads you’d buy through a programmatic platform. Our model is simple, transparent, and all-inclusive: We charge our clients a single fee, which is a percentage of their media budget—which includes media buying, strategy, planning, and access to our real-time, enterprise-level reporting suite, and more, all without incremental hourly charges.
There’s nothing inherently wrong with automation. But one of the secrets of the ad-tech market is that automation is hiding the markup costs—and doing it so well that brands think they’re saving money by forgoing agency fees.
What do you think? Join the conversation.
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