Sustainability in Ad Tech: Are SMBs at a Risk of Falling Behind?

adelement | March 27, 2023

As the world grapples with the climate crisis, sustainability has become a buzzword across industries. While the ad tech industry has been making strides towards sustainability, there are concerns that small and mid-sized companies may be left behind. I will try to share some of my thoughts on a high level.

Ad tech is a data-intensive industry, and the infrastructure required to support real-time bidding, ad targeting, ad verification etc. in a complex supply chain makes every single impression served very energy-intensive. On top of that, the fact that nearly half of all ad buys never reach publishers indicates a significant amount of wasted energy, time, and money.

“SeenThis” estimates that 1GB of data generated from digital advertising is the equivalent of 1kg of CO2 emissions. Further putting this in perspective, the digital ads industry emits 60 million tons of CO2 annually which is equivalent to 2000 billion plastic bags. This is a mind boggling number.

Interestingly, the top 10 companies in the industry, who are leading the charge towards Sustainability, efficiency with their initiatives such as Direct to Publishers, deduplication of requests, SPO and more also control a staggering 80% of the ad spend. They have collected massive amounts of data in the past giving them an overall edge in the market.

Will Sustainability and similar initiatives become a way for big companies to gain a competitive advantage? Is the intention to get SMBs out of business?

While sustainability is an important goal, there's also a risk that large corporations may use this initiative as a tool to gain a competitive advantage. To level the playing field, it's important to promote transparency and collaboration across the industry and ensure smaller and mid sized companies are not left behind.

How do SMBs stay in the game?

There are several ways for any company to address the sustainability challenge in the ad tech industry. Here are the steps we are taking at AdElement that may be applicable to many:

1. Raising internal awareness of the issue and staying informed on best practices and the latest trends. Some of the great resources and organizations to know about are:
   • Seenthis.co/sustainability (Eye Opening stats, emissions calculator)
   • Adnetzero.com
   • Planet Pledge group (Marketers driven)

These resources provide insightful white papers, reports, podcasts, and a checklist of actions to help guide companies on their path towards sustainability.

2. Leveraging partnerships with vendors who are actively involved in green initiatives.
   

   For example: Opting for data centers powered by renewable energy, which can contribute towards reducing their carbon footprint. By choosing eco-friendly vendors and suppliers, companies can demonstrate their commitment to sustainability while also contributing to a greener future.

3. Lastly, we are promoting transparency and efficiency in our operations. This is achieved by
   • Prioritizing transparency in supply paths by passing all the Schain data in bid requests as well as enhancing capabilities and partnerships to pass OMSDK signals. This provides brands with clarity on how their advertising dollars are being utilized, including whether their ads are viewable, thereby increasing the value of their advertising purchases.
   • Enhancing algorithms to automatically identify and eliminate inefficient and costly paths to supply and develop a provide feedback loop. Another approach is to start by identifying the highest-performing sources of inventory and slowly build up on it.
   • Develop KPIs and success metrics aimed at increasing the meaningfulness and impact of requests. For example, utilize AI to optimize and filter requests, with a focus on Request RPM.

In conclusion, by staying informed, promoting transparency, innovating and building value in your demand as well as supply partnerships, companies can make a significant impact towards a more sustainable future for the ad tech industry.