In recent years, the digital advertising industry has taken significant strides towards sustainability, acknowledging the pressing need to address its environmental impact. At first glance, the issue may sound confusing and you may wonder, what on Earth does saving the planet have to do with advertising?
To put it simply, as the demand for digital ads continues to rise, so does the associated carbon footprint. In this blog post, we’ll explore the impact of digital advertising on the environment, delve into the challenges our industry faces in offsetting carbon footprints, and propose actionable steps for companies to reduce their carbon emissions.
The Impact
While driving clear economic growth and influencing billions of consumers around the world, advertisers have a considerable impact on the environment. From the high production value of creating the advertisements to massive, electric, out-of-home (OOH) signage, the ad industry uses enough energy to power hundreds of thousands of homes. And online advertising is no different.
Think about your own personal devices. Electricity is used to power your phone and computer, all places where you see digital ads. Not only do online ads consume huge amounts of energy but with the advent of programmatic advertising, carbon emissions are now connected to auctions–trillions of them–that take place every day without any ads ever being served.
And so, as climate change continues to grow into a significant problem for all of us, so does the call for a more sustainable advertising industry, one that will collectively work towards cutting greenhouse gas (GHG) emissions that are emitted into the atmosphere to as close to zero as possible (also known as net-zero).
"Sustainability is not just a topic for discussion; it's an opportunity for action. Advertisers possess the power to drive a more efficient, sustainable, and carbon-friendly supply chain," said Anthony Katsur, CEO of IAB Tech Lab. "It's time to move beyond well-intentioned conversations and actively implement change. Brands can make a significant impact by leveraging IAB Tech Lab supply chain tools like ads.txt & SupplyChain object to optimize supply paths while enforcing standards around Made-For-Advertising inventory and accurate video signals."
"Demand transparency, monitor and optimize towards direct supply paths, and insist on quality inventory. Let's not just talk about sustainability; let's embody it in our media investments and drive positive change for a greener future," Katsur concluded.
The Challenge
Digital advertising's impact on the environment is multifaceted and includes everything from the energy-intensive production of video content to the data centers that power ad delivery. And yet, one of the biggest challenges the advertising industry faces around sustainability efforts is simply how to calculate any given company’s carbon footprint.
According to Digiday, technologies that help to calculate carbon emissions may not be able to provide a true picture, given the complexities of the supply chain. Also, as new technologies emerge such as generative AI, a company’s carbon footprint may grow literally overnight.
There’s also no standardization about carbon emissions within the industry and there are no current incentives for anybody within the industry (publishers, advertisers, agencies, and tech vendors) to make changes. The question is: Are these valid excuses for companies to avoid change? While publishers face an array of financial challenges, the supply and demand sides continue to point fingers, calling for the other side to take action towards a more net-zero future.
Chris Kane, founder and president of programmatic supply chain management firm Jounce Media, believes that change has to come from advertisers, and says it’s unreasonable to expect publishers to lead this effort.
"Buyers need to vote with their wallets. In today's programmatic advertising market, publishers are financially required to sell their inventory through many duplicative supply chains,” Kane said. “But buyers can and should concentrate their investments on a small number of high efficiency supply chains. In particular, it's time for DSPs to choose a preferred path to each publisher and eliminate the cost, complexity, and carbon emissions of auction duplication."
Kane has a point. Many players–like smaller publishers–simply don’t have the resources to make changes including the measurement of their carbon emissions. Let’s face it; programmatic advertising at its core was inherently designed to lower CPMs as much as possible. This results in publishers seeking out additional monetization opportunities, thereby creating more carbon waste, but this is a necessary evil for any publisher to earn revenue in today’s economic climate.
Steps Towards Sustainability
As the programmatic advertising industry has evolved, the ecosystem has become more crowded, cluttered, and fragmented. One of the fastest ways companies can reduce carbon emissions is by pairing down the number of hops, or middlemen, an advertiser uses to reach their desired inventory. This process is known as supply path optimization (SPO) and it can also provide more transparency and cost-efficiency to media buyers.
EX.CO is a steadfast proponent of SPO. In fact, our online video platform (OVP) is specifically designed to help publishers streamline their video content and monetization efforts. By providing all the necessary tools a publisher needs to execute an online video strategy at scale, EX.CO makes it possible for publishers to cut ties with unnecessary third-party vendors that may have duplicative solutions which, in turn, can also cut costs.
Still, the nature of programmatic advertising also lends itself to the need for efficient ad operations within the billions of auctions that take place every millisecond. Duplicate bids, for example, is a real energy waster.
Many ad exchanges have begun to implement a fairly new optimization strategy called traffic shaping. This is the practice of selecting a subset of requests to process and only sending those to relevant demand partners, helping to reduce the amount of requests not answered and therefore, wasted.
Additional steps the industry can take towards the decarbonization of digital advertising include better targeted and more relevant ads, improved viewability, and investing in green media. Scope3, the collaborative sustainability platform decarbonizing media and advertising, has built a slew of solutions to help advertisers, publishers, and ad tech companies lower emissions.
"Digital advertising is responsible for an outsized share of carbon emissions," said Harvin Gupta, Head of Partnerships, Scope3. "This is not only harmful for our planet, but also for our industry’s long-term viability. We all have a duty to address this issue and adopt more sustainable practices. One way to do this is to aggressively reduce waste and inefficiency, whether that means traffic shaping to reduce the number of auctions held, or buying higher quality inventory that achieves the same outcomes with fewer impressions.
Getting accurate and granular emissions data into the hands of brands and publishers, and everyone in between, will help us isolate areas of improvement, and maximize the impact we can have. If we do this right, we can lower our carbon emissions while increasing our performance. This is not only good for the environment, but also good for our industry’s future," Gupta continued.
Collaboration and Innovation
One thing is for certain: creating a more sustainable advertising industry requires a collaborative effort. Publishers, advertisers, and technology providers must work together to implement sustainable practices. We simply can’t work in silos. Innovation in supply chain optimization and new technology solutions can foster the decarbonization of digital advertising and a more eco-friendly industry.
We all need to keep the topic of sustainability top-of-mind and continue to discuss it. The more we share best practices and learn from success stories, the easier it will be for all of us to collectively drive positive change. Also, the more we measure carbon footprints, the easier it will be to create benchmarks for us to work towards offsetting them. If we work together, we can build a greener, more sustainable future for our industry and our planet.
Interested in learning more about EX.CO’s supply path optimization efforts? Drop your details below.