Programmatic · also called tech tax, intermediary fees
Ad tech tax
The ad tech tax is the combined share of an advertiser's spend taken by intermediaries, such as agencies, DSPs, data providers, verification vendors and SSPs, before the rest reaches the publisher.
"Ad tech tax" is industry slang, not a real tax. It describes the cumulative fees taken out of each advertising dollar on its way from the advertiser to the publisher. Each player adds a take rate or charge: the agency or trading desk, the DSP, data and targeting fees, ad verification fees, the SSP or ad exchange, sometimes a curator or reseller.
How big is it? The best-known attempt to measure it, the ISBA and PwC Programmatic Supply Chain Transparency Study published in 2020, reported that on average only about half of advertiser spend reached publishers, and about 15% could not be traced at all, the so-called unknown delta. The ANA's 2023 study similarly found that a large share of programmatic spend went to intermediaries and low-quality supply.
The tax is not all waste: platforms provide targeting, fraud filtering and measurement. The problem is opacity and duplication. Supply path optimization, principal-based models and log-level data sharing are all attempts to shrink or expose it.
Think of it like this
The ad tech tax is like the price difference between what a farmer receives for a mango and what you pay at the supermarket, after every trader, transporter and packer has taken a cut.
An example
An advertiser spends US$100: agency fee US$5, DSP US$15, data US$8, verification US$2, SSP US$12, leaving US$58 for the publisher, a total "tax" of 42%.
Related terms
Take rate
Take rate is the percentage of the money flowing through an ad tech platform that it keeps as its fee: platform revenue divided by the gross spend it handles.
Unknown delta
The unknown delta is the share of programmatic ad spend that could not be traced or attributed to any identifiable fee or publisher payment in the 2020 ISBA/PwC supply chain study.
Supply path optimization (SPO)
Supply path optimization (SPO) is a buyer's practice of choosing the most direct, cheapest and most trustworthy routes to the same inventory, and cutting unnecessary resellers and duplicate paths.
Principal-based buying
Principal-based buying is when an agency buys media for its own account and resells it to clients at a price it sets, instead of buying at cost as the client's agent.
Media rebates
Media rebates are payments, credits or free inventory media owners give agencies for the volume of client spend they bring, which may or may not reach advertisers.