Follow the money
Trace an advertiser's dollar through the supply chain and into the income statement. Ten advanced questions on the ad tech tax, take rates, ex-TAC and the numbers companies choose to highlight. advanced · 10 questions
Question 1 of 10Score 0
In the 2020 ISBA/PwC study, about how much of each advertiser pound reached publishers?
All questions with answers
- In the 2020 ISBA/PwC study, about how much of each advertiser pound reached publishers?
Answer: About 51p. Roughly half, 51%, reached publishers; the rest went to intermediaries or could not be traced. That missing half is the famous ad tech tax. - What happened to the ISBA/PwC 'unknown delta' in the 2022 follow-up study?
Answer: It fell from about 15% to about 3% as data matching improved. The unknown delta was untraceable spend, not proven theft, and it shrank to about 3% when participants shared better data. Publishers' share rose to about 65% in the same study. - The ANA's 2023 programmatic transparency study estimated how much of each dollar entering a DSP effectively reached consumers?
Answer: About 36 cents. The ANA found about 36 cents, with the rest lost to transaction fees and to wasted media such as non-viewable, invalid and made-for-advertising sites impressions. The 51% figure is ISBA's publisher share, a different measurement. - A DSP handles $50M of media spend and keeps $10M in platform fees. What is its take rate?
Answer: 20%. Take rate = fees ÷ spend = $10M ÷ $50M = 20%. The $50M is gross spend flowing through the platform, not the platform's own revenue. - An ad tech company acts as agent: it arranges media but does not control it. How does it report revenue?
Answer: Net, only its own fee or margin. Accounting rules require an agent to book net revenue. A principal that controls the inventory books gross, which is why headline revenue can mislead comparisons. - A company reports $500M revenue gross and pays $300M in traffic acquisition costs. What is its revenue ex-TAC?
Answer: $200M. Revenue ex-TAC = revenue − TAC = $500M − $300M = $200M, closer to what the company truly keeps. Reading $500M as its 'real' size would overstate it by 2.5×. - A company highlights adjusted EBITDA margin of 30% while GAAP net income is negative. What should you check first?
Answer: What was excluded, especially stock-based compensation and one-off charges. Adjusted EBITDA is non-GAAP and management-defined; stock-based pay is a real cost borne by shareholders through dilution. The audited numbers are in the Form 10-K. - An agency buys inventory itself and resells it to clients at a price it sets, without disclosing its cost. What is this model called?
Answer: Principal-based buying. In principal-based buying the agency acts as a seller, so its margin is hidden inside the media price. It can offer savings, but advertisers lose visibility into what the media actually cost. - What are media rebates?
Answer: Payments or credits from media owners to agencies, often tied to volume, that may not be passed back to advertisers. Media rebates came under scrutiny after the ANA's 2016 transparency investigation. Fraud refunds are a different thing, a refunds and clawbacks after IVT is found. - An advertiser spends $100. The agency keeps 10%, the DSP takes 15% of what it receives, and the SSP takes 15% of what passes through it. Roughly how much reaches the publisher?
Answer: $65. $100 → $90 after the agency → $76.50 after the DSP → about $65 after the SSP. Fees compound on the remainder, so adding 10+15+15 = 40% and answering $60 slightly overstates the ad tech tax.