Sustainable by design: How AdTech vendors can contribute to decarbonization

For all the good that it does in empowering innovation and fueling the free Internet, digital advertising has a problem — it’s wasteful by design. There’s been a lot of talk about poor resource allocation, traceability and attribution challenges, yet a more impactful concern has been overlooked — how far from being truly sustainable advertising operations are.

A rough estimate is that one ad impression generates one gram of CO2. At large scale, the numbers are alarming: According to the data provided by Scope3 and Sprout Social, digital advertising yields 13,860 metric tons of carbon each year.

According to the US Environmental Protection Agency, it’s equivalent to over 15 million pounds of coal burned, over 34 million miles driven in a gasoline-powered vehicle, and the energy needed to sustain 1,746 homes all year long.

The industry is getting its wake-up call, but, while more publishers, brands, agencies, and AdTech providers acknowledge the problem, their solutions are fuzzy. Given its catastrophic scale, eliminating the environmental impact of advertising needs to be a team sport, with all players united for the greater good.

In particular, we believe that AdTech vendors have the potential to move the needle on the issue by supporting the industry with sustainability-focused solutions. That’s why we decided to delve deeper into the benefits of optimizing AdTech platforms for sustainability and practical examples of tech solutions combining sustainability and value.

Here’s a quick recap of what we will touch on:

• The business case for sustainability in AdTech
• Ways for AdTech vendors to optimize each step of the supply chain for sustainability
• Examples of vendors who successfully rolled out sustainability-facing features
• Key sustainability initiatives.

First, let’s understand why sustainability is becoming the order of the day in AdTech.

Consumers are watching: The rise of sustainability awareness

Shoppers are readily acknowledging the power of their purchasing decisions and are wielding it to support environment-conscious companies and stop empowering those with no apparent care for the long-term impact of their operations. Consumers turned to green products and sustainable packaging, incentivizing brands to support green production.

Recently, a more significant shift is becoming apparent: Shoppers are looking beyond product and packaging and paying more attention to the impact brands have on the environment across all operations, including advertising.

This paradigm shift on the buy-side sets the stage for green AdTech providers that can enable sustainable advertising campaigns.

Sustainable advertising as a business opportunity: What’s in it for AdTech vendors?

Currently, there’s no unified standard for tracking carbon emissions across the supply chain (although some are in the works) and, as such, no regulatory framework.

Understandably, AdTech vendors might be tempted to prioritize other issues — privacy or ad fraud — over sustainability.

However, we would like to make a case that giving the environmental impact of AdTech platforms the credit it deserves will open a highly rewarding growth trajectory for vendors: here’s why.

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A bargaining chip in the era of supply path optimization

Supply path optimization encourages advertisers and publishers to review and trim the list of SSP and DSP partners they work with and be more selective about incorporating new solutions into their AdTech stack.

On both ends, selection criteria will get stricter — and, with the rise of consumer awareness on the buyer side and the “green media” trend on the seller side, sustainability will be one of the deciding factors.

Optimizing for sustainable advertising brings infrastructure costs down as well

For AdTech vendors, examining the sustainability of their infrastructure goes hand in hand with infrastructure cost optimization. The fundamentals are the same: optimize resource usage, reduce or avoid server sprawl, and migrate obsolete on-premises infrastructure to the cloud.

Xenoss developers have repeatedly observed that sustainability and infrastructure cost optimization are closely linked. For our clients, practices like cloud migration, data storage optimization, and re-platforming drove both cost reduction and progress on ESG commitments.

Ways to make AdTech platforms more sustainable

AdTech solution providers have the opportunity to help both advertisers and publishers make their operations more energy-efficient. Each step of the supply chain generates emissions that can be avoided.

The market already has technologies that reduce the environmental impact of ad production, media buying, or data transmission during ad exchange. We explored these solutions to encourage vendors to introduce new platform capabilities.

Ad production

The high cost of ad creatives in the landscape of ever-expanding platforms, formats and channels is becoming a concern for brands and agencies. According to IAB, 58% of marketers admit they don’t have enough resources to optimize campaign creatives.

Now that AdTech sustainability is part of the discussion, it’s becoming clear that ad production is also a powerful carbon hog.

According to a carbon footprint breakdown by media agency fifty-five, creative production is the second largest source of greenhouse gas emissions, accounting for 35 tons of carbon.

How AdTech vendors can support creative management to drive sustainability:

• Leveraging AI to streamline production. Artificial intelligence has the potential to generate multiple creatives at scale, allowing agencies to reduce their spending and cut carbon emissions. For instance, Ad-Lib.io, a creative management platform Xenoss developers helped build, uses AI to personalize creatives at scale and automatically generate assets across multiple channels and formats.
• Dynamic creative optimization. Using dynamic creative optimization to adjust campaigns in flight helps reduce waste by cutting out excess impressions from disinterested consumers. In today’s market, tools like Adobe Experience Cloud offer robust DCO features which empower marketers and designers in personalizing creatives. The dynamic creative optimization market is growing by leaps and bounds, so AdTech vendors should consider building custom solutions for optimizing creatives from a sustainability perspective.
• Reusable creative templates. Automating creative production will reduce the need to expand headcount and enable resource efficiency in agency operations. Platforms like Adzymic, with its Smart Templates, help advertisers cut production time, costs, and associated emissions by automating ad production and reusing assets.

Media buying

Lack of control over ad placements has been the bane of advertisers’ existence for a long time. According to Ebiquity, brands spend a tenth of their total spend on made-for-advertising (MFA) websites: Media that have no readership, publish low-quality content, and are created only to capture ad revenue.

MFA-hosted ads have low performance and bring advertisers no reputation gains (if anything, it creates losses). The damaging environmental effects of MFA inventory are also becoming apparent: The joint research by Scope3 and Ebiquity PLC revealed that MFA platforms emit 52% more carbon than reliable publishers.

Another wasteful aspect of media buying lies in its real-time nature. Listening to bid requests 24/7 adds to server costs and bandwidth needed for media buying — thus, the carbon footprint of each ad on the page goes up.

Ways for AdTech vendors to address the sustainability problem in media buying

Increasing the transparency of media buying and creating tools that help green publishers reach advertisers is a way for AdTech providers to eliminate the waste generated by MFAs. Here’s a review of sustainability-friendly features vendors can introduce to their solutions:

• Cross-inventory campaign emission tracking. AdTech vendors can empower advertisers to track emissions across their inventory and tweak their approach to media buying based on the outcome. Scope3, for one, is developing benchmarks to let advertisers track the carbon footprint of their campaigns across all inventory.
• Giving advertisers access to low-carbon inventory. Green media marketplaces that help buyers choose ad placements by CO2 emissions will help endorse green publishers stop the spread of MFA inventory. Blockthrough partnered with Scope3 to create such a solution. Advertisers can thus access green publishers via their DSPs with a universal Deal ID.
• Batch-based media buying substitutes impression-by-impression RTB by pulling bidding results intermittently. Kevin Flood, investment partner at FirstPartyCapital, told Digiday that enabling the buy-side to push intermittent API-based requests into their chosen walled garden would help significantly reduce carbon footprint.

Data transmission during ad delivery

The programmatic supply chain is extremely energy-intensive: According to Good-Loop, computing advertising code is responsible for 2% of total emissions generated by the Internet.

Researchers also looked into the amount of energy generated by a single impression: It turns out that each time an ad is displayed, 1g of CO2 is emitted.

In data terms, each gigabyte of transmitted data consumes 0.06 kW of energy. It’s estimated that 6-10 thousand impressions seen daily by 5 billion internet users consume 6.5 billion kilowatt-hours per year.

Zooming in further led AdTech vendors to realize the many actors that determine the carbon footprint of a digital ad. According to MiQ, formats have a powerful impact on the amount of carbon generated.

Ways for AdTech vendors to help cut the waste associated with data transmission:

• Campaign sustainability tracking. Understanding how different types of creatives influence the total carbon footprint of the campaign would help advertisers stay accountable. To give brands more control, Cavai, a Norwegian advertising technology platform, released a feature for tracking energy spent on ad rendering and delivery.
• Creative compression. Some vendors are introducing format conversion and compression capabilities into their platforms to help advertisers reduce ad loading speed and cut associated emissions. Nexd, a creative optimization tool, appeals to advertisers by allowing them to make display ads 5-10 times more lightweight than is the case for the industry average.
• Video content optimization. Research by fifty-five shows that video content is one of the highest emission-generating digital advertising channels: A mock video campaign run by the MarTech consultancy emitted 115 tons of carbon along its course. To reduce the footprint of video campaigns, vendors are tapping into more energy-efficient ways to serve ads. OpenX, one of the leaders in championing sustainability, optimizes paid video by leveraging streaming as a less data-intensive technology.
  Traffic shaping. In a landscape where AdTech platforms need to process millions of requests per second, traffic shaping is a way to create a request filter, effectively cutting through the noise of traffic sent to DSPs. From a sustainability perspective, it brings about server efficiency, reducing the amount of energy needed to support the infrastructure and the amount of CO2 it emits. GumGum is among AdTech vendors that include traffic shaping in their solutions.

Server and infrastructure costs associated with advertising technology

A highly sophisticated infrastructure is the bedrock for AdTech platforms. In a typical platform, a lot is going on under the hood, as both DSPs and SSPs are required to process thousands of requests in milliseconds.

AdTech platforms need a lot of server power to offer speed and scale. Criteo, for example, runs over 40,000 servers that allow for a 624,000-terabyte storage capacity. This infrastructure is a powerful CO2 generator: According to the company’s sustainability report, data centers alone emit 1,078 metric tons of carbon per year.

AdTech vendors with sustainability commitments should see infrastructure optimization as the first-order priority, especially once they realize that resource efficiency also brings about significant cost reductions.

Strategies for optimizing AdTech infrastructure for sustainability

• Tracking Scope 3 emissions across your tech infrastructure. AdTech vendors should use methodologies for tracking emissions across each infrastructure component. While most emission tracking models are inefficient and based on industry averages rather than client data, big market players like Microsoft have already developed the Emissions Impact Dashboard for customer-specific Scope 3 emission tracking on Azure Cloud.
• Leveraging green cloud providers. AdTech vendors should keep sustainability goals in mind when choosing cloud infrastructure providers – and more are already doing so. For example, LiveRamp transitioned 80% of its data to Google Cloud, which has been running on renewable energy since 2017.
  Optimizing the data infrastructure. Even when idle, a server consumes 70% of its peak energy, increasing the carbon footprint of the infrastructure. AdTech platform providers can eliminate this waste by focusing on computing resource optimization. This can be achieved through autoscaling, which is supported by all major cloud providers (e.g. Amazon EC2 Auto-Scaling for Amazon or Azure VM for Microsoft Azure). Another way to keep resource consumption down is by optimizing data storage. There are many data storage optimization strategies tech teams can explore. In our experience, even incremental changes like migrating to a high-performance database management system can help make progress in data management efficiency.

Campaign performance tracking

Resold supply chains are a widespread industry problem: They account for 40% of display auctions and 58% of video auctions. Essentially, auction duplications make advertisers place multiple bids on the same impression, leading to inefficient ad spend, as well as unsolicited energy expenditure.

Even if an ad gets placed, brands have little to no oversight over whether or not it is seen. Statistically, advertisers lose 20-30 cents on a dollar to poor viewability tracking — non-viewable impressions lead to budget leaks and zero-value carbon emissions associated with each impression.

Learn more about the impact of auction duplication and poor performance tracking on sustainability

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Ways for tech vendors to prevent resource siphoning

• Reducing the number of touchpoints. In the wake of supply path optimization (SPO), both DSP and SSP vendors are enabling direct buy-sell-side connections. OpenPath by The Trade Desk, released last year, became an SPO trendsetter – now, the platform connects over 4,000 publishers directly to DSPs, taking SSPs out of the equation. Fewer touchpoints help consolidate campaign data and increase reporting transparency. The long-haul game is that, by eliminating inefficiencies across their AdTech stacks, brands can run fewer campaigns – in doing so, they will emit less carbon.
• Tracking attention. 83% of UK marketers surveyed by Teads in an attention study believe that tracking attention is important for cutting carbon emissions. The business value is also appealing, with agencies and brands touting attention as a more reliable metric than viewability. The ecosystem is witnessing ambitious bets on attention tracking, such as Havas Media partnering with Lumen Research to add attention data tracking to its Mx operating system.

• Improving the granularity of viewability control. Though it is missing a direct link to conversions, better management of viewability is a helpful strategy for eliminating zero-value impressions that amplify carbon footprint. DoubleVerify is one of the frontrunners in viewability monitoring. The platform enables consistent viewability measurement across channels, formats, and devices, so that advertisers can stop paying for impressions that are not seen.

Key sustainable advertising initiatives

Sustainability may be an emerging concern in AdTech, but it has passionate advocates within the ecosystem. In the last 5-7 years, a number of promising initiatives emerged to keep sustainability conversations going, offer publishers and advertisers tools for tracking emissions, and raise awareness of sustainable advertising practices.

Here’s a brief introduction to the most impactful AdTech sustainability projects.

• Ad Net Zero: a global initiative designed to help AdTech ecosystem players to build sustainable advertising strategies. Its activities focus on decarbonizing ad production and delivery.
• IPA Media Climate Charter offers an IPA Media Carbon Calculator that helps agencies estimate emissions for their media plans.
• Scope3: a first-mover in end-to-end emission measurement across the media and supply chain. Scope3 also supports Green Media Products, encouraging advertisers to incentivize sustainable publishers.

Takeaways

Sustainability is a hot-button issue for global governments and multiple industries. With most countries announcing net-zero commitments, there’s no wonder that businesses have to comply. AdTech, though traditionally not associated with high carbon emissions, is realizing its impact on the environment and preparing for action.

No specific part of the ecosystem has to feel the pressure of paving the way for sustainable advertising. Pushing AdTech to carbon neutrality should be a collective effort of advertisers, publishers, and agencies.

However, AdTech solution providers have wider toolsets than anyone in the industry to make proactive changes. They can approach their sustainability journey from two perspectives: Supporting partners with sustainable advertising solutions and reducing Scope 3 emissions in internal operations.

In both cases, business value follows sustainability goals, allowing vendors to expand the range of partners and cut operating costs by infrastructure optimization.

At Xenoss, we helped a wide range of vendors in the SSP, DSP, CMP, and other markets make their operations more sustainable by examining and maximizing the efficiency of their tech infrastructure.

Learn more about our approach to AdTech infrastructure optimization or contact our consulting team to discuss how we can help build a sustainable foundation for your platform.