Most buyers have heard of the term working media. However, most have never spent more than a moment thinking about it because the working vs non-working ratios are sweated further upstream with the client. Agency fees have been a standard component of non-working media since the birth of advertising. However, the "fees" involved in a digital transaction are far more broad and complex than traditional media. I'll explain more in a moment.

Major brand advertisers usually have a diversified approach to placing their online video / preroll buys. Typically it breaks down into a few major distribution points.

Publisher Direct: Direct buys for preroll inventory with a publisher or content owner. Often packaged with a larger media spend at publishers that operate traditional television or offline businesses.

Direct buys for preroll inventory with a publisher or content owner. Often packaged with a larger media spend at publishers that operate traditional television or offline businesses. Programatic & Exchange: Inventory purchased through an agency trading desk or demand side platform (DSP) where the inventory is executed via auction. Popular solution for data driven audience buys.

Inventory purchased through an agency trading desk or demand side platform (DSP) where the inventory is executed via auction. Popular solution for data driven audience buys. Ad Network: Inventory sourced though a large network aggregator of unsold / remnant inventory. Can have added value components such as audience targeting, etc. applied as a managed service. Great for additional reach. Seen as "efficient" due to low prices.

Generally speaking, larger brands will sprinkle their budgets across a mix of the outlets listed above.

It is important to stop and think about the life of each dollar as it passes through each of these distribution points. $10/cpm on each one of these outlets will yield dramatically different outcomes.

The single largest driver of the differences is money. Period.

Question: When you spend $10/cpm through a video DSP, how much of that money actually makes it to the original site or publisher?

Answer: $2 or $3...on a good day.

At the end of the day, what level of quality would you expect from a $3/cpm preroll? Effectively, that's what you just bought when you spent $10/cpm.

Where'd the rest of the money go? The middlemen.

Fees and other cost associated with a typical programatic transaction: