WHY PROGRAMMATIC SHOULD HEED WARNING FROM BITCOIN MINER’S CANARY
Industry Discussion | Authors: David Hearn, Bloomberg; Amit Rathi, Adcolony
On May 13th 2021 Bitcoin dropped in value by 17% overnight due to one word; ‘insane’. It was Elon Musk’s comment on the energy used to produce Bitcoin and Tesla’s u-turn on accepting the currency. It shocked the markets and it raised a very important question of the technology. While it is widely lauded for decentralising finance and applying pressure on how the markets operated, it also drew attention to the process and the energy involved.
It may seem like a long bow to draw comparisons between Bitcoin and Programmatic, but the signs are all there. Earlier this month the corporate world converged at COP26. A long journey from the promises of the Paris agreement. As COP26 gained momentum across the globe the pressure to update the corporate narrative grows stronger. A shift away from promises into action. A flag in the green sands for those organisations that will lead, those that will follow and those that will fall by the sustainable wayside. High-profile companies such as Apple and Volkswagen have already committed themselves to zero emissions as have Microsoft, who are not only making a statement to be carbon negative, but that they will remove all carbon created by Microsoft across its history by 2050.
“By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”
Brad Smith, President, Microsoft
Should marketing and advertising be contributing to these pledges and goals? The short answer is yes. Because in order to achieve these goals marketers will need to look towards their supply chain. According to Clickon report 71% of UK brands said their aim was to deliver carbon neutral advertising in the near future (5-10 years). In the US the numbers are the same with 68% of brands seeking the same goals. And most US respondents (90%) claim that their brand considers production and creative as part of its sustainability activity, and 83% agree that delivering sustainable advertising is an important message to relay to their customers, with almost a third (29%) strongly agreeing. Across Asia we are seeing the same trends. More recently in Australia, Telstra announced their sustainable goals with specific mentions to the advertising supply chain.
“If media companies, agencies and technology vendors want to maximise their commercial opportunities, it’s in their best interests to (decarbonise)…I certainly see that change coming.”
Jeremy Nicholas, CMO, Telstra
So, how much of an issue is on-line and programmatic advertising? There are no commonly agreed ways to assess the total energy consumption of the Internet and it is challenging also due to interconnectedness. Our online advertising ecosystem resides in the core of Internet. Hundreds of billions of dollars are exchanged yearly, which places online advertising in a significant role economically. Online advertising promises real-time measurements, targeting and optimization at scale, every intention of user is collected and millions of ads are delivered to capitalize conversions, we have a typical scenario where a click of an end-user makes dozens of requests to data centres and so on, which in short consumes more energy and more carbon emissions. But we are moving in the right direction to finding ways to measure. In 2018, in ‘Environmental impact assessment of online advertising’ it was calculated online advertising attributed to 159 million tonnes of CO2 via the electricity consumed. Invalid traffic accounting for 36 million tonnes. The conclusion was that the energy burden of online advertising is considerable and urgently requires attention from the industry. Add into these conclusions the buying methodologies such as header bidding, where more bids are lost than won and the figures become even larger.
There are signs the industry is driving change around the globe. Ad Net Zero (UK advertising initiative to help industry to respond to climate crisis) is running a 2-day special global summit to coincide with COP26. Companies such as Good Loop are also emerging with green tag solutions which track, measure and offset carbon emissions of ad-campaigns via a TreeCM trading model. According to Good-Loop’s carbon calculator, a typical online ad campaign emits 5.4 tonnes of carbon dioxide - almost half of what an average person in the UK produces in a year. Publishers and agencies are also putting forward their climate goals with four of five major advertising holding groups announcing ‘net zero’ emissions by 2030.
Sustainability and climate change is changing the questions we ask of our industry. And shining a light on digital and programmatic energy consumption. And we are starting to find our answers. What would change look like? It is difficult to tell for certain, but the shoots are there. In the short-term carbon calculators could become an integral part of the analytical stacks of marketers and media departments to help establish media weights, and carbon offsets towards carbon neutral advertising. There will be a greater emphasis placed on the climate practices and policies of the supply chain; from publishers through to networks and holding companies. Longer-term we could work towards establishing frameworks like GDPR, with carbon compliance becoming a mandatory norm for organizations which will lead to staff training and developing carbon offsetting schemes.
Advertising is increasingly becoming a vehicle for sustainable marketing messages, and it needs to establish a climate message of its own. We all have a responsibility to get us there. We’d be ‘insane’ not to.
