The Decline of Programmatic Open Web Advertising and the Rise of Direct Brand-Publisher Partnerships

Tim Peterson of Digiday recently held a LinkedIn Webinar on a topic suggesting that Programmatic Open Web is F*cked, and recent stock prices for well-known ad-tech companies aren't painting a narrative that would disagree with this hot take. 

The digital advertising industry is undergoing a seismic transformation, marked by the decline of traditional programmatic advertising on the open web and the rise of direct brand-publisher partnerships. This shift is driven by inefficiencies in programmatic ecosystems, evolving privacy regulations, and the growing demand for higher-quality, personalized content. As advertisers and publishers recalibrate their strategies to adapt to these changes, new trends are emerging that promise to reshape the future of digital advertising. This essay explores the reasons behind the decline of programmatic advertising, the factors fueling the rise of direct partnerships, and how these changes are shaping a new era in digital marketing.

The Decline of Programmatic Advertising on the Open Web

Programmatic advertising, once heralded as the future of digital marketing for its ability to automate ad placements and target audiences with precision, has faced mounting challenges in recent years. These challenges have exposed vulnerabilities in the programmatic ecosystem, leading to a decline in its effectiveness and appeal.

Inefficiencies and Wastage

One of the most significant issues plaguing programmatic advertising is inefficiency. A 2024 study by the Association of National Advertisers (ANA) estimated that $22 billion—roughly 25% of total programmatic ad spend in the U.S.—is wasted annually due to inefficiencies in ad delivery and targeting. For every $1,000 spent on programmatic ads through a Demand-Side Platform (DSP), only 43.9% reaches consumers. While this represents a modest improvement from previous years, it still highlights substantial waste within the system.

Moreover, a significant portion of programmatic ad spend is allocated to low-quality, made-for-advertising (MFA) websites. These sites are designed solely to generate ad revenue and often feature excessive ad density that frustrates users and diminishes engagement. In fact, 24% of programmatic ad spend is wasted on MFA sites where ads are technically "viewable" but fail to capture consumer attention or drive meaningful interactions. This inefficiency undermines advertisers' return on investment and erodes trust in programmatic platforms.

Privacy Regulations and Signal Loss

The erosion of third-party cookies has further destabilized programmatic advertising on the open web. Privacy-conscious policies introduced by major tech companies like Apple and Google have limited advertisers' ability to track user behavior across websites. For example, Apple's App Tracking Transparency (ATT) framework has led to significant declines in audience targeting capabilities on iOS devices. Similarly, Google's upcoming opt-in/opt-out cookie policy for Chrome is expected to result in a 76% opt-out rate among users, mirroring trends seen with iOS privacy changes.

These developments have fundamentally disrupted the core value proposition of programmatic advertising: granular audience targeting at scale. Without access to third-party cookies, advertisers are struggling to deliver personalized ads effectively, which has diminished the appeal of programmatic strategies.

Shift Away from Low-Quality Inventory

Another notable trend is the reduction in publishers participating in programmatic ecosystems. The number of domains and apps used for programmatic advertising has dropped from 44,000 to 22,634 over recent years as advertisers become more selective about where their ads appear. Additionally, marketers have significantly reduced their spending on MFA sites—from 15% in 2023 to just 6.2% in 2024—indicating a growing preference for high-quality inventory over sheer scale.

The Rise of Direct Brand-Publisher Partnerships

As programmatic advertising faces these headwinds, direct partnerships between brands and publishers have emerged as a compelling alternative. These partnerships offer greater control over ad placements, enhanced targeting capabilities through first-party data, and access to premium content environments that foster trust and engagement.

Leveraging First-Party Data

In an era defined by privacy regulations and signal loss, first-party data has become a critical asset for both brands and publishers. Unlike third-party cookies, first-party data is collected directly from users who interact with a company's website or app, making it more reliable and less susceptible to regulatory restrictions. Brands are increasingly leveraging this data to create precise audience segments and deliver personalized messaging.

Publishers are also playing a key role in this ecosystem by providing curated audiences based on their own first-party data. For example, major media companies like The New York Times and Condé Nast have developed sophisticated data platforms that allow advertisers to target specific reader segments while maintaining user privacy.

Higher Engagement Rates

Direct brand-publisher partnerships often result in higher engagement rates compared to programmatic campaigns. Consolidated media publishers report that integrated content packages—such as sponsored articles or branded videos—achieve 30% higher engagement rates than traditional display ads. These formats align more closely with consumers' preferences for immersive and relevant content experiences.

Additionally, performance-based pricing models such as cost-per-acquisition (CPA) or cost-per-click (CPC) ensure that advertisers pay only for measurable outcomes, further enhancing the efficiency of direct deals.

Revenue Growth for Publishers

For publishers, direct partnerships represent a lucrative revenue stream. Many publishers have embraced commerce-driven content strategies that integrate product recommendations into editorial content. Personalized campaigns within these environments have been shown to achieve three times higher conversion rates than standard display ads.

Video Content and Personalization as Key Drivers

As direct brand-publisher partnerships gain momentum, video content and personalization have emerged as central pillars of success.

AI-Powered Video Innovation

Advances in artificial intelligence (AI) have revolutionized video advertising by enabling scalable personalization at unprecedented levels. For instance, AI-generated avatars can deliver tailored video messages without requiring live production resources. Personalized video ads have been shown to drive a 300% increase in clickthrough rates compared to generic campaigns.

Tourism boards provide a compelling example of this trend: AI-driven video trip planners that customize travel recommendations based on user preferences achieve three times higher conversions than standard display ads.

Cross-Platform Video Integration

Connected TV (CTV) has also become a critical component of modern advertising strategies. CTV advertising revenue is projected to reach $46 billion by 2025 as brands increasingly invest in cross-device campaigns that blend CTV with mobile and social media platforms. Publishers like Hearst and Condé Nast have capitalized on this trend by offering omnichannel video packages that deliver consistent brand storytelling across multiple touchpoints.

The Path Forward: A New Era for Digital Advertising

The convergence of privacy constraints, ad fraud concerns, and demand for quality is reshaping the digital advertising landscape. Programmatic advertising will continue to play a role—global programmatic ad spend is projected to approach $779 billion by 2028—it is clear that its dominance on the open web is not currently under threat but Publishers should still future-proof with better revenue diversification.

Direct brand-publisher partnerships represent a sustainable path forward for advertisers seeking greater control over their campaigns and better alignment with consumer preferences. By prioritizing first-party data strategies, embracing AI-driven personalization, and investing in high-quality content environments, both brands and publishers can thrive in this new era.

Ultimately, this shift underscores an important lesson: trust and transparency are paramount in digital advertising. As brands move away from opaque programmatic ecosystems toward more collaborative partnerships with publishers, they are not only improving campaign performance but also fostering deeper connections with their audiences—a win-win scenario for all stakeholders involved.