What happens when two technology experts found an environmental company? They are looking for solutions to how better use of technology can solve the problems that poor use of technology creates. Anne Coghlan and Brian O’Kelly are behind the hype startup Scope3. The whole world of digital advertising is talking about Scope3. The startup deals with measuring and combating the waste of resources in digital advertising. The company, which actually has no real company headquarters, but – thanks to Corona – was organized completely virtually, is not even a year old and is already being invited to keynotes at the big digital conferences and is allowed to advise the BVDW on sustainability.
And there’s a solid reason for that: Scope3 has a stable streak in the digital advertising industry. Brian O’Kelley and Anne Coghlan are two of the five founders and head the company. A trained consultant with a tech focus, she was at Accenture and then worked for AppNexus for four years and one more year after it was acquired by Xandr. He was her boss at AppNexus. Brian O’Kelly founded the company in 2007 and is one of the most popular names in the technical ecosystem of digital advertising, especially in programmatic advertising.
Because you know what you’re doing in digital advertising
Anne and Brian know exactly how the digital value chain works. Unlike in conversations with eco-activists or politicians, you can’t fool the two of them with technical Anglicisms or abbreviations. The industry knows that what Scope3 criticizes makes sense.
And so it is not surprising that Anne Coghlan goes all out when she realizes that the person she is talking to also knows the industry: “We founded Scope3 to tackle an emissions problem that has global consequences: digital advertising”. bam The sits.
The usual figures follow: CO2 emissions have only increased slowly in most sectors in recent years. In agriculture and construction, they are even constant. Only one segment stands out and that is electricity and heating energy. Emissions in this area have doubled since 1990. And the internet is part of that. Around two percent of global emissions are due to the internet and its use.
That is so much that resistance stirs. Wherever the big Internet giants operate data centers, residents are worried about the energy supply. And it’s not just about Meta, Google, and Amazon burning so much fossil fuels. It is also about pure security of supply. West London was temporarily without electricity for the construction industry. In Ireland, the government fears blackouts if Google’s servers overheat.
But, according to Coghlan, change has begun. Public pressure on the digital industry is not the only thing that is increasing. The advertisers who pay for the whole system also position themselves. Four out of five companies from the FTSE 100, the stock market index of the Financial Times, have already committed themselves to net-zero targets, i.e. carbon neutrality. Ultimately, it’s the companies that foot the bill for digital advertising.
And the public sector is also increasing the pressure. The Energy Saving Ordinance in summer was just a harbinger. The CSRD really gets down to business. This is the new directive for Corporate Social Responsibility. It comes into force next March and must then be converted into national law by the member states. The CSRD stipulates that significantly more companies will have to report in much more detail about their ecological and social measures. It will become mandatory for larger companies from the fiscal year beginning after January 1, 2024. Step by step, medium-sized and small companies will then also be bound by this directive.
For Robert Prengel, Director of Sustainable Corporate Transformation at PWC, the CSRD represents a “significant impetus” for more transparency. What he particularly likes is the mandatory machine-readability of the reports. “More transparency will be created through a mandatory electronic format and tagging in the sustainability report.” Want to say: Unlike with the GDPR, companies cannot hope that their misconduct will remain undetected because the authorities are simply overburdened. The sustainability reports are pre-sorted by software and where there are irregularities, the alarm bell sounds, and personal checks.
To be honest: Small banners don’t make much crap in digital advertising
Anyone who confronts Anne Coghlan with this question has already fallen into the trap. The British woman’s eyes light up when she lectures. “In fact, calling up a banner that was played out programmatically causes only 0.67 grams of CO2 equivalent. But if the campaign has 1.5 million impressions – and that’s not a lot – then that adds up to a metric ton. As much as 200 households cause in the year through their electricity consumption”.
Scope3 makes the extent of the problem tangible. If the industry doesn’t respond fully, advertisers and regulators will be forced to step in.
One of the serious problems identified by Coghlan, O’Kelly, and their co-founders is the inefficiency of what is arguably the most efficient advertising system that has ever existed: programmatic advertising. “One ad impression generates hundreds of requests from adtech companies and that causes thousands of server calls”. And the most absurd thing: These costs also arise if only one advertiser bids, but if the campaign is booked by two different DSPs or intermediaries, for example. Despite header bidding. “Programmatic advertising is bad for the environment,” Coghlan concludes. As a reminder, Programmatic is Coghlan’s Hometurf.
But the publishers also get their fat off the pugnacious Briton. It shows a screenshot of a British news site. Although the text has been blurred, the layout easily recognizes the Daily Mail from London. A bold retargeting banner in the head, an automatically started video in the right browser corner, prominent skyscrapers to the left and right of the content, and numerous smaller inventories adorn the page. Scope3 counted 18 advertising spaces on the homepage. In addition, the page reloads every 30 seconds. And in an analysis of the tracking codes, Scope3 found a completely overcrowded list of service providers responsible for feeding the advertising space.
This results in the following sum: Every 10 minutes, the Daily Mail homepage consumes 200 grams of CO2 equivalents, 29 kilograms per day, 10 tons per year, assuming that at least one user uses the site permanently.
However, programmatic advertising is not only the cause of the problem, it is also the solution for Scope3. If you make efficient use of the opportunities offered by this unique technical infrastructure, you can achieve a lot. Essentially, it is a question of the KPI considered.
And as always when it comes to protecting the environment, avoiding waste is better than recycling. This also applies to digital advertising. Avoiding wastage is one of the biggest levers you see with Scope3. “The avoidance of AdFraud, a lack of attention to advertising, redundant advertising, and frequency capping that doesn’t work are all features that already play a role today. The technology is there, it just has to be used across the board and that saves the advertiser money as well,” says Coghlan. Of course, it plays a role in developing from trivial indicators such as reach or viewability to the valuable analysis of attention, commitment or hard lead and sales KPI.
If you want to optimize for CO2 more specifically, you first need to measure the value chain. Here Scope3 has entered into a partnership with DoubleVerify (DV). Since DV analyzes the individual playout of the advertising medium, this can also be priced with CO2. This is always more accurate than an evaluation of the channel budgets. Here the CSRD plays an interesting role. Philipp von Hilgers reacts relaxed to the question of whether the publishers provide the necessary data for determining the CO2 footprint. The Managing Director of Meetrics said on the sidelines of a BVDW event: “The data are in the sustainability reports and are public. The publishers have to publish this data, if only out of their own interest because otherwise there will be fewer bookings on their website in the long run”.
In fact, DV could draw a publisher’s quality map, not only when it comes to CO2, but also in terms of advertising effectiveness. However, one keeps a low profile in this matter, knowing full well that the publishers are important partners in the entire advertising system. Hilgers is also chairman of the “Advertising Quality” focus group at the BVDW, which also includes numerous publishers and is therefore committed to neutrality. “The goals of the advertisers are crucial,” Hilgers said diplomatically.
Anne Coghlan is more drastic. She would like to name horses and riders clearly and expects advertisers to put their relationships with partners to the test. Publishers with a bad CO2 footprint should be sorted out. The Brit sees a new key figure as the basis for this, the CO2 emissions per impression or per contact. This makes the inventories somewhat comparable. However, the contract does not say much about the advertising effect. A spot in the podcast could have a completely different effect than contact with a single DOOH display.
After the first rough sorting has been carried out, the new KPI is stored in the planning software (DSP). CO2 per mille is a value that is used by the automatically working algorithms to influence the individual advertising display. For example, the value could tip the scales when two placements have equal contact quality. A whole new form of DCO: Dynamic Carbon Optimization.
Everything that Anne Coghlan and Brian O’Kelly are demanding is not directed against programmatic advertising but is only possible because this powerful system exists. However, there is also tangible criticism of the service of Scope3. So far, many of those involved have obviously not been using the available systems optimally. Automatic does not relieve control, you can summarize that. Programmatic critics like Bob Hofmann or Thomas Koch put it more drastically: because they don’t know what they are doing.
Overall, the signs point to a reduction in the number of cooperation partners and the selection of fewer but higher-quality advertising materials. This applies equally to publishers and advertisers. And the nice thing: the user and the environment like it!