Why supply path optimization is the sustainable choice for brands and planet Earth

The United Nations calls climate change the “defining issue of our time,” and for good reason — carbon dioxide levels are now higher than ever recorded in human history. There are so many industries that contribute to carbon emissions, from fossil fuels to beef production, but another that seems unlikely at first is digital advertising.

It’s easy to miss the emissions that ads might cause because they’re not as tangible as a flying plane. Yet the internet has a larger carbon footprint than the entire airline industry, according to The Shift Project, a French nonprofit focused on sustainability. Because of complex supply chains and data centers that power all the data computation necessary in ad tech, online activity makes up around 4 percent of the world’s global emissions, with that number expected to double by 2025.

Now the digital advertising industry is taking steps to tackle the issue and make sustainability a bigger priority. It’s not simply an environmental move, though — making ad tech more efficient through forms of supply path optimization (SPO) can make sense economically.

“We can decarbonize media and advertising quickly — and without billions in investment — simply by optimizing processes to eliminate waste,” Brian O’Kelley tells The Current. O’Kelley is the founder of Scope3, a new ad tech startup with a mission to decarbonize media and advertising. “This isn’t a problem that requires an entirely new infrastructure. And it’s our responsibility to take the right steps to do it.”

Scope3 claims to be the only company to measure end-to-end emissions across the media and advertising supply chain. That data is valuable to a company like Chalice AI which provides custom ad-buying algorithms for brands. In May, it launched a carbon optimizer to help brands lower their ads carbon footprint. Chalice let brands see the footprint attached to its biddable advertising with a free carbon assessment.

“It’s a really hard decision to say, okay, sustainability or ad performance,” Ali Manning, COO of Chalice AI, tells The Current. “And in this work, most brands are going to choose ad performance. But what we discovered is it doesn’t have to be either-or. It could be ‘yes and.’”

Reducing emissions without sacrificing revenue
O’Kelley, known as one of the innovators of programmatic advertising, became obsessed with supply chains and sustainability after taking a graduate-level course on supply chain management at MIT during the COVID-19 pandemic. He named his company Scope3 as a reference to the type of emission produced through the full supply chain instead of a single company’s own actions. There are three different types of emissions: scope 1, scope 2, and scope 3. While scope 1 and 2 emissions are more direct sources (like gas from a car or a heated office), scope 3 emissions consider all the other indirect steps it takes to complete a process (like all the servers or devices required to operate digital ad campaigns). O’Kelley says scope 3 emissions make up 98 percent of digital advertising companies’ footprint.

An ad impression generates about one gram of carbon, meaning a million impressions creates a metric ton — equivalent to a round-trip flight from New York to London. Digital researcher Joana Moll, along with a team of researchers at Barcelona University, found that the top 1 million most-viewed websites on the internet produced 11,442 metric tons of carbon dioxide each month. That upkeep came from all the energy generated to maintain cookies, which is around the same footprint a city with 30,000 people would create over a month.

Scope3 estimated that The Trade Desk saved 5,387 tons of CO2 after pulling out of Google’s Open Bidding this past February when OpenPath was launched. Scope3 also calculated that if every programmatic platform stopped using Open Bidding, 100,000 metric tons of carbon would be saved every year — the same effect as taking 20,000 cars off the road.

Given those staggering numbers, O’Kelley says the economics of how publishers auction ads must change. Fewer auctions with higher-quality ads means lower emissions, creating a more profitable approach for publishers as well.  

“This is a critical point because it’s not only good business for publishers, but it will also reduce emissions from the ecosystem,” O’Kelley says. “Publishers can participate in and contribute to reducing emissions without sacrificing revenue, and we think publishers will ultimately create more revenue opportunities by moving in the same direction as advertiser demand.”

The cleanest path
Two of the world’s largest media agencies, PMG and Horizon Media, are brainstorming how to streamline their media plans, along with their partnerships with publishers and supply-side platforms (SSPs). In the simplest terms, Horizon Media’s Senior VP of Programmatic and Data Strategy Jesse Fisher says, “The more direct the path, the better.”

“The simplest thing to do for us to prevent carbon emissions from happening in the first place is to create the cleanest path for the advertiser and the publisher to connect,” Fisher tells The Current. “It seems like indirect access to supply creates more intermediaries, which requires more servers, more data processing, more data transfers. All of that contributes to CO2 emissions. But it’s also better for advertisers to have a direct path to publishers because publishers have great data. So there are all these benefits that are now coming around to making supply path optimization something that we have to do, not something that we should do.”

Autumn White, Horizon’s executive VP of digital agrees. “We want to reduce the footprint upfront through better planning, but then also offset any damages that we do.”

Justin Scarborough, PMG’s head of programmatic, was also drawn to doing more than tidying up after business is done. “It’s not just about buying carbon offsets or ’The cost of doing business has a finite impact on the environment, therefore I’m going to basically use money to buy things to offset,’” he tells The Current. “It’s legitimately reducing the material impact of your business practices.”

The question is: Why now? According to White and Fisher, it’s a combination of the technology and measurement now available within the digital space, driven by the urgency of tackling climate change.

Confronting climate change can seem like an insurmountable task. To these executives, even learning the nuances of making digital advertising more sustainable has taken time and patience. Step by step, impression by impression, they are all working to lessen their imprint.

“I’m often overwhelmed by how big of a change needs to happen for us to impact the future of the Earth,” Manning says. “But what I was really surprised by is that we can do something really practical, and it will make a big difference once more and more advertisers and companies come on board.”