Column: Managing the Carbon Emissions out of Marketing

If there’s one thing advertising is good at, it’s convincing consumers to consume. But doing that wastes massive amounts of energy and generates millions of tons of carbon emissions.

This is especially true for digital programmatic ads. To serve a digital ad, data must travel between servers, from the advertiser to the ad exchange and into the publisher’s inventory to access their audience, consuming energy and producing carbon emissions during each step of the process.

Then, an entire ecosystem of advertisers, advertising platforms, and other data collects send it to their data warehouses for storage and analysis, more energy is consumed, resulting in yet more carbon emissions. Since those servers are mostly located in data centers, that’s where the greatest impact is created. As more processing power is needed for the Artificial Intelligence that is becoming part of the ads ecosystem emissions promise to grow faster and faster.

Ads pollute. CEPSA, a company specializing in sustainable mobility, recently reported on a study from Spanish company Colpisa that a single ad campaign generates 70 tons of CO2 emissions – the equivalent of what seven people on average produce annually. Digital marketing consultancy Fifty-five estimates that the digital ecosystem is responsible for 3.5% of all greenhouse gas emissions produced. And it’s growing at a faster rate than civil aviation. Colpisa claims that since 2019, the ad industry’s emissions have risen by 11%, and that 32% of each person’s carbon footprint now comes from the ads they see and receive. Ads are behind 10% of all energy expenditure generated by the Internet, according to a 2018 estimate by the Environmental Impact Assessment Review.

How do these environmental impacts get measured? There are 3 types of emissions:

• Scope 1 covers the emissions that result directly from a company’s operations. This is the easiest to track and therefore the most commonly measured.
• Scope 2 emissions result from the production of the energy used by the company’s operations.
• Scope 3 emissions are produced both downstream and upstream by sources not directly owned by the company. Downstream inputs include materials purchased by the company to produce goods and services, and upstream effects occur as a result of product usage.

Scope 3 emissions are less often reported because 1) they are much more difficult to track, and 2) there are often no obvious benefits for firms in reporting these additional emissions. However, this is changing. Beginning in 2025, under the EU Corporate Sustainability Reporting Directive (CSRD), large companies operating in the EU will have to report their Scope 3 impacts.

Purpose Disruptors, a network of ad professionals dedicated to reducing the impact of digital advertising, estimated in 2022 that the UK’s advertising industry alone was responsible for 208 million tons of CO2. Based on current population figures, that’s about 3 tons per person per year. Given the new EU regulations and proposed SEC regulations in the United States on the reporting of Scope 3 emissions (the latter for emissions deemed material), firms need to be proactive in tracking and managing their advertising carbon footprint.

While the carbon footprint of programmatic advertising partly derives from the consumption of the products and services it advertises, there is also pollution from wasted media. In a report by marketing and media consulting firms Ebiquity and Scope 3, it is estimated that about 15% of global digital ads never reach consumers, but are destined for illegitimate ‘made for advertising’ (MFA) sites designed only to serve ads. This is not only a waste of energy, but a huge waste of money. According to digital ad performance firm Next&Co, in 2022 it amounted to a waste of $5.6 billion, 41% of total digital ad spend.

So how to reduce the emissions of digital advertising? Here are three things advertisers can do:

Dynamic price flooring: Optimizing ad requests will propose the highest price for the publisher and the best price for the programmatic buyer. The best solutions use AI and Machine Learning to create the right floor at the right time by running predictions in real-time for every impression. In addition, advertisers can screen DSP’s (demand side platforms) for their commitment to sustainability and how they are reducing emissions themselves. How green are their servers? How many SSP’s do they utilize?

Optimizing quality content: Optimizing video content, or having campaigns delivered only over Wi-Fi connections and not via mobile Internet can reduce the emissions generated by ads by 50-70%. Reallocating investment to high quality journalism can boost ad effectiveness and lower emissions, According to the Ebiquity/Scope3 study. Bid throttling helps buyers focus on quality over quantity by pausing bid requests to SSPs after a specified number of no bids have been returned, leading to higher win rates and inventory quality.

Carbon offsetting: Mitigating the impact of carbon emissions by buying high-quality carbon credits or investing in renewable energy projects. Be aware: this is considered the least effective way of reducing emissions because it allows the buyer to continue the practices that necessitated mitigation in the first place.

Sustainable advertising is a complex task, one where AI can aid in measurement and management decisions. Measuring the carbon impact of your investments as a KPI against your media allocation decision enables you to know what is driving those emissions and what the trade offs are against business goals.

Michael Cohen, Chief Data & Analytics Officer, Plus Company

Bryan Bollinger, Professor of Marketing and George A. Kellner Faculty Fellow, NYU Stern School of Business