Ep. 4: Decarbonizing Advertising with Anne Coghlan of Scope3

On this episode, Keith is joined by Anne Coghlan, co-founder and COO at Scope3, a collaborative sustainability platform for decarbonizing media and advertising. Before co-founding Scope3, Anne was head of product at Waybridge, a company created to make the supply chain for raw materials more efficient, resilient, and sustainable. In this episode they discuss the size of the emissions challenge in advertising and media and what the industry can and is doing to collaborate to reduce emissions.

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Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what’s new, interesting, and actionable at the intersection of climate innovation and commerce. I’m your host, Keith Anderson, and together we’ll meet entrepreneurs and innovators reinventing retail, e commerce, and consumer products through the lenses of low carbon and commercial viability.

Hi, everyone. I’m Keith Anderson, and this is the Decarbonizing Commerce podcast. And our topic today is Decarbonizing Media and Advertising with our guest, Anne Coghlan, co founder and chief operating officer of Scope3. Scope3 is building a pioneering platform to help the advertising and media ecosystem, measure and collaborate to drive down emissions, and Anne, before co-founding the company, was head of product at a company called Waybridge, which helped, make the supply chain for raw materials more efficient, resilient, and sustainable, and her background prior to that was really in product leadership roles in the ad tech landscape, Anne is also, part of the Ad Age 40 under 40 list and before meeting Anne and getting to know Scope 3, I didn’t understand the size of the emissions challenge in advertising and media, or what drove it, or what the industry can and is doing to collaborate to reduce emissions. But I learned a lot speaking with Anne, and I think you will too. So, I’d love to introduce you to Anne Coghlin of Scope 3.

Hi Anne. Welcome to the show.

Anne Coghlan: Thank you so much for having me.

Keith Anderson: Well, it’s great to finally meet you and speak with you. And I have to congratulate you and the company on the name and especially the domain name.

Anne Coghlan: Yeah, it was a bit of a coup, I think, to get scope3.com, and certainly something that we were quite proud of to be able to name our company after a whole, a whole problem, a whole category of, the greenhouse gas protocol and really shining a light on the need to focus on supply chain emissions.

Keith Anderson: Well, that may be a great place to start. I think many in the audience are familiar with what the, the three scopes are and, what they mean, but maybe you can spend a minute or two, defining them and explaining why it was such a focus for you and your co founders.

Anne Coghlan: Yeah, absolutely. So, and also I love the fact that we’re starting with some definitions that make sure that, that we get, we get those covered off at the, at the start. So, scope one, scope two and scope three emissions are the different categories within the greenhouse gas protocol as to how we talk about the, greenhouse gases emitted into the atmosphere by, you know, as a result of doing business.

Scope one emissions are direct emissions. So the emissions that you have full control over, and then, you know, physical manufacturing companies, for example, that’s, you know, as a byproduct of the processing that you do. Scope two emissions are indirect emissions from, you know, generating power, heating your offices, that kind of thing.

And scope three, which is where most emissions come from are the emissions of your supply chain. There are multiple categories under that things like business travel, employee commuting, goods and services, all of these fall under scope three for many companies, scope three emissions can be, almost all of the emissions, of a company, our company, we don’t have any scope one emissions at all.

We don’t own anything. We don’t generate stuff. And so really, almost everything is scope three and so by focusing on where emissions are coming from in this interconnected world of, of industry, that’s where we can really focus on how we help an industry decarbonize. And at Scope3, we’re really focused on the advertising industry.

Keith Anderson: That was going to be my next question. You know, we’re not talking about the supply chain broadly. We’re talking about advertising. How big of a source of emissions is the ad ecosystem and how did you and your co founders end up deciding to start the business?

Anne Coghlan: So I’ll take the second half of that question first, and then I can talk about how big advertising is. So, myself and my co founders, we’ve been working in advertising for a really long time, and specifically in digital advertising. I think it’s interesting to think about the fact that no one really considers digital to have a carbon footprint.

I think when we think about emissions, as you know, individuals, as humans, as consumers, we think about and can relate more to this idea of something physical, having a carbon footprint. So, you know, you can see the end trails of an airplane in the sky. You know that you put petrol or gasoline in your car, like these things are really tangible and real.

And so thinking about the digital advertising ecosystem can sometimes be, you know, a little strange to think about something so ephemeral and fluffy like a cloud actually being server farms being powered by electricity. So like the company was kind of started because We’ve been working in emissions, sorry, we’ve been working in advertising for a really long time, and then we actually, the co founding team were working outside of, advertising with physical supply chain companies, so companies that were buying and selling metal and transporting that around the world, trying to understand and model how we could help those companies be more efficient, more resilient, more ultimately sustainable, and recognising that all of the physical connectivity, all of the modelling and mapping that we were doing could potentially also translate back into the advertising ecosystem, where we started to realise that there was actually a really large carbon footprint because of all of the electricity being used to, to power this entire advertising ecosystem. And to give you, an idea of the scale and size of that problem, it’s quite hard to put an exact number on it. If you think about the, the number of servers that power the internet, I think some estimates are saying that the internet is about 4 percent of global energy consumption.

That is significantly powered by advertising, like advertising powers and funds the largest companies in the world, like the Alphabets, the Metas, you know, the Xs of this world are all, you know, funded by advertising. And so there’s a huge, huge part of, emissions coming from the internet that is bactually this complexity of how ads are, delivered, how creatives or the ads, ads are, are made.

And, and that’s pretty big and quite striking.

Keith Anderson: Yeah. I can imagine. And I totally understand your point about digital emissions being sort of viewed as abstract, it was certainly one of the areas that I hadn’t really paid much attention to until I started discovering businesses like yours, companies focusing on ways of, decarbonizing cloud computing or cloud storage and, and the big one that I think has been in the headlines over the last several months is the emissions and, and water intensity of AI, I mean, as you, as you look at some of the disclosures from Alphabet and Microsoft, as they’ve invested so heavily in generative AI, the processing is, really driving resource intensity up.

Anne Coghlan: Absolutely. And I think it’s that lack of realization that with these new innovations, you need to have a, you know, have a second eye on the environmental impact of those innovations. I think, you know,

when I started in the advertising industry many years ago and really focusing on programmatic advertising, I mean, it was so far from my mind. I didn’t think about the environmental impact at all. I was just caring about trying to make the internet a bit better by making sure that good publishers were, making money from quality advertising and that users and potential consumers of brands were. Being found and being shown the right ad for them.

Did not think about the fact that for every single ad that is served online, there are hundreds, sometimes thousands of companies touching that transaction. All of the auctions that happen, all of the different computers that, or servers that get spun up just to do a tiny bit of computation. It is kind of mind boggling when you think about it, had no idea 10 years ago, but now we’re in a position where as these new innovations happen, we can think about some of those second order consequences and realize that we should be asking those questions about what are the business benefits, but also what are the environmental considerations that we should be doing to make sure that we’re not.

You know, in five years time talking about how, you know, everyone’s carbon emissions have gone through the roof just because the number of servers that we’ve had to bring online to support the weight of this, where ultimately they’re not necessarily dramatically improving a business KPI.

Keith Anderson: You and the company have published what I thought was a really enlightening report on the state of, ad industry emissions, and maybe it would be helpful, especially for those that haven’t read it, just to take a minute and, unpack the ad ecosystem and where some of the hotspots are, you, you sort of set part of it up by introducing how many players, touch an ad through the whole life cycle, but I think it would be really helpful to understand, with what does the ecosystem look like and where are some of the levers that different players in the ecosystem can pull to move the needle.

And then I, I don’t want to jump into it right away, but I would love to go from there to, okay, if we then came back to the business considerations. Where have we found there’s actually win wins, in terms of, we can pull some of those levers and it actually saves us cost or increases effectiveness.

Anne Coghlan: Yeah. So we’ve released two reports to date trying to map out the state of sustainable advertising within the digital. The kind of headline number in the most recent report that we released, which looked at, 30 different countries, looked at, the kind of display inventory, as well as streaming video inventory, showed that there is 7. 2 million metric tons of CO2 E, being emitted on an annual basis, that is a lot. That is, you know, 400, more than 400 swimming pools of petrol that you would need to, to burn essentially. So significant amount of carbon going into the atmosphere there. And where we see the. most amount of emissions coming from is what we define to be the ad selection process.

So if you think about those scope one, scope two, and scope three emissions, and you think about it from the start of a, of a product, which is. The publisher trying to sell ad space to a brand. You start with the publisher. Their scope three are all of the companies that are involved in deciding which ad gets shown, and within, you know, programmatic advertising, they’ll be working with tens, but sometimes hundreds of supply side partners who talk to each other, who then also talk to, the demand side platforms as well.

So this is kind of real complex web of all of the different players. And each one of those essentially like nodes in this, graph, also obviously have their own corporate emissions as well. So kind of adding in their kind of scope one and two into this, this picture. And so what we see is that ad selection process has a significant amount of waste, and redundancy.

We see the same players being called multiple times, so it’s not just a linear supply chain. It’s almost like a, in some cases, a circular returning supply chain, this kind of complexity that, I certainly wouldn’t be able to justify having one of those if I was a publisher from a revenue perspective, because it is, seems to me to be so convoluted and so complex.

So what we see there is like a real lever in understanding that all of that from an emissions perspective is bad, but also great from a understanding where your revenue is coming from and how to maximize that too. So that’s where we see kind of a significant, significant amount of opportunity from a reducing waste perspective.

And so we recognize that across the ecosystem, there are different pockets of publishers that are doing really well from an emissions perspective, often because they’ve had business goals that have been quite aligned to being more sustainable, even things like you care about your user experience.

If you have 20 ads on a page and each one of those is, you know, behind that is that huge crazy web that I just talked about, that’s kind of going to be bad from a user experience perspective of number of ads that are there, but also potentially page loading. And, you know, you can sometimes feel your phone or your laptop heating up based on the amount of energy being used to actually load the site in the end.

We also see significant differences on the creative side, so the actual creative asset, of course, a video asset is going to be, more, energy intensive, than a, a kind of a standard banner, but lots of things that can be done there, lots of really interesting companies in the space, like a company called, SeenThis, who, enables you to stream a creative rather than download the full asset at the beginning, which is great from a user perspective as well.

So I’ve heard lots of different ways of thinking about the waste reduction, not just from a carbon emissions point of view, but also from an ultimately, a performance perspectiv

Keith Anderson: Yeah, and is waste reduction the primary lever can be pulled?

Anne Coghlan: I think from a publisher perspective, there’s definitely this kind of looking at two axes, one in, one being revenue opportunity and one being, emissions. I think there is a really simple framing for brands when looking across the channels and across the media that they’re buying as to what actual, slices of inventory are, on the whole, wasteful, so, you know, a site that’s high emissions versus a site that’s low emissions. You’ll find a site that’s high emissions could, you know, do some of their own, optimizations to be less wasteful themselves.

But even in kind of the more binary, like, do I buy this site or not? Lots of things to be done from a brand perspective where, we’ve been running, studies to show that they see better performance on pockets of inventory that are just generally higher value and lower emissions.

Keith Anderson: Got it. So I think we’ve done a great job framing the problem. Why don’t we shift into what scope 3 itself does and how do you do it? Who do you work with and so on?

Anne Coghlan: Yeah, so, we started the company by thinking about how we actually can map and model the sources of all these emissions. So kind of those buckets that I talked about, the ways of being able to optimize to do that, you first need the measurement data, and you first need to actually be able to build out the model, the methodology, to be able to get to numbers that can actually be actionable.

So, we, in the physical world, we talk a lot about building a digital twin, so you take a process, you take, you know, shipping routes, and you take the way that different companies work together, and you build this kind of digital model of that so that you can play around and understand, you know, what, if you did X, like, what would the impact be?

If you did Y, what would the impact be? So we were essentially building a digital twin of a digital ecosystem, and we, open source our methodology last year and essentially provide to all players within the advertising ecosystem the opportunity to use the output of our model. So to use our data set, to understand what they can then do from a reduction perspective.

We also work with many players to offer up solutions. So our theory is that by providing solutions that are more sustainable for brands or agencies to buy, spend will shift towards greener, more decarbon-, like, inventory that’s more on the journey of decarbon- towards decarbonization. And that will encourage everyone in the ecosystem to essentially be on the race to the bottom. And the only time I will ever say that a race to the bottom is a good thing, when we’re talking about, carbon emissions. So, we provide kind of those solutions as well. And really what we’re doing is, we are building what we’re calling a Collaborative Sustainability Platform. So, this idea that all of the data across the ecosystem needs to be able to be kind of centralized and collaborated on in order to make sure that we’re all talking the same language, we’re all tracking towards decarbonization together, we’re finding and creating an ecosystem of solutions that, again, drives that decarbonization, and we’re doing that in such a way that we’re reflecting the connectedness of the ecosystem without, without putting sustainability to the side.

So essentially bringing sustainability into the center of the conversation when we’re talking about media outcomes.

Keith Anderson: and so you’ve tried to do that As you say, through measurement and introducing some new KPIs, what are the new KPIs that you’re pioneering?

Anne Coghlan: So the first KPI that we’ve introduced in our reports Is GCO2PM really rolls off the tongue. We love KPIs. How many letters can we get into one? It’s really the grams of carbon dioxide or carbon dioxide equivalents per a thousand impressions. So it’s just a really good measure to start to understand and be able to compare.

The kind of value of inventory, but with a focus and a lens on carbon. So the lower the GCO2PM, the more carbon efficient, a domain is or an app or a connected TV device or a digital out of home screen whatever you can start to really compare, across channels, et cetera. We have partnerships with other companies also focusing on media quality and seeing a correlation between low emissions and, you know, other performance metrics. So, KPIs like the, carbon cost per attentive second, none of these roll off the tongue. But I think what we’re, what we’re seeing is that by including carbon alongside any existing media KPI, you’re starting to see this nuance that by focusing on carbon numbers alongside whether it’s a CPA goal or your return on ad spend, you can start to see different trends and start to recognize where maybe where there are areas of your media plan that benefits even more from bfocusing on carbon emissions?

Keith Anderson: So, am I correct in that the primary user would be the media buyers?

Anne Coghlan: We have lots of media buyers using our data, via channels to start to make decisions. Absolutely I think media investment teams also are using our data to kind of understand more holistically where there should be broad investment, into inventory again from a carbon lens, but yes, media buyers definitely focusing on, how to make buying more sustainable, and essentially adding another access to the decisions that they’ve been making before.

So spoke with one media buyer last week who essentially says that he takes our data on a carbon emissions perspective, overlays that with the primary KPI, works out what’s high emissions and high performance. Okay, we need to lower emissions or maybe move spend slightly away from that because there’s a bit of a trade off there.

If it’s low emissions and high performance, like, let’s go, let’s put a rocket ship. And then if it’s, you know, high emissions, low performance. It’s a no brainer to cut that from the plan.

Keith Anderson: Well, and that was directionally where I was headed next, which was, how is the industry beginning to align and integrate some of your data with those conventional performance datasets? Is it happening at the moment, just based on the stage of maturity through innovators like intrapreneurs who are exporting data from your platform and merging it with data they already have or how is that coming to life?

Anne Coghlan: I think we’re starting to see it. So our data is now alongside, you know, performance data in a variety of different verification platforms. So DoubleVerify, IAS, Ubiquity all have, many others all have, you know, essentially an omissions column that enables you to start looking at these things side by side.

I will definitely say that this is not a primary KPI, and nor will it ever be a primary KPI, but I think we’re definitely seeing, especially with some of the more innovative, forward looking brands that have ESG goals front and center within their organization. Prioritizing sustainability and kind of prioritizing carbon reduction within their plans as something that, you know, is very close to, the, the primary goals of, of whatever they’re trying to, to achieve.

Keith Anderson: Can you name names and if not, you know, can you at least profile what some of those innovative companies look like in terms of commitments and really what it looks like to lead?

Anne Coghlan: So, kind of zooming out from media and advertising just for a second. I’m from the UK, so I’m biased, but 81 percent of the top 100 UK companies have some sort of net zero goal, but that’s scope one, scope two, usually scope one. Scope two is 2030, and then scope three is a little bit beyond that, and that’s trickling down into the, marketing departments right from, from the CEO’s office.

And what we see is, for many large companies, particularly FMCG brands there has been a, such a big focus on how they decarbonize their physical supply chains, right? How they decarbonize their manufacturing, how they, you know, make their products, lower emissions overall. When there’s been a focus there, the marketing department feels like there’s, they need to do something and they’re, focusing on, what they can do across their media planning and digital can be a significant portion of that. So I think, MasterCard, said recently on stage that half of their spend in marketing goes to digital, but 80 percent of the emissions come from digital. So there is an opportunity there and we see forward thinking brands recognizing this and lowering their, their footprint.

It becomes a higher priority. And if they can get good performance. Then it feels like it’s more of a no brainer. It’s a kind of a double win. We did work with some brands, through a pilot with the WFA earlier this year. So, Reckitt, MasterCard, Philips, Diageo were part of that. And we saw this testing around reducing emissions and whether that should be, good for performance as well, kind of come to life and be realized.

And so those sorts of brands really kind of leaning in, but we see case studies coming out from some of our partners where our partners are using our data to help brands optimize. So AdForm, DSP has been doing some case studies. I think they released one recently with Vodafone, with Audi. So seeing kind of brands in multiple different verticals looking at this and recognizing that there can actually be quick wins within their marketing departments because something like, I know, changing your factory and that you know, reducing your water usage if you’re a, an alcohol brand and making everyone commute in a different way is a lot harder than making some configuration tweaks that you can see the progress and the results month over month.

Keith Anderson: Yeah. Yeah. I’m seeing really similar and I, I think historically so much of the action has been really originated by sustainability teams and naturally to your point, their focus is on energy and transportation and the macro drivers of a company’s scope one and two emissions, where I see things headed and what I think is so interesting and what we’re really focused on is in all these conventional functions and disciplines, you know, you may as a marketer not be responsible for energy or transportation choices, but within your remit, you can reduce emissions, strategically and, and at least for the foreseeable future there’s typically that low hanging fruit that you have highlighted, that is, you, you can recover waste, or you can improve experience or effectiveness with new data that helps you pinpoint, here’s where the sweet spot is, and, I think in some distant point in the future, we’re going to have to make even harder, choices, and it’s not going to be, quite so straightforward to win win, but I think what’s, opening a lot of people’s minds at the moment is, with data like this, they can start to add a new layer to their analysis, and when you can do that, you can see, oh, this is something that’s just a sensible decision any w ay you look at it.

Anne Coghlan: Yeah, I think that’s a great point. And I think, yeah, we you always know that. If you’re, if you’re starting from a relatively high number to get to the average, if you’re talking about benchmarks, it’s maybe not that much of a work to do, and that’s really hopeful and promising that we can actually dramatically reduce at the beginning.

You’re totally right that probably in a couple of years time getting that last mile that last hurdle is always the most difficult part but we actually ran again can’t name the brand but, specifically but we ran a test where the average emissions across this brands campaign were already below the kind of the median for that specific country.

So they were already starting from a place of, you know, being better. And they still managed to over the course of the campaign to reduce their carbon emissions by 9 percent and performance improved. So,what that shows is that even if you’re actually on the journey and you’ve already been kind of putting best practices in place without even realizing potentially that there was this positive effect, there is still jobs to be done and there is still work that you can do to further enhance.

So, I think that gives me hope as well that, there are things that can be done from a low hanging fruit perspective, to use your words, bbut also when you’re already operating your marketing department with significant best practices, with, you know, really good hygiene on all of the other areas of what it takes to run an effective media campaign, you can still do better from an emissions perspective, and it’s not going to hurt.

Keith Anderson: Absolutely. And I mean, that, that makes me think about some of the adjacent or intersecting potential emissions drivers within media and advertising. How do you think about and what are you seeing in areas that maybe Scope 3 itself doesn’t directly touch, but what other ways are advertising and media, defining and working on this problem?

Anne Coghlan: So one area that I’ve.Being more interested in, recently, is the production side of ads. So the production of a creative itself. The, the use of materials there. The use of, emissions from a travel perspective. So, someone was talking to me about how There was a, they ran, it’s a European company, they ran a, a commercial for, you know, an everyday household object, and of course the, the shoot was a week long in South Africa, but it was in, with a green screen, so you could have done it, you could have done it anywhere.

So I think, thinking about the creative production, world within media, so that’s something that I think there are, again, really interesting ways of, thinking about how to reduce and optimize, emissions and waste there, that flows in, just extends the, the supply chain out. I think, lots of work being done in that area, in the industry as well.

Keith Anderson: Is Green the Bid someone you’re familiar with?

Anne Coghlan: Green the bid. Yep. Add green.

Keith Anderson: Yeah, that’s, that’s probably the closest thing I’ve encountered that’s really focused on the commercial production side of things.

Anne Coghlan: Absolutely. Yeah. And I know that they’re pushing for so many best practices, like you use a hard drive once and then you put it in cold storage and it has to be, you know, in a special place that is in a controlled environment that uses electricity. Can’t you reuse those hard drives, for example, and lots of, lots of work and thinking being done there and in that area of the industry too.

Keith Anderson: I never would have thought of that, but that’s a great great point.

Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Keith Anderson: Thanks for listening. I’m Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we’d really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we’ll see you on the next episode of Decarbonizing Commerce.

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