The bewildering digital ad supply chain is said to benefit vendors, but for the latest in our anonymous Confessions series, we talked to an ad tech executive who views the complex chain as an elaborate lie. Here are the excerpts, edited for clarity.
What irritates you the most in ad tech?
Omission of how agencies and their ad tech vendors are taking media dollars off the table so that 30 percent or less of media spend is going to publishers is the biggest lie going.
Aren’t those outlier cases?
No, they’re not. And 30 percent might be generous. Because at the end of the day that is not telling them exactly what the ecosystem is charging. Most of the time, publishers don’t even know what the markup is.
Why is that?
It is not about margin, it is about markup. What can the behemoth supply-side platforms and exchanges mark up the supply to and not tell anybody? From a buy side, they don’t know if they’re paying $10 that publisher is perhaps getting only 30 cents. So it is not 30 cents on the dollar, it is 30 cents on what.
So publishers are getting less than 30 percent of the ad dollars?
A lot of times, yes. Let’s say a publisher sells a $1 CPM and the advertiser ends up paying $7. The advertiser is buying that inventory at 700 percent markup because somewhere in the middle $6 comes out. And that markup is exponentially higher if they can get away with it.
How do you know this is happening?
Because I know as an industry insider source and I have technology to prove this. When intermediaries can publish their net numbers and they are in the hundreds of millions of dollars, that is coming out of the ecosystem.
Can’t advertisers audit their vendors to see what is going on?
They can only audit if they have the contracts to do so and if the contracts are aligned with their purpose. In general, most contracts are not. But there is a movement to change that. So it is about getting the right contracts, reviewing what they currently have, assessing it and moving forward from there.
For being a tech vendor, you sound anti-ad tech.
I think players who provide value should be paid fairly. But tell the publisher, brand and agency what your markup is. And I get it, if they do that, people will go out of business. And the industry is dictating that and we will continue to see more consolidation.
Are vendors with high markups always trying to be deceitful?
I don’t know. Maybe people have been hiding the truth long enough that they buy into their own Kool-Aid.
Image via Creative Commons
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