Ad tech vendors: Publishers fail to do their programmatic homework

While ad tech innovation has opened doors for media owners wanting to capitalize on the rise of programmatic ad trading, publishers have often felt mystified. But for ad tech vendors, that’s due to a simple factor: Publishers failed to do their homework from the start, whether it’s ceding too much control of inventory to SSPs or simply not vetting the ad tech vendors they’re getting into bed with. And now, they’re having to live with the consequences.

Last month, we gave publishers the chance to vent their biggest frustrations, or just gnarly suspicions over their relationships with ad tech vendors. All spoke frankly, under condition of anonymity. In the spirit of fairness, we’ve now given the other side the chance to have their say. A common theme among responses: Publishers have shot themselves in the foot, and they’ve only themselves to blame. But some believe the tide is turning.

We spoke to a range of senior executives from a mix of ad tech vendors, both large and small. Here are the takeaways:

There’s a knowledge gap on the publisher side
Bunching all ad tech vendors, and their products and tactics, into the same homogeneous pot is equal to (wrongly) treating publishers as if they’re cardboard cutouts, with identical business challenges. Some ad tech execs believe there’s a hoard of firms (like SSPs) that claim to be ad tech companies but, in reality, are primarily media sales networks. Pitching themselves to publishers and the public market, as ad tech companies, when they don’t actually own proprietary tech, gets up the noses of some of the more established ad tech firms.

“Ad tech is a total anomaly,” said one senior ad tech exec. “SSPs are media sales networks that make 20 percent margins. But they can’t get the inventory without telling people they’re tech companies … and publishers have completely fallen into the hole by not doing due diligence on them from the start.”

That big hairy problem: disintermediation
The rise of programmatic ad trading has led to a lot more intermediary businesses that offer some kind of service that in theory adds value to the trade. Some on the ad tech side believe that publishers were too quick to share all their inventory with SSPs and, in doing so, compromised their sales channels. The knock-on effect is disintermediation from their readers and from buyers.

“Publishers’ desperation for money is leading them to disintermediate themselves. They don’t understand what transparency they have or don’t have. And then they complain about the ad tech. But they need to be interrogating the platforms, and not believing everything they’re told,” said the same exec. “They act like this is happening to them, but they’ve allowed the disintermediation to happen by not doing due diligence on how their partners make money.”

Publishers are often too slow
Publishers are the first to admit that they aren’t always able to capitalize on innovative ad tech opportunities that arise. It’s symptomatic for legacy publishers in particular, whose internal systems and structures just aren’t set up for fast-moving digital innovations and decision-making. Naturally, that’s a frustration for vendors.

“There’s so much good stuff coming out of ad tech that most of it gets ignored,” said one ad tech vendor exec. This could be due to a number of understandable reasons: lack of resources on the media owner side or a lack of true understanding of the product or service, or simply because they’ve been burnt in the past from investing in a digital initiative that’s crashed and burned. But a common vendor frustration: development cycles within publishers need to be speedier.

Eyes glued shut
Much of the tension that has arisen between publishers and ad tech vendors has been related to that recurrent theme across all areas of advertising: lack of transparency on fees. The Guardian has investigated buying inventory via its in-house trading desk to see how much it loses in digital ad buys. The result: In some cases, only 30 percent of budgets find its way back to the media owner. But ad tech vendors are unsympathetic.

But for one mobile ad tech vendors, the constant carping is reminiscent of the “drunk uncle” at dinner who won’t stop yammering.

“Lack of transparency on fees is one thing, it’s the publishers’ problem for going into a relationship with eyes glued shut and naively drinking the Kool-Aid we sold,” said the same ad tech exec. “Those [publishers] will have plenty of insight into how the sausage is made, and an axe to grind. Revenge will be slow, but it will come.”

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