MediaMath’s Joe Zawadzki on Yahoo’s ‘War on Middlemen’

November 29, 2011 • 2 min read • By Carla Rover

Last week, several demand-side platforms learned that they would no longer have access to Yahoo remnant display ad inventory using their DSP status unless they acquire their own seats on the Right Media Exchange. MediaMath CEO Joe Zawadzki believes that Yahoo’s move to restrict remnant display ad inventory access is destined to significantly disrupt the landscape, at least in the short term.

What’s behind the move by Yahoo?

Yahoo is looking to get closer to demand — the advertiser and agency responsible for buying. The thesis is that Yahoo will be able to influence spend on Yahoo with a more direct relationship and will capture more margin with fewer intermediaries.

How will this impact the ad landscape?

In the short term, it will be disruptive as it is trying to abruptly force a process onto clients — getting direct seats and putting contractual paperwork in place to allow them to continue programmatic buying with a technology platform of their choosing. In the midterm, the very DSPs impacted that have a transparent self-service technology platform and true optimization and analytics will begin to separate themselves even further from the pack.

How about impact on advertisers?

What is sometimes lost in these discussions is that “optimization is not zero sum.” That is, a technology that improves results by 100 percent and charges 20 percent is a fantastic bargain. The marketer sees better business results and will spend more on that channel as a result, meaning publishers like Yahoo can sell more of their inventory at higher prices. There will be heightened scrutiny around margins at each link of the chain, and mapping those margins to value-add. Publishers like Yahoo will find two channels that work for them: direct sales and strategic integration with programmatic demand partners. The opaque arbitrage channel — buy low, sell high, and keep your buyers from knowing your suppliers and vice versa — is under attack, and not a moment too soon.

How does this play in to the possible Microsoft deal in your opinion?

It could help pro-forma yield on inventory, at least temporarily, and thus justify a somewhat higher price.

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