Programmatic advertisers ramp up efforts to deal direct with publishers

As more advertisers set up their own ad tech deals, they’re taking demonstrable steps to ensure a larger slice of their programmatic ad budgets get directly to the publisher.

While the idea of closing the gap between advertisers and publishers is nothing new, the sheer number of intermediaries between the two has made it easier said than done. But as the likes of Hershey’s make peace with those vendors that help, rather than hinder, the performance of their ads, advertisers’ attention has turned to how to manage paying vendor fees without robbing the media seller.

It’s nearly impossible to execute a programmatic buy without intermediaries deducting a fee as there will be an ad server involved, even before a bidder is considered. The panic over hidden ad tech fees has turned into pragmatism among programmatic advertisers who are content to pay it — just not if it comes from their media budget.

When Procter & Gamble’s top marketer Marc Pritchard met with board members from the Association of National Advertisers earlier this year, he asked whether it would be possible for TrustX — the non-profit programmatic marketplace the trade body backs — to remove the 12.5% sell-side fee it charged from the supply chain. According to one media exec with knowledge of the meeting, Pritchard didn’t have a problem with the fee as long as it didn’t impact its actual media spend. Instead, he said that for the sake of both transparency and accountability, fees should be charged separately rather than from inside the supply chain.

“The key take-away from the ANA Board was that today’s fee structure — one that typically reduces working media buying power at each step in our complex supply chain — needs to be blown up in favor of one that is both more transparent and far more accountable,” said David Kohl, president and CEO of TrustX. “Sophisticated programmatic advertisers have a right to know exactly who pays. When advertisers are the ones getting the bill, the ANA is advocating that fee amounts need to be lifted from within the complexity and made totally clear. It’s not that way today. Not even close.”

Discussions like this aren’t the norm, but they are becoming more frequent as advertisers start to work directly with publishers and the SSPs that sell ads on their behalf. “There are so many negative connotations around the tech tax, but I’m happy to pay for a well-defined service that adds value to my media buys,” said a media director who tried something similar at a global advertiser, and requested anonymity. “In order to do that, however, I need to understand what was happening at all parts of my supply chain, which was why I met with an SSP last year.”

In the U.K., there’s a project underway between trade bodies the Incorporated Society of British Advertisers, the Institute of Practitioners in Advertising, the Association of Online Publishers and auditors PricewaterhouseCoopers to match data generated by the SSPs to the data created by the DSPs. Accessing those two data sets means advertisers can better understand how certain publishers sell their inventory through one ad tech vendor versus another. Armed with those insights, advertisers can then start to broker better deals with publishers and the ad tech vendors that sell inventory on their behalf.

“Phase one of programmatic was really about the technology and ownership of data; whereas, phase two is about looking at how the publisher side of the supply chain comes into play,” said Vincent Rinaldi, head of addressable media at Hershey’s. “We don’t want to be stuck in the margin game with publishers and the tech they have to use.”

The starting point is to address programmatic direct. When advertisers do direct deals with publishers and agree on fixed pricing, it’s hard for them to justify paying SSPs for managing these campaigns.

To do this, Rinaldi is considering supply-path optimization, a catch-all term used to describe the algorithms and processes advertisers like Hershey’s can use to ensure as much of their budget reaches the publisher. He added that it’s too early to discuss the specifics of how this might play out since he and his team are still bedding in a DSP they manage internally.

“We’ve been cleaning up our ad tech stack, but as we do that, we’re talking more about leveraging tools outside of the walled garden environment when it comes to measurement,” said Rinaldi. “The SSPs are going to play a pivotal role when it comes to that.”

Time will tell how serious advertisers are about making sure more of their money gets to publishers. After all, advertisers have talked about going direct to publishers for some time. It’s not easy managing multiple publisher and ad tech vendor relationships, which is why some SSP executives still haven’t met with an advertiser directly, despite having to complete several RFIs from them in recent months. Advertisers, for the most part, continue to talk out of both sides of their mouths it would seem when it comes to paying for transparency.

“We’re getting requests from advertisers mainly in the CPG and telco space,” said the exec, who spoke on the condition of anonymity. “They’re asking more questions about auction dynamics and the transparency of the auctions we manage as well as a lot of questions about fees. There’s never any follow-through.”

Download Digiday’s complete WTF Programmatic guide, including 11 explainers detailing the ins and outs of programmatic advertising.

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