CHAPTER 2 - UNDERSTANDING AD TECH
Will Need For Transparency Drive Ad Networks Out Of Business? DEAN VEGLIANTE, MEDIAPOST
A
d networks have always faced scrutiny in the ad tech world for a variety of reasons. There were complaints of too many ad networks, then not enough of them; concerns of high margins, opacity and unsavory inventory. But since the late ‘90s, ad networks have weathered and adapted to every economic and technologic storm, and the successful players are still growing. In fact, I believe the explosion of programmatic media buying has made them indispensable for marketers looking to drive performance for their brand. However, many still insist that ad networks are on their last legs. There is talk that data management platforms (DMPs) and demand-side platforms (DSPs) are the new tools that will finally kill networks, because they provide something networks supposedly lack: transparency. These new platforms take advantage of marketers’ desire for trans parency. But, marketers need to ask themselves if this “transparency” is really only an illusion of control, and if they possess the right analytical and operational skill sets to leverage these tools successfully in the first place. At the center of the discussion surrounding ad tech transparency is the issue of pricing. The proposition of a selfservice DSP or DMP is to give marketers control of all the media buying levers, and to provide them with a clear view of what they’re paying for each impression. The players condemning ad networks would have you believe that on the
other side of the transparency spectrum, ad networks are black boxes making a profit off of arbitrage and heavy markups. That sure sounds sketchy, but it’s not the case. The network cost isn’t the result of surreptitious markup, but of the bundling of services that go along with the media buy. Networks do not function in the same way as DSPs or DMPs because there is a clear difference in how the services are packaged – networks sell targeting, data, RTB technology and media together. While many technology types (DSPs, networks, etc.) programmatically access and buy from the same display inventory, each company evaluates the media differently using its own unique process and algorithms. The efficiency of determining where, when, what ad to serve, and more importantly how much to pay for it, is affected by the technology’s ability to use a combination of algorithmic and manual optimizations to interact with data in a holistic way. Separating each of these elements may look cheaper on paper, but marketers need to consider what the final costs are once the time and efforts have been put in to reach the same actionable results.
“The best advice for marketers is to do their digging and always maintain a few programmatic partners in a testing pattern.”
Let’s say the marketer is a homeowner looking to remodel his/her home. The homeowner can hire an architect and a contractor, or he/she can do it themselves to cut costs. Many who go the latter route fail to factor in time and other costs besides materials. In the end,
The Big Book of Digital Marketing | 21