Ad Tech Insights

Are You Paying the Ad Tech Tax? The Other Side of Ad Tech

We take a reality check on where supply-side programmatic ad tech can do better to serve the needs of publishers.

Are You Paying the Ad Tech Tax? The Other Side of Ad Tech
We take a reality check on where supply-side programmatic ad tech can do better to serve the needs of publishers.
Apr 02, 2018
A full stack advertising technology company for publishers and advertisers.

In the Ad tech ecosystem, Publishers – the ones that offer the sites for the ads to display – are often overlooked for the needs of the demand side (the ones who pay!). But the supply side has as much angst as advertisers when it comes to the complex ecosystem and the many players that work to keep them as far from advertisers as possible.

There are so many players in the complex Ad Tech ecosystem today. Publishers and advertisers are kept far apart by all the players in between – media agencies, DSPs, SSPs, ad networks, trading desks, ad exchanges, affiliates and other sundry players in the middle.

As much as an advertiser struggles to make sense of this ecosystem, the publisher too – especially the small publisher – finds it challenging to cut through the clutter and get the best value for their offerings and effectively monetize their website.

How much of your advertising dollar goes towards actual media?

This screen grab from the TrustX website claims that less than half of an advertising dollar actually goes behind working media. That is worrying for both – the publisher and the advertiser (although the many players along the way gladly collect a share of the pie!)

Marketing Dollars Share

Clearly, the time is right to simplify programmatic adtech while empowering advertisers to get the best value for their money and publishers to intelligently take charge of their content monetization. With all the current complexity built into the process of placing a simple display ad, my search begins at asking what partners do advertisers and publishers actually need to get things done effectively? Diego Sanchez, CEO of supply-side adtech company Adtelligent Inc., doesn’t mince his words. “There are very few key players needed in the game. Publishers need an ad server, header wrapper, and good analytics. Buyers need an ad server, a bidder, a CDP, and a good attribution platform. In my opinion, everything else is the ad tech tax”.

Really? So why do publishers feel compelled to pay the ‘adtech tax’ today? What is lacking in the core ecosystem that these (additional) players on both sides are exploiting ? “I think many vendors are able to convince the buy side that their technology is indispensable, even if there is no clear impact on ROAS. Take viewability as an example. This is a made-up standard that only digital advertisers are held to. With television advertising, you don’t know if someone walks out of the room while a commercial is playing. With print, you don’t know if the reader is skipping past the ad pages. But advertisers still buy TV and print because they know it performs for them. I wish digital advertising was held to the same standard, but unfortunately, there’s a trust deficit between digital buyers and sellers that ad tech vendors are able to exploit”.

So, the current system truly is set up to put as much distance as possible between advertiser and publisher? “As you state, a true disruptor would be trying to minimize the distance between advertisers and publishers. TrustX is an interesting example of publishers working collaboratively to establish their own SSP, but they are still plugging into traditional DSPs. I can’t think of many other examples that aren’t self-serving”.

The elusive ‘unified auction’

Like many other advertising executives on either side, Diego also feels that publishers should force all their SSPs, ad networks, and other buyers like AdX and A9 to compete in a ‘unified auction’. This certainly seems like a popular term in the industry right now. Its supposed to be the magic bullet that has the potential to truly maximize yield for publishers. But isn’t that what an Adexchange is already supposed to do? Run a free and fair auction of inventory to the highest bidder (advertiser)? Apparently not. There are serious concerns raised over the transparency and even the impartiality of ad exchanges. Take DoubleClick for example. For years they took advantage of the ‘last-look’ advantage (allowing themselves to bid one penny higher than the highest programmatic bid) and when header bidding got mainstreamed, they created EBDA to potentially invite other exchanges into what was touted as a ‘unified auction’. But there are many concerns even today over EBDA, which, according to Diego “has been in beta a long time and many publishers and bidders aren’t yet able to participate. Also, I’m not sure that publishers can trust Google to create a fair, unified auction. History would suggest otherwise”.

Innovation, disruption and the new-age ad exchange

Google enjoys untold advantage, especially with smaller publishers, with its combination of demand side and supply side solutions. But this also means the space is ripe for innovation, and preferably, disruption. “I can envision a platform that evolves from the programmatic space to handle the tasks that are currently handled by AdX. This platform could unify video, native, and display demand so that​ publishers are getting the highest bid for each impression across different inventory types​​​​​​”.

So while it may seem like EBDA is a step in the right direction – as is the entire header bidding and header wrapper movement – there are still many opportunities along the entire adtech supply chain for innovation and disruption. The solution – something that integrates wrapper and analytics functionality – needs to be simpler, and far more cost-effective than the options available to publishers – large and small – today. Diego goes ahead and names to validate the need for innovation. “There are no killer products in the wrapper and analytics spaces. Index,, Sortable, and others have built proprietary wrappers, but I believe that the future of header bidding is open source, which to me means prebid. Current analytics offerings from Staq, Adjuster, and others are very expensive and take a long time to integrate. We think header bidding and analytics are too hard and too expensive for publishers”.

Are you at the (forgotten) end of a long tail?

Having done some research into the adtech supply chain for this article, I cannot disagree. The entire space is too complicated, and unless someone is a specialist, it is quite impossible to make sense of the adtech space as a mere marketer. Publishers can’t be expected to understand the nuances and complexities of programmatic – especially smaller ones who can’t afford to hire expensive AdOps pros. Affiliate advertising (and commerce) could be one recourse, of course, for smaller and more niche publishers. However, while it can be a valuable revenue stream, it cannot be the only revenue stream. Their only recourse then becomes to tap into their ecosystem of service providers, ending up with less than 50% of the actual spend by advertisers, or then to isolate themselves from the universe of bidders by retreating into an owned bidding system.

As Diego confirms, “I refer to small and mid-size publishers as forgotten publishers. They’re too small to have tier one SSPs like Index, AppNexus, and Rubicon build their wrapper, and they’re also too small to build a header bidding solution with their own engineering and ad ops resources. (So) they are stuck monetizing their programmatic inventory with companies that take expensive revenue shares”.

AdTech won’t be the first industry, after all, to exploit the ignorance of the end users at both ends of the spectrum . Advertising did it for years – including the early years of digital. The esoteric nature of programmatic will ensure they remain in business unless disruptors bring new levels of transparency and new operating models. Adtelligent hopes to bring a new level of DIY transparency to these ‘forgotten publishers’ by allowing them to launch, manage, analyze, and optimize header auctions for display and video from a user interface – no engineering, ad ops, or analytics resources needed. If the self-service model works, it could be a disruptor. It would be great to see a similar approach from other big adtech software developers. There’s a lot of quality content and inventory in the long tail!

Our take: The buy side (advertisers) has already made moves to take back control by insourcing media buying, including programmatic; and insisting vendors are able to offer or work with data-driven programmatic strategies. Its likely publishers will follow suit and scout around for the solutions that allow them to connect more directly with advertisers. Diego has the last word, “We need to go back to the day when a dollar can move from an advertiser to a publisher without 50% plus in ad tech tax being deducted”. So, how much adtech tax do you think you can save?

Author: Chitra Iyer, Editor-in-Chief, MarTech Advisor

Inputs: Diego Sanchez, CEO, Adtelligent Inc.


#ad tech#adops#programmatic advertising#publishers#tech fee

You may also be interested in

Adtelligent Product Updates 2023
Adtelligent is constantly working on improving its products and offering new tec...
First-Party Data: Everything You Sh...
For years third-party data has been a fuel for the advertising market that helpe...
How to Boost Your Revenue with 5 Sm...
Choosing the correct monetization strategy, considering the nature of the busine...
The Ultimate Guide to Programmatic ...
Digital audio advertising grows faster than any other ad format. Statistical dat...
What is Video SSAI?
According to the Streaming monetization report, over 50% of advertisers consider...
Adtelligent Product Updates Q4 2022
Adtelligent is constantly working on improving its products and offering new tec...
Adtelligent Product Updates Q3 2022
Adtelligent is constantly working on improving its products and offering new tec...
What is SIMID & OMID
Understanding new ad formats for videos is essential to keep up with the growing...
What is VAST?
Digital video advertising is on the rise, and more and more companies want to ha...