The Trade Desk of the Sell Side
M&As aren’t losing pace in our industry. And, if you want to know why you have to take a look at our previous discussions on the same topic – At one point, it was the combined effect of duopoly and media buying trends, and at another, it was ‘supply path optimization’ and header bidding. So, what’s pushing the M&As now?
Cookieless environments, commoditization of platforms (DSPs and SSPs), and emerging privacy laws.
Let’s dive into the news.
Last week, Rubicon and Telaria announced their merger and plan to create ‘the world’s largest independent SSP’. Rubicon is one of the industry’s leading ad exchanges and a well-known header bidding provider and Telaria, on the other hand, focuses on video and Connected TV. Both believe the merger would create a single platform for media buyers to acquire customers across various channels and platforms.
Similarly, publishers would be able to move into new areas without an added fee/platform.
“An opportunity for someone to create really The Trade Desk of the sell-side — a real alternative to those walled gardens.”
– Mark Zagorski, CEO, Telaria.
But what’s the actual reason for a merger? Commoditization of SSPs. As you know, header bidding granted several SSPs to access publishers’ inventories and buyers typically wouldn’t understand the difference b/w two SSPs (if there’s any). In fact, according to AdExchager, Michael Barrett has been trying to get Telaria from 2017.
“A lot of folks have said, ‘Hey Rubicon, you’re not that different from a PubMatic, OpenX or Index Exchange. And there has been a certain sameness for a group of players. After this merger, I don’t expect we’ll be hearing that, because there will be such a clear difference.”
– Michael Barrett, CEO, Rubicon Project.
We know media companies and buyers are reducing the number of platforms they work with and Rubicon-Telaria wants to be the default independent option. As both technologies complement each other without any huge customer overlap, you don’t have to be concerned about any change regarding its fee/infrastructure/existing offerings.
Apple News+ Fails to Deliver
Apple News+, a subscription product that promises 90 million readers, as expected, failed to deliver for many. Digiday interviewed several publishing executives last week to understand the impact of News+ on publishers’ bottom lines.
If you want to put it in a word, the results are modest.
What went wrong?
To be frank, publishers joined the aggregator with realistic expectations, but News+ seems to not meet the expectations. First, the number of subscribers to News+ didn’t grow as intended. Second, the Apple News+ terms and conditions aren’t good enough for many media groups to join.
Without adding new publishers, it is quite hard for Apple to convince its users to subscribe to a paid plan. So, the company plan to bundle News+ with Apple TV+ and Apple Music, as per Bloomberg’s report.
“We’re happy to be on there because it’s another way to increase subscription revenue, but it’s not like it’s a huge boon for our business or anything like that. It’s not really relevant.”
Will it work? We have to wait and see. But we are certain about one thing though – it is always better to channel readers to your properties and build direct relationships with them. In the era of privacy laws and tracking prevention features, it is more apparent that you need to own the customers.
Here’s what we wrote, when Apple News+ hit the shed:
“We believe in the open internet and besides, publishers chasing down the platforms for ‘distribution and monetization’ almost always end up in a troubled situation.”
Note that it is better to experiment with new platforms and traffic acquisition channels, but not to rely on them to monetize. For instance, publishers tried news aggregators including Smart News, News Break, Top Buzz, and Flipboard and saw some success (in terms of incoming users).
Sell-side and Buy-side Consolidation
Apple introduced ITP, Firefox brought ETP, Google limiting cross-site tracking, with so many privacy measures, the third-party cookie is slowly becoming obsolete. Privacy laws like CCPA and GDPR are acting as the catalyst in the process.
While tracking the users is becoming more and more difficult, the first-party data is emerging as the clear winner in the whole conundrum.
In the bid to access more first-party data, the ad-tech companies are constantly trying to find new solutions. One of the ways to make first-party data more accessible is the amalgamation between the demand and the supply side platform.
When the buying as well as selling side of the process is handled by a single company then it becomes easier to share the tracking data without the need for third-party cookies.
Due to the reasons stated above, we have recently seen some mergers and acquisitions in the industry, the latest one is between Smart Adserver and LiquidM. Smart Ad Server provides supply-side solutions whereas LiquidM is a demand-side platform. After the acquisition, Smart Ad Server will be able to offer its inventory to the buyers without the need for a DSP as a middleman.
For SSPs, only having a pool of inventory is not enough, at the same time, DSPs are trying to reach the publishers directly. In ad serving, the involvement of multiple companies means the exchange of user data between them, which again is risky in the current age of so many data protection laws. Supply Path Optimization also talks about reducing the number of intermediaries in media buying. Walled gardens are becoming safe havens for brands because of the tracking they can provide with their first-party data. While so many forces are at work, be prepared to see more such mergers and acquisitions.
Brand Safety Tags Can Slow Down Your Sites
A recent article published by Digiday reveals how brand safety, viewability, and verification tags can harm the publishers’ revenue. Citing the research by RedBud, Digiday says that the brand safety tags and tools cause latency and increase page load time. Keyword wrapping blockers cause a delay between two and four seconds. For the reference, 53% of mobile users will leave a mobile page if it takes more than 3 seconds to load.
“The challenge we have is that we don’t get visibility of the full extent of this, it’s a bit of a silent assassin.”
The lags can lead to undelivered ads and discrepancy between the publishers’ and the buyers’ data related to impressions delivered. In the presence of tags, the median of the discrepancy was found at 8.4% whereas 3.4% while there were no tags.
Do not overuse brand safety, viewability and verification tags, strike a balance between revenue and the use of tags. If it is essential to use them, ensure you’re optimizing the page speed and minimizing the discrepancy to mitigate the impact.
Breaking Up Google
While breaking up Google isn’t a new proposal, what we’re about to highlight is a bit different. UK’s competition watchdog ‘Competition and Markets Authority (CMA)’ said it is considering a range of “separation remedies” for Google and make Facebook interoperate (specific features) with others to enable new companies to better compete with the incumbents.
CMP published an interim report citing that the regulator may intervene in three major areas:
a. Open display ad market. Especially, it will focus on “the conflicts of interest Google faces at several parts of its vertically integrated chain of intermediaries”.
b. Search and search advertising. CMA will look into “Google’s market power and the barriers to expansion faced by rival search engines”.
c. Social media and display advertising. The regulator plans to zero in on “Facebook’s market power and the lack of interoperability between Facebook and rival services”.
Moments that matter
Adtech and the data protection debate – where next? – ICO.
IAB Tech Lab Releases Blockchain Implementation Guide – AdExchanger.
Eyeview becomes the latest ad tech casualty – Digiday.
Forbes Now Lets You Use Cryptocurrency to Get an Ad-Free Reading Experience – CryptGlobe.