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When a media buyer puts $1.00 in on one side of the system, on average only $0.60 makes it to the publisher. In some cases less than $0.50 gets to them. Advert

When a media buyer puts $1.00 in on one side of the system, on average only $0.60 makes it to the publisher. In some cases less than $0.50 gets to them. Advertising is an intentionally complex system so that companies can clip the ticket at multiple stages throughout the process. Google should be broken up, but the whole ad tech system needs to go into the bin if these problems are going to ever get fixed. https://www.forbes.com/sites/augustinefou/2021/02/15/how-much-of-your-dollar-goes-to-working-media-in-digital/ https://www.forbes.com/sites/augustinefou/2021/02/15/how-muc...

shortrounddev2 1y ago
The (Open)RTB system makes things more competitive and reduces costs for advertisers by making unsold inventory available to an automated marketplace while also increasing revenue for smaller publishers who otherwise wouldn't have been able to create first party relationships with advertisers. The middlemen are various identity providers and other tracking/data enrichment services, as well as third party exchanges, DSPs and SSPs. Believe it or not this system makes it a lot cheaper than just having someone buy ad space directly on a website > Three industry studies showed less than 50 cents of every dollar goes to showing ads. Every penny of what is spent goes to showing ads, by definition. However, that doesn't mean that every penny goes to the publisher. The advertiser may look at the 60 cents being spent on everybody between them and the publisher and say "hey, I'm getting ripped off! I could be paying 4 cents/CPM instead of 10 cents/CPM!" but each middleman (usually) adds some kind of value to increase acquisition rate. For example: * Identity providers who have lists of user IDs that belong to "high CTR" audiences (users more likely to click ads) * Geo providers who tell the bidders where the User's location is so that they can target locally-focused advertisements to them * User intent plugins, "abandoned cart" retargeting, product recommendation providers, etc. who look at user interaction events and build profiles of people who can be retargeted * Exchanges which conduct auctions across multiple DSPs to get a better price for publishers while also making more inventory available to advertisers At one company I worked for, we allocated impressions ahead of time. Based on prior years' data and viewer ratings of TV shows, we could predict the future, determining how many viewers a video or TV show would get, and then selling the advertising inventory based on that prediction. That shit ain't free! All of these things are designed to increase your acquisition rate from x% to y%, where x > y. Sure, you could just pay $5,000 a month to a website to show a banner ad directly, but a larger % of your money would be wasted on users who are utterly uninterested in your banner.
- crowcroft 1y ago
  > each middleman (usually) adds some kind of value This is the argument that gets made, but very rarely is it true. From Neumann et al in 2019 [1] "When investigating gender (being male) and age (three different tiers: 18-24, 25-34 and 35-44 years) individually, we find that digital audiences for gender are on average less often correct than random guessing (accuracy of 42.3%)." If the accuracy of targeting is worse than random guessing on average then it's value is less $0.00. Advertisers would reach more of their target audience by simply buying more media instead of spending money on 'targeting' even after you discount wastage to $0.00 in 'value'. I agree with everything you're saying about programmatic *in theory*, but I would argue that in practice the whole system is just broken. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3203131 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3203131
  - PaulHoule 1y ago
    I have tried to sell ads and never been able to fill all my inventory and often the rates are poor and the ads brand destroying. If you are The New York Times it is different but a site that makes $1000 /mo in ads can’t afford an ads salesperson and in the big scheme of things that is royalty.
    - shortrounddev2 1y ago
      Have you tried prebid? It lets you send your bid requests to as many exchanges as you want so you can advertise your inventory to as many DSPs as possible
      - PaulHoule 1y ago
        When I talk about "sell" I mean sell directly with a human touch. Like the way a newspaper or a network of radio stations has actual salespeople that sell ads.
        Nemo_bis 1y ago
aiauthoritydev 1y ago
As someone who has worked in AdTech I would respectfully disagree. It is indeed complex but it is incredibly efficient. Also it is irrelevant of whether publisher earns 75% or 30% of the total revenue. What matters is how much they are earning compared to the next best alternative. Some companies like Google are incredible at this. Google is not a "monopoly" in this space. In fact the world has far too many Google equivalents but absolutely no one comes close to Google in generating top dollars for publishers. I am saying this after working for 10+ years competing against Google.
- xmprt 1y ago
  Perhaps Google does well for their publishers but do they do well for advertisers? Inherently it seems like it's impossible to do both because what's good for one group is bad for another. Fortunately with healthy competition we solve this problem since alternatives could be used. But since Google is playing both sides and has so much sway over the market, they're able to manipulate things. Even if they're not manipulating things to their benefit, it's still not great to have a single party have so much control.
  - PaulHoule 1y ago
    It’s a two-sided market and it doesn’t have to be either/or. Google has a wide range of advertisers so it can find one that converts on your site and it has a wide range of sites so it can find ones that work for a given advertisers. Also Google has a large database and user inventory for personalization so it can find ads that convert on your site even if your site wouldn’t attract ads otherwise. the personalization economy has all sorts of ads and might be brand destroying in the case of retargeting but you see that crap everywhere whereas many Google alternatives run brand-destroying ads and pay you $0.00 after rounding.
  - mattmcknight 1y ago
    > Inherently it seems like it's impossible to do both but that is the value of a marketplace, aligning buyers and sellers via the price mechanism
secondcoming 1y ago
Running a DSP is quite expensive if you have all the features advertisers want.
- dboreham 1y ago
  Digital Signal Processor?
  - tomwojcik 1y ago
    demand-side platform, i assume
TZubiri 1y ago
The argument here being that the fee is too high? I don't think prices being too high is a strong argument of the existence of a monopoly, but it might be of the exploitation of one.
- crowcroft 1y ago
  There's been a few instances where internal communications have leaked showing Google intentionally rigging auction mechanics to inflate CPCs. It's not just the fees being high. https://upriseup.co.uk/blog/something-doesnt-ad-up-google-admits-to-manipulating-its-auctions/ https://upriseup.co.uk/blog/something-doesnt-ad-up-google-ad...

shortrounddev2 1y ago

The (Open)RTB system makes things more competitive and reduces costs for advertisers by making unsold inventory available to an automated marketplace while also increasing revenue for smaller publishers who otherwise wouldn't have been able to create first party relationships with advertisers. The middlemen are various identity providers and other tracking/data enrichment services, as well as third party exchanges, DSPs and SSPs. Believe it or not this system makes it a lot cheaper than just having someone buy ad space directly on a website > Three industry studies showed less than 50 cents of every dollar goes to showing ads. Every penny of what is spent goes to showing ads, by definition. However, that doesn't mean that every penny goes to the publisher. The advertiser may look at the 60 cents being spent on everybody between them and the publisher and say "hey, I'm getting ripped off! I could be paying 4 cents/CPM instead of 10 cents/CPM!" but each middleman (usually) adds some kind of value to increase acquisition rate. For example: * Identity providers who have lists of user IDs that belong to "high CTR" audiences (users more likely to click ads) * Geo providers who tell the bidders where the User's location is so that they can target locally-focused advertisements to them * User intent plugins, "abandoned cart" retargeting, product recommendation providers, etc. who look at user interaction events and build profiles of people who can be retargeted * Exchanges which conduct auctions across multiple DSPs to get a better price for publishers while also making more inventory available to advertisers At one company I worked for, we allocated impressions ahead of time. Based on prior years' data and viewer ratings of TV shows, we could predict the future, determining how many viewers a video or TV show would get, and then selling the advertising inventory based on that prediction. That shit ain't free! All of these things are designed to increase your acquisition rate from x% to y%, where x > y. Sure, you could just pay $5,000 a month to a website to show a banner ad directly, but a larger % of your money would be wasted on users who are utterly uninterested in your banner.

crowcroft 1y ago
> each middleman (usually) adds some kind of value This is the argument that gets made, but very rarely is it true. From Neumann et al in 2019 [1] "When investigating gender (being male) and age (three different tiers: 18-24, 25-34 and 35-44 years) individually, we find that digital audiences for gender are on average less often correct than random guessing (accuracy of 42.3%)." If the accuracy of targeting is worse than random guessing on average then it's value is less $0.00. Advertisers would reach more of their target audience by simply buying more media instead of spending money on 'targeting' even after you discount wastage to $0.00 in 'value'. I agree with everything you're saying about programmatic *in theory*, but I would argue that in practice the whole system is just broken. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3203131 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3203131
- PaulHoule 1y ago
  I have tried to sell ads and never been able to fill all my inventory and often the rates are poor and the ads brand destroying. If you are The New York Times it is different but a site that makes $1000 /mo in ads can’t afford an ads salesperson and in the big scheme of things that is royalty.
  - shortrounddev2 1y ago
    Have you tried prebid? It lets you send your bid requests to as many exchanges as you want so you can advertise your inventory to as many DSPs as possible
    - PaulHoule 1y ago
      When I talk about "sell" I mean sell directly with a human touch. Like the way a newspaper or a network of radio stations has actual salespeople that sell ads.
      - Nemo_bis 1y ago

aiauthoritydev 1y ago

As someone who has worked in AdTech I would respectfully disagree. It is indeed complex but it is incredibly efficient. Also it is irrelevant of whether publisher earns 75% or 30% of the total revenue. What matters is how much they are earning compared to the next best alternative. Some companies like Google are incredible at this. Google is not a "monopoly" in this space. In fact the world has far too many Google equivalents but absolutely no one comes close to Google in generating top dollars for publishers. I am saying this after working for 10+ years competing against Google.

xmprt 1y ago
Perhaps Google does well for their publishers but do they do well for advertisers? Inherently it seems like it's impossible to do both because what's good for one group is bad for another. Fortunately with healthy competition we solve this problem since alternatives could be used. But since Google is playing both sides and has so much sway over the market, they're able to manipulate things. Even if they're not manipulating things to their benefit, it's still not great to have a single party have so much control.
- PaulHoule 1y ago
  It’s a two-sided market and it doesn’t have to be either/or. Google has a wide range of advertisers so it can find one that converts on your site and it has a wide range of sites so it can find ones that work for a given advertisers. Also Google has a large database and user inventory for personalization so it can find ads that convert on your site even if your site wouldn’t attract ads otherwise. the personalization economy has all sorts of ads and might be brand destroying in the case of retargeting but you see that crap everywhere whereas many Google alternatives run brand-destroying ads and pay you $0.00 after rounding.
- mattmcknight 1y ago
  > Inherently it seems like it's impossible to do both but that is the value of a marketplace, aligning buyers and sellers via the price mechanism

secondcoming 1y ago

Running a DSP is quite expensive if you have all the features advertisers want.

dboreham 1y ago
Digital Signal Processor?
- tomwojcik 1y ago
  demand-side platform, i assume

TZubiri 1y ago

The argument here being that the fee is too high? I don't think prices being too high is a strong argument of the existence of a monopoly, but it might be of the exploitation of one.

crowcroft 1y ago
There's been a few instances where internal communications have leaked showing Google intentionally rigging auction mechanics to inflate CPCs. It's not just the fees being high. https://upriseup.co.uk/blog/something-doesnt-ad-up-google-admits-to-manipulating-its-auctions/ https://upriseup.co.uk/blog/something-doesnt-ad-up-google-ad...