The Rise and Decline of Digital Advertising

2022 was a remarkable year for digital advertisers. Post-COVID restrictions generated an advertising boom, with brands scrambling to capture pent-up consumer demand. As restrictions lifted and the world took baby steps towards normalcy, digital ad spending skyrocketed.

However, fast forward to 2023, and the scene has somewhat changed. Global economic concerns have ushered in an air of caution. Brands are now more deliberate with their ad dollars, meticulously choosing where to place them.

In a landscape where cautious spending prevails currently, one thing remains consistent: programmatic ad buying continues to dominate the digital space.

Digital Ad Trends: The Numbers

MediaRadar’s analysis of ad spending from national digital media outlets paints an intriguing picture. By Q3 2023, national digital advertising was hovering at a colossal $46 billion. Despite this impressive number, digital spending noted an 8% YoY decline from 2022.

Interestingly, this downturn is predominantly due to a slump in programmatic spending, which decreased by 13% YoY. Industries such as technology observed a significant decline in programmatic ad spend by 31% YoY, settling at $3.8 billion.

However, let’s add some context: programmatic ad investments still commanded a large share of the pie, with 74% ($35 billion) of digital spend through Q3 2023 being allocated to programmatic channels. Tailor digital ad sales by understanding which advertisers embrace ad tech along with their buying behavior.

On the flip side, digital publishers should note that direct ad spend has shown growth. Up 7% YoY, direct ad expenditures touched nearly $12 billion. Leading this uptrend are sectors like tech (increasing 7% YoY to $1.8 billion) and home furnishings, which saw a whopping 19% YoY increase, amounting to $924 million. Not to be left out, professional services also hiked their direct ad investments by 6% YoY, bringing their total to $763 million.

Top Programmatic Advertisers in 2023

A staggering 136k companies jumped aboard the programmatic bandwagon by the end of Q3 2023, buying ads for about 208k brands or product lines. This is an impressive 83% of the nearly 165k companies that opted for digital advertising during this period.

Several top companies, including industry giants like Amazon.com, Comcast, Hyundai, and Mondelez, dedicated a whopping 80% or more of their budgets to programmatic spending emphasizing its significance in today’s ad landscape. And when we delve into different advertising categories, eleven out of 27 allocated more than $1 billion solely for programmatic advertising. Leading this list are media & entertainment and retail advertisers, with over 80% of their digital ad dollars flowing programmatically. These along with apparel, food, and beauty are categories to target for ad tech sales opportunities.

However, there are always outliers. The home furnishings category, including furniture, maintenance items, and outdoor products, leaned less into programmatic channels, placing less than 60% of their digital ads through ad tech.

Looking ahead, several brands, such as Aflac, H&M, and Old Spice, seem poised to bolster their programmatic ad spending, with predicted RFPs slated for Q4.

The Future of Programmatic Advertising

The world of programmatic advertising is dynamic, and shaped by myriad external factors. While we’ve noted a YoY decrease, the resilience of ad tech remains undeniable. Companies are still betting big on programmatic, signaling its enduring relevance in the ever-evolving advertising ecosystem.

For advertisers and ad sales professionals keen on staying ahead of the curve, harnessing advertising intelligence is paramount. Ad sales professionals leveraging real-time insights and data can make informed decisions on how to target key brands for success, ensuring their sales efforts yield optimal results.

Why does it all Matter?

MediaRadar’s analysis highlights that while programmatic advertising has seen a slight decline in 2023, it still makes up the vast majority of digital ad investments. Advertisers across industries continue to lean heavily into ad tech to reach their target audiences.

For ad sales professionals, these insights indicate that programmatic channels remain crucial for prospecting new business. Focus sales outreach on categories investing heavily in ad tech like retail, media, entertainment, and apparel brands. Use real-time data to identify brands increasing their programmatic budgets.

For publishers, direct ad sales present an area of growth to capitalize on. Allocate resources to building direct relationships with advertisers in home furnishings, tech, and professional services. Develop tailored offerings to attract these brands investing more in direct channels.

The programmatic landscape will continue to evolve rapidly. By leveraging timely advertising intelligence and data, ad sellers and publishers alike can adjust strategies to drive revenue and stay ahead in 2024’s digital advertising arena.

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The number of OTT users across Netflix, Disney+, HBO Max, Hulu, and other platforms is expected to reach 4.2b by 2027.

Connected TVs (CTV) are seemingly more commonplace than toasters. As of February 2022, there were around 117mm CTV households in the U.S.

This leaves advertisers and media brands asking: Where are programmatic ads headed?

Programmatic advertising is certainly in the cards for brands, both large and small. And programmatic TV advertising continues to make headlines and big promises. 

But one thing is certain: The popularity of ads across streaming services is growing as the industry figures out measurement, inventory and growth.

By 2026, ad revenue is projected to surpass $32b.

How OTT Is Shaping Programmatic Ad Tech 

With the streaming giants’ rapid expansion — fueled by Silicon Valley’s mantra of ‘move fast and break things’ — ad tech had difficulty keeping up with the shift from traditional TV to OTT. 

Programmatic advertising fits individual web properties and Internet-native video platforms. A native ad on a publisher’s site feels natural. So do ads across major social media platforms, including Facebook, Instagram and Snapchat.

But applying the same ad tech to OTT (particularly with live programming) proved difficult. 

“Early adopters are finding that pairing digital data with connected TV and OTT ads isn’t a simple plug-and-play exercise,” wrote eMarketer’s editorial board. “Those hoping to benchmark connected TV and OTT performance against standard digital video advertising metrics are also finding this a complex task.” 

Programmatic advertisers in OTT have faced the unique challenge of translating the metrics of traditional TV and data-driving digital ads. 

According to a 2022 survey, 48% of respondents said measuring incremental reach across streaming platforms and publishers was challenging for CTV advertising. Meanwhile, 43% pointed to managing ad frequency across platforms and publishers as a hurdle.

But the challenges don’t end there.

Another survey found that 85% of respondents said they were “very” or “somewhat concerned” over ad fraud.

Buying digital ad space for OTT and CTV is still difficult, but more laser-focused DSPs have popped up to support the demand. 

“Comcast-owned FreeWheel is introducing a one-stop shop for buying commercials in these emerging forms of TV,” writes Jeanine Poggi at AdAge. “The suite of new ad products will allow buyers to access inventory from FreeWheel’s clients, which include more than 60 of some of the top TV networks and publishers that are being served on platforms like Roku, Amazon Fire, Google Chromecast and Apple TV, among others.”

Similarly, Adobe acquired TubeMogul, a DSP aimed directly at programmatic video. 

The Trade Desk, one of the world’s most popular DSPs, has also invested in CTV advertising.

TTD’s solution not only helps advertisers “maximize reach to increasingly digital audiences, wherever they’re watching,” but the company’s relationships with top networks and content providers give it an edge.

TTD also positions itself as an “all-in-one” DSP, which gives advertisers a more streamlined way to scale their CTV ads across inventory, including video, audio, native, and OOH.

It’s DSPs like these that will allow programmatic video ads built for CTV and OTT to scale in a meaningful way.

Specialized DSPs Are Expanding Opportunities for Programmatic 

But that doesn’t mean it’s suddenly a straightforward affair. 

Tal Mor is the CTO of Tremor Video, a DSP purportedly meeting these new demands. “Just because programmatic video is everywhere doesn’t mean it’s easy,” writes Mor. He says that programmatic video — and especially Connected TV or OTT — requires the right balance of ad tech to prove effective: “It requires access to the right audiences, unique targeting abilities, channel-specific inventory, reporting/optimization abilities, and fraud detection/prevention methods.” To drive this home, Mor writes that the lack of industry standards makes it particularly difficult to navigate the nuanced space. 

That said, movement in OTT services is driving growth in programmatic video ad spend.

Automation and measurement are improving.

For example, DoubleVerify launched a solution that can verify a CTV ad’s viewability, allowing advertisers to determine if an ad was actually seen. The launch marks the first viewability measurement solution to hit the market.

“As CTV impressions continue to be sold at a premium, brands need insight into which platforms and environments offer the best viewability rates,” said DoubleVerify CEO Mark Zagorski. “To that end, we’re excited to launch this first-of-its-kind solution and continue to lead in measurement and innovation for CTV buyers.”

Targeting is getting more precise.

Ad formats are innovating.

Case and point: Samsung Ads is tapping into Clinch’s ad tech platform to “deliver personalized and dynamic programmatic campaigns across FAST service Samsung TV Plus.”

Clinch CEO Oz Etzioni said, “Samsung has established an incredible global footprint, fueled in part by their commitment to providing innovative consumer experiences. Through this partnership, we are able to bring a new level of real-time personalization to millions of Samsung connected devices with superior automation and efficiency.”

Metrics and benchmarks are also catching up—and consumer demand only continues to rise, aided by increased mobile consumption.

All of this translates into scalability and a better advertising ROI. 

Mor, the DSP tech leader, writes that video-specialized DSPs have the best hope of capturing this value. Within their specialization, they can focus on ad formats and creative, inventory and execution, and (maybe most importantly) measurement. 

The benefit is clear: Reach a more engaged audience for less than it costs on traditional TV.

“OTT program producers focus on developing video programs for targeted, highly enthusiastic audiences instead of broad-based fare,” writes Barry Levine at Marketing Dive. 

Programmatic video is a natural way to take full advantage of this benefit — and DSPs are starting to meet demand. 

For more insights, sign up for MediaRadar’s blog here.

It’s not a tease, though. Google is parting ways with third-party cookies. It’s just a matter of when. As of today, third-party cookies will go away in 2024.

To make matters worse, Apple’s App Tracking Transparency feature continues to pose challenges.

Needless to say, advertisers are concerned. How can they roll out and optimize their programmatic campaigns without third-party cookies and other identifiers?

Alternative identifiers will eventually fill the void, but which ones?

Email? Probably.

Phone numbers? Yep.

Google’s Privacy Sandbox?

Absolutely.

What is the Privacy Sandbox, and what does it mean for advertisers and publishers? 

What’s Google’s Privacy Sandbox?

Google’s Privacy Sandbox is a set of APIs designed to protect user privacy while allowing publishers and advertisers to target based on interest, demographics and more. The project “consists of new APIs that will allow advertisers to show targeted ads, but without having direct access to users’ personal details, as they do now,” writes Catalin Cimpanu at ZDNet.

Using the so-called ‘Differential Privacy’ techniques that Google has employed for its internal projects, the APIs block the Chrome browser from sharing identifying data until it can be lumped in with thousands of other users’ data points. It means advertisers can still track and target but introduces a layer of anonymity. Vox calls it a tightrope walk. 

Recently, Google launched the first beta of its Privacy Sandbox on Android, allowing users and developers to test the new technology.

Anthony Chavez, Google’s vice president of Privacy Sandbox, said, “The Privacy Sandbox beta provides new APIs that are designed with privacy at the core, and don’t use identifiers that can track your activity across apps and websites.” Chavez continued, “Apps that choose to participate in the beta can use these APIs to show you relevant ads and measure their effectiveness.”

The Privacy Sandbox on Android shares similarities with Google’s Privacy Sandbox for the web, which will replace third-party cookies in Chrome when they disappear in 2024 (we think).

Understanding Ad Relevance and Impact with Google’s Privacy Sandbox

Google’s Privacy Sandbox sounds great in theory, but how does it actually work, and how will it ensure ad relevance? Going from one-to-one targeting via third-party cookies to one-to-many targeting via Privacy Sandbox certainly can’t be a good thing, right?

Let’s break down what we know about Google’s Privacy Sandbox and, more importantly, what it means for advertisers.

Showing relevant ads

Without third-party cookies, how will Google know which ad to show person X, Y, and Z?

The simple answer: Interest-based targeting via “the Privacy Sandbox privacy-preserving APIs.”

• Topics API: Topics are categories the browser concludes based on the pages you visit. For example, Topics may categorize ESPN as “sports” and The New York Times as “news.” The browser then collects a handful of topics commonly associated with the websites someone’s visited.
  
  From a high level, Privacy Sandbox is saying, “someone is interested in X website, so they may also be interested in Y website.” They’re then shared with advertisers and used to deliver relevant ads.
  
  Users can go into Chrome, see the topics they’re “linked” to and remove or disable any they don’t like. It’s like disabling third-party cookies in the post-cookie world.
  
• FLEDGE: FLEDGE addresses the constant need for remarketing, i.e., delivering ads based on what someone has looked at online in the past. Remarketing is why you often see ads “following” you online.
  
  With FLEDGE, the sites of advertisers someone visits can inform their browser that they’d like to show them ads. They can also share information with their browser, including the ads they’d like to show. Then, when someone visits a website with ad space, an algorithm informs ad delivery.
  
  Here’s a diagram that outlines FLEDGE:
  

At one point, there was FLoC, which grouped people based on their browsing patterns. However, FLoC was stopped in 2021.

Check out this article to learn more about interest-based targeting without third-party cookies.

Measuring advertising impact

Third-party cookies have been the gold standard in digital for so long because they made tracking and measurement easy. Cookies basically put a name tag on someone, followed them around online, and then said hi (with another ad) when the time was right. Guesswork wasn’t necessary; there was always a one-to-one connection between advertisers and consumers.

That’s gone, so how will Google’s Privacy Sandbox allow advertisers to measure the impact of their campaigns?

Attribution Reporting API.

Attribution Reporting API measures “when an ad click or view leads to a conversion, such as a purchase on an advertiser site.”

According to Google, the API allows for the measurement of two events linked together: an event on a publisher’s website—think a user viewing or clicking an ad—with a subsequent conversion on a website.

Here’s a breakdown:

Event-level reports link a click or view with data on the conversion side. Google says these reports help answer the question: “How can I improve my return on investment?”

Summary reports aren’t tied to a specific event on the ad side but offer richer conversion data than event-level reports. Google says these reports help answer the question: “What is my return on investment?”

Looking Ahead to a Better Internet and More Thoughtful Advertising

Third-party cookies aren’t the enemy. They never were.

At their core, third-party cookies facilitated the fundamental value exchange on which the internet was built: you see ads in exchange for (most of the time) free content.

Third-party cookies are powerful, turning many people off from targeted advertising over time. It’s why most people go out of their way to avoid ads via ad blockers, skipping, or paying for ad-free services.

Six months before Google announced the initiative, a Think with Google blog positioned the idea behind the sandbox project. “When you work in digital advertising, it’s easy to forget what it’s like to be an average internet user,” Global Product Strategy Lead Kelsey LeBeau wrote. “But when you take a step back and experience the web as most people do, you begin to understand why so many people employ ad blockers.” 

Misconceptions aside, third-party cookies are on their way out, and advertisers will immediately need an alternative way to deliver, optimize, and measure their campaigns across the addressable internet.

Google’s Privacy Sandbox could be one of those ways.

The Privacy Sandbox is among the first steps “in exploring how to address the measurement needs of the advertiser without letting the advertiser track a specific user across sites.” Google is the king of ad tech — if the Privacy Sandbox threatened advertiser reach or ability to target (or ad revenue) in any way, you can rest assured they wouldn’t move forward. Instead, it seems to be a way to address consumer concerns with privacy. 

If the philosophy behind the project is sound, a Privacy Sandbox across browsers won’t mean a decrease in revenue for publishers or the nullification of targeting for advertisers. Google seems to think it simply means users will be less likely to use ad blockers. 

For more of a developer view on Google’s Privacy Sandbox project, you can check out its series of explainers designed to encourage commentary from the web community. 

For more insights, sign up for MediaRadar’s blog here.

Ad spending on the medium was up and podcasts became a big topic at Digital Content Next.

Better yet, Midroll Media found that 6 out of 10 podcast listeners purchase based on the ads they hear on their favorite shows. The power of podcast ads was becoming crystal clear.

Today, podcasts and their ads are shining even brighter. A 2022 study found that 38% of the U.S. listened to a podcast in the past month, more than 3x the share recorded a decade earlier.

Advertisers have responded. Podcast ad revenue was expected to reach $2 billion in 2022 and $4 billion by 2024.

What feeds this advertising format?

Their very nature. Many podcast ads are the audio equivalent of native ads, which we know perform well.

Traditionally, host-read ads have attracted the most attention, but they may have to make way for their programmatic counterparts as advertisers seek more efficiency and performance from the format.

The question is: How, exactly, do podcasts connect to programmatic tech? 

Programmatic Podcast Ads: What We (Don’t) Know

The conversation surrounding programmatic podcast ads is more complicated than anyone would like. 

Case and point: AdExchanger featured two apparently contradictory articles.

One focuses on how programmatic audio took off. The other argued we shouldn’t expect programmatic ads for podcasts just yet. 

“As the podcast industry gained steam, it also overcame some technical hurdles,” writes Alison Weissbrot. “As for programmatic, the buying method is still nascent in podcasting but the technology is advancing.”

By way of evidence, Weissbrot points to Panoply’s new programmatic marketplace, Acast’s $35M Series C funding designed to move programmatic forward, and NPR’s foray into listener metrics. 

In a phrase, the state of programmatic podcast advertising was still uncertain—and it still is.

According to a Digiday article published in 2023, advertisers are hesitant to buy programmatic podcast ads.  

Why? They still love host-read ads, and programmatic technology strips their ability to vet the corresponding content before the ad goes live, i.e., they don’t know where their ad will play.

That said, the downfall of third-party cookies could put a premium on podcast ads as advertisers look for equally effective ways to reach consumers with targeted ads. As that happens, players rolling out programmatic podcast ad tech will have to evolve quickly to meet the rising expectations.

How Podcasts Move Programmatic Tech Forward

The success of programmatic podcast ads revolves around one thing: The technology’s ability to keep up. Advertisers big and small have come to trust programmatic technology elsewhere, which is why ad spending via programmatic means continues to rise.

Programmatic podcast advertising may reach that point, but it must prove itself first.

“The tech infrastructure that underlies much of digital ad buying wasn’t really made for audio,” Ross Benes writes at eMarketer. “The ad industry’s most popular ad servers and ad exchanges were originally designed for display. To ensure that their ad insertions aren’t too clunky, audio streaming platforms have had to build a lot of their ad tech themselves.”

According to some, the tech is coming.

“Standardized measurement will come,” one Spotify automation lead told The Drum. “If you look at video, there are a lot of verification technologies out there. None of these have a metric for audio, yet. As adoption grows and expands, those layers of verification and development will expand.” 

Which brings us to our second question: Have podcasts affected advances in programmatic tech? 

For their part, Pandora, Apple, and Spotify have dipped their toes into programmatic podcast advertising. Pandora even opened its ad inventory for programmatic buying partway through last year. 

More recently, Pandora announced that it reorganized into a cross-platform ad sales team that combines SiriusXM, Pandora and Stitcher.

Lizzie Widhelm, SVP of ad innovation and B2B marketing at SXM Media, said, “We can take the exclusive content we have from Sirius to build new shows, use Stitcher to find new audiences and monetize in a way that makes sense for the intimacy of the podcast medium.” 

Meanwhile, Spoify’s ad business is booming.

Despite the hesitation, it’s clear that advertisers are warming up to programmatic podcast ads. As the technology grows stronger and advertisers learn to trust it—like elsewhere in the programmatic world—the sentiment will warm even more.

For more insights, sign up for MediaRadar’s blog here.

That’s not the case.

After all this time, new ad technology is still rolling off the conveyor belt of innovation to help advertisers make the most of their digital ad dollars.

Supply path optimization (SPO) falls into that bucket.

What is SPO, and why is it a game changer for programmatic advertisers?

This article answers both of those questions.

What Is Supply Path Optimization (SPO)? 

Supply path optimization, or SPO, reduces the redundancies and intermediaries between advertisers and publishers.

Supply path optimization is “understanding who is touching your inventory and [removing] as many touches as you possibly can,” said Prebid President Mike Racic.

In the simplest terms, SPO ensures media buyers purchase ads at the best price while allowing publishers to maximize revenue, both of which are increasingly top-of-mind for media buyers and publishers as they fend off the down economy.

Jounce Media Founder and President Chris Kane said, “SPO is really just making deliberate choices about which auctions to participate in and which ones to ignore.”

Where Did SPO Come From?

Almost paradoxically, the impetus behind this new form of optimization is a decrease in ad tech investments. 

AdWeek reports that the ambiguity surrounding future ad tech legislation is causing many venture capitalists to place their funding elsewhere.

“Whatever funding is left in the ad-tech ecosystem is being snapped up by an increasing array of middlemen seeking to get their share of the multibillion-dollar digital ad market,” the article points out. “In an attempt to bring some sort of transparency, we’re now seeing advertisers become a bit more choosy about partners, using SPO to slim down the number of supply-side platforms they work with.”

In other words, the multiplex of supply side platforms (SSPs) and demand side platforms (DSPs) is getting crowded.

As a result, advertisers must determine which platforms are worth getting onto and which make sense to pull out of. At the same time, publishers work toward increasing ad revenue. 

“With thousands of ad-tech middlemen littering the landscape and seemingly more entering daily, marketers are quickly realizing the need to be smarter about the outfits they partner with,” writes Shoshana Wodinsky for AdWeek. “Enter supply-path optimization, or SPO, which translates to cutting through the clutter between media buyers and the publishers they work with.”

What role does header bidding play?

Header bidding is a programmatic technique that allows publishers to offer ad inventory to more than one ad exchange at once before making the call to ad servers. By allowing multiple bids at the same time, publishers make more money.

Yieldbot CEO, Jonathan Mendex, said, “Header bidding is a much cleaner and better tech integration between revenue partners, ad tech companies and publishers compared to what’s going on currently.”

While leveling the playing field was necessary, it created a new problem: DSPs receive multiple bids for the same ad impressions. As a result, they had to pick a “path” without losing the inventory.

Enter supply path optimization.

Now, media buyers can pinpoint the best—and most profitable—path for their ads.

What Are the Benefits of SPO?

For those pushing SPO, it’s meant to benefit publishers by giving them an avenue for better, more efficient advertising relationships and benefit advertisers by decreasing spending in unnecessary areas.

Considering at least 50% of every dollar spent in digital channels now goes to intermediaries rather than publishers, according to three studies, it seems there is a lot to optimize. 

An article from Forbes summarizes the challenge nicely: “In what other industry would customers be OK paying a 50% tax on goods and services, and on top of that be at risk of money simply gone missing?”

To push for transparency isn’t exactly scaring away SSPs, either.

Adam Soroca, the Head of Global Buyer Team at Rubicon Project (an ad network), writes that “the recent transparency movement stands to build buyer confidence through curating efficient, transparent programmatic partnerships while establishing clear industry benchmarks.”

The 3 benefits of SPO

• Cost: SPO pulls back the curtain and gives buyers a glimpse into the fees of different SSPs. It also improves the efficiency and effectiveness of the auctions, which translates to higher-performing ads for a better price.
• Insights: Eliminating the unnecessary complexity from auctions gives media buyers a better vantage point into performance, which they can use to improve future campaigns.
• Control: SPO largely eliminates the fraud that comes with the “old way” of buying ads, ensuring a brand’s ad only shows up in tandem with websites they want to be associated with. The simplicity of SPO also increases accountability and rewards partners acting in advertisers’ best interests.

The primary factors that go into an SPO-based decision are inventory quality, the scale of advertising, pricing, audience, and the mechanics of the auction platform. It’s a perfect combination that will continue to catch the attention of advertisers.

SPO: A Move in the Best Interest of Programmatic Advertising

Programmatic advertising’s meteoric rise has been nothing short of remarkable.

Between 2017 and 2021, programmatic ad spending increased by more than 122%. Despite an expected slowdown in spending this year, largely due to the economy, by 2027, spending is expected to reach more than $700b.

The growth lends light to programmatic’s efficacy but also points to the need for ad tech players to constantly improve. SPO isn’t exactly new, but it’s the perfect example of the industry working together in the best interest of everyone involved.

For more insights, sign up for MediaRadar’s blog here.

The former answers a brand’s need to speak personally and authoritatively to its audience. The latter allows rapidly expanding brands to reach a huge demographic while still targeting interest (although targeting will be tricky without third-party cookies).

One is almost always in a natural format, while the other traditionally take the form of banner and PPC ads. 

These two formats are not diametrically opposed but seem to address different needs. But as ad networks expand and programmatic capabilities advance, the line between programmatic and direct ads blurs, opening the opportunity for native ads to join the programmatic bandwagon. 

What Is Native Advertising?

Native advertising is paid content that matches the look and feel of the unique environment in which they’re delivered. Native ads feel natural and aren’t jarring. Nearly every online ecosystem offers native ads, including social media and YouTube. That said, the ad format is making its way offline as advertisers look to escape the crowded online world and rising prices.

Why Are Programmatic Native Ads So Popular?

Native advertising spending increased by 37% in 2021 and is expected to reach $98.59b in 2023.

These numbers make it clear that programmatic native ads are popular.  

But why are native ads on the rise, and what do they offer brands?

The short answer: They just work.

According to Outbrain, 68% of consumers trust native ads seen in an editorial context, compared to 55% for social ads. Meanwhile, native ads generate an 18% boost in purchase intent, which is music to all advertisers, especially those in DTC who rely heavily on their online presence.

The longer (but not super long) answer: People don’t mind native ads. In fact, Outbrain found that native ads are the least intrusive form of advertising.

In the past, brands have had valid concerns about programmatic ads translating into a poor fit or a risk to brand safety. YouTube has been in the headlines in the past for brand safety-related concerns.

In 2017, AT&T and Johnson & Johnson pulled ads from YouTube and Google after news reports showed their ads running next to offensive content.

In 2019, Procter & Gamble warned digital media companies that they need “a rethink of their ecosystem to build in quality, civility, transparency, privacy and control or risk major brands stepping back from advertising.”

Google’s president of EMEA business & operations, Matt Brittin, responded by saying, “In the context of brand safety, we’ve seen some of the bigger advertisers pull back spend while they understand what’s there and make sure they do the right thing. And we recommend that where they have concerns about it.

“We take the responsibility very seriously, we’re in it for the long term. Any advertiser who wants to think about what they’re doing differently, we support them in doing that.”

Google and other major advertising ecosystems have taken the responsibility seriously.

In 2021, Google became the first digital platform to receive content-level brand safety accreditation from the Media Rating Council (MRC). It received the same accreditation again in 2022, making YouTube the only platform to hold this distinction.

Similarly, Meta has gone to great lengths to address safety concerns on Facebook and Instagram by showing brands exactly where their ads appear.

But the pros are starting to outweigh the cons. 

The approach offers two major benefits for advertisers: cost-effectiveness and better targeting. 

Programmatic native ads are more cost-effective because they automate an otherwise time-consuming process and result in higher-converting ads. One study shows native ads have a click-through rate (CTR) 8.8x greater than display ads.

“Doing native ads programmatically means you get many of the benefits of programmatic display: automated media buying, effective targeting and audience insights for further optimization,” writes Grace Kaye at Marketing Land. 

The higher conversion is often due to combining the power of contextual and native ads; users not only see highly relevant ads, but they see them next to highly relevant content.

“Programmatic adds more power to native ads by leveraging machine learning and contextual signals to customize them according to user preferences and placing them at appropriate places,” writes Vandita Grover at MarTech Advisor. 

Here’s a good example of a native ad from Visit Portugal:

Why’s it a good example?

Because someone looking at flights to Portugal on Skyscanner clearly has some intention of visiting the country. Therefore, an ad from Visit Portugal makes all the sense in the world. It’s natural and highly relevant to the page.

Native ads already reached more qualified leads, particularly when placed with niche publications. With advancing ad tech, that reach can become more expansive and targeted. 

Top native advertising platforms

• Outbrain: Outbrain is arguably the most established native placement platform, making 275 billion monthly recommendations and covering 80 percent of the “world’s premium publishers.” 
• Nativo: Nativo offers Dynamic Creative optimization and A/B testing to ensure native ads are well-placed. Major brands — from Walmart to Disney — are using the platform. 
• Taboola: The platform has agreements with MSN, Business Insider, Fox News, and many digital properties. Their goal is to make brands the next story on the page “in moments when people are looking for something new.” 

Other popular native advertising platforms include TripleLift, Yahoo Gemini, and RevContent.

Native Ads: An Advertiser’s BFF

The downfall of third-party cookies and the rise of other privacy-focused initiatives have made one abundantly clear: People are tired of the current state of advertising.

That said, most people don’t dislike ads simply because. In reality, most people want to distance themselves from ads because they’re intrusive and don’t add value to their lives.

In 2023 and beyond, advertisers who can make the most natural, authentic, and meaningful connection with consumers will win (and get the most ad engagement).

Natural, authentic, and meaningful are three characteristics at the heart of native advertising.

For more insights, sign up for MediaRadar’s blog here.

Now, it’s a major contender in the streaming wars.

How will the tech-turned-everything company approach programmatic advertising?

In 2013, Digiday called Amazon the ‘sleeping giant’ of media. Now, it seems, the giant has awakened.

In this post, we’re talking about Amazon, the media company, not necessarily Amazon, the eCommerce platform.

Amazon has slowly transformed into a media company, replete with the Fire Stick, Kindle Fire, Amazon Prime, and owned and operated sites like IMDb.com.

What has Amazon done with this owned content, and where is it going?

Amazon, the Third Largest Ad Platform in the US

Now firmly established as a media company, Amazon has quickly increased its advertising game.

“For more than a year now there’s been a steady murmur about Amazon’s encroachment on the territory of the Facebook-Google duopoly,” writes Nicole Perrin in a report for eMarketer.

But Amazon is slowly taking a piece of that total digital ad spend, percentage point by percentage point.

In 2018, Amazon accounted for 4.1 percent of all digital ad spending in the U.S.

In 2021, Amazon was expected to account for 8 percent of the digital advertising revenue; by 2026, that number will reach 13 percent.

It doesn’t sound like much, but it makes Amazon the third-largest programmatic ad platform in the U.S., behind Google and Facebook. In 2021, Google, Amazon, and Facebook accounted for 64% of all US ad spending.

Amazon isn’t exactly new to the programmatic advertising environment. Kindles have been around for a decade, and Amazon has offered sponsored spots at the top of its results pages for at least as long.

But the company has made critical changes to how it approaches programmatic advertising—changes that may contribute to making it a bigger player.

Amazon’s advertising business grew by 19% in Q4 2022, while Google and Meta saw ad revenue slow. That said, Facebook still beat estimates in Q4.

The growth is particularly impressive given the recession and financial anxiety many people are experiencing. But it does highlight the premium advertisers are putting on retail media networks and where they’ll fit into media mixes for years to come.

Where Is Amazon Going With Programmatic Advertising?

The ‘first steps’ in doubling down on programmatic advertising came in September 2018, when Amazon consolidated its advertising offerings.

Before, advertisers had to navigate Amazon Marketing Services (the full suit of CPC ad formats), Amazon Media Group (the unit that sold display ads on Amazon devices and properties) and the programmatic advertising platform itself. Now, these are all operated under one roof as Amazon Advertising.

“We’ve unified our product offerings under the name ‘Amazon Advertising,’” said Paul Kotas, SVP of Amazon Advertising. “This is another step towards our goal of providing advertising solutions that are simple and intuitive for the hundreds of thousands of advertisers who use our products to help grow their business.”

With simplification and accessibility as the goal, Amazon offers five features in one console:

• Sponsored Products specifically for the eCommerce platform
• Display ads for both Amazon and third-party sites
• Video ads for Amazon devices and properties like IMDb
• Amazon Stores to create branded stores
• Amazon DSP for CPC bids and monitoring

What does this mean for Amazon’s expansion into the programmatic advertising market?

Garett Sloane at AdAge writes that while there won’t be a major difference in the status of Google and Facebook as a duopoly, there will be a differential in what Amazon offers. “No other major platform is so plugged into what consumers buy,” Sloane writes. “Amazon doesn’t need to close the loop from ad to sale by reading uncertain data about when a person saw an online ad and when that led to an actual purchase. Amazon is the loop.”

That difference means Amazon will continue strengthening its impact on the programmatic advertising market. And it will certainly change what, why and how advertisers buy on a programmatic platform.

Retail Media Is the Future

Amazon isn’t just walking on Google and Facebook’s hallowed ground. It’s also ushering in a new era of advertising: retail media.

According to WPP’s GroupM, retail media represents 10.7% of global ad spending and is expected to grow 60% by 2027. The growth is staggering, but it makes sense.

Retail media networks give advertisers instant access to shopper-level data they can use to hyper-target consumers. For example, advertisers for Colgate could target Amazon shoppers who’ve bought a competitor’s product in the past 30 days.

That level of precision would catch the attention of advertisers under normal circumstances. Still, given the impending demise of third-party cookies and Apple’s App Tracking Transparency, the value increases exponentially.

As retail media continues to go mainstream, Amazon will evolve.

At the same time, other retailers looking to get a piece of the pie will invest. Walmart and Target are prime examples.

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Demand side platforms (DSPs) get confused with data management platforms (DMPs), programmatic deals get mixed up, and waterfalling is unique from any other form of advertising.

With the pandemic and new legislation, programmatic continues to evolve. 

To break down the programmatic process and make it as digestible as possible, we have compiled a list of definitions to take with you moving forward.

Here is our brief glossary for programmatic advertising, explained:

1. Ad Exchange

An ad exchange is a digital marketplace where publishers and brands can buy and sell ad inventory. Mostly used for video, display, and mobile placements, ad exchanges hold real-time auctions, collecting bids from brands that want a specified ad placement.

Whether in the traditional process of waterfalling or header bidding, ad exchanges make filling ad inventory more efficient and easier for buyers and sellers.

A few of the most popular ad exchanges include Google Ad Exchange, AppNexus, Rubicon Project, and Verizon Media.

2. Ad Inventory

Ad inventory is the available ad space a publisher can sell to advertisers.

In a general sense, inventory is a stock of goods a business holds to eventually be sold.

Ad inventory is the same, simply less tangible than what most of us think of when considering inventory.

Whereas an auto parts store stocks brake pads, rotors, oil, and headlights as inventory, publishers stock display, mobile, and video ad space as inventory.

3. Ad Network 

An ad network is a company that connects advertisers to websites that host advertisements. It serves as an aggregation of ad supply and demand.

Essentially, ad networks help advertisers buy space across publishers. Online ad networks developed in the ‘90s but have developed since. Snapchat, for example, created its own ad network.

4. Ad Server

An ad server is a digital technology that serves advertisements to website visitors.

In the programmatic ad buying process, the ad server works as a mediator between ad exchanges holding auctions for advertisers and a web page with open ad placement.

The server communicates with exchanges to find a brand, then serves that brand’s advertisement on the given web page.

5. Ad Space

Ad space can be considered the spots on a webpage where an advertisement can be placed.

On a web page, ad space can typically be found in the header/footer areas, in the sidebar, within the content itself, and so on.

Publishers often host many web pages, thus allowing them to offer a great deal of ad space. All of that ad space combined is what makes up their ad inventory.

6. Attribution

With attribution, advertisers can see where their incoming traffic is coming from. For brands advertising with PPC, social media, display ads on publications and more, attribution becomes important for figuring out which channels have the biggest impact.

Selling an ad to a brand may just be part of their larger digital campaign — and they need a way to determine the touchpoints of the campaign and the impact that each touchpoint has. This is typically achieved with tags embedded in the display ad.

7. Audience Extension

One of the most appealing elements of ad networks and demand-side platforms is the ability for brands to follow their audience from one site to another.

Audience extension and its cousin retargeting are what allow brands to offer highly targeted, personalized ads to their audience not only based on demographics but also browsing behavior.

It also allows advertisers to retarget consumers when they bounce from site to site.

8. A/B Testing

Since programmatic ads are built digitally, brands have the ability to test the efficacy not only of an entire campaign or advertising channel but also of each creative that they put to use.

A/B testing is an automated comparison of different ad versions to determine which performs best. In many cases, the higher-performing ad will be automatically prioritized.

9. Behavioral Targeting 

This refers to sending advertisements to consumers or buyers based on their behavior across the web (i.e., pages visited, content viewed, searches, and purchases). As cookies are phased out, this type of targeting will likely rely on an open-source ad ID framework. 

10. Blacklisting or Blocklisting

Blackslists allow brands to block advertisements from being placed near certain keywords, topics or domains. This helps ensure brand safety—though publishers, especially reputable news sources, say it’s detrimental to journalism.

Vice adopted the term ‘blocklisting’ because “blacklisting” and “whitelisting” carries racial undertones. 

11. CCPA

The California Consumer Privacy Act (CCPA) was enacted in 2018 but took effect on January 1, 2020. The law is designed to limit the way publishers collect and use consumer data, giving users the ability to opt out of data collection. The vague wording of the CCPA means publishers have addressed compliance in disparate ways, and AdWeek reports that the effect of the law remains to be seen.

12. Container

Also referred to as a “wrapper,” a header bidding container is a technology used to make communication with header bidding partners easier and make the header bidding process less disruptive for websites.

The container minimizes the code needed in the process of header bidding.

Instead of individual lines of code needing to be added for each demand source, the container allows for a single line of code to be added.

As demand sources come and go, only the container needs to be updated, not the entire webpage. It is a way to make sure that website load times are not affected by the automated process of header bidding.

13. Contextual Targeting

Instead of (or in addition to) targeting ads based on browsing behavior or demographics, contextual advertising automatically places different ads on pages based on the page’s content.

A travel publication, for example, may offer the ability to automatically display ad creatives related to a specific destination as a consumer is viewing the page. The text- or image-based ad is typically dependent on the keyword related to the page.

14. CPM (Cost Per Thousand Impressions)

CPM is a way to measure the cost-effectiveness of ad space. It is typically the cost accrued by an advertiser per 1000 viewer impressions of an online advertisement.

CPM represents what advertisers are willing to pay for certain ad space. For publishers, higher CPMs represent more valuable ad space.

Cost Per Click (CPM), in comparison, is typically used for PPC search ads, but it can still be a viable pricing model for programmatic display ads as well.

15. CPRA 

The California Privacy Rights Act (CPRA) was passed in November 2020. Strengthening the original CCPA “allows consumers to prevent businesses from sharing personal information, correct inaccurate personal information and limit businesses’ use of sensitive personal information including precise geolocation, race, ethnicity and health information.”

Instead of placing the responsibility on consumers to opt out, businesses are now held more responsible by minimizing data collection and protecting data security. Businesses will also be held more accountable to regulators with more required risk and cybersecurity audits.

16. First-, Second- and Third-Party Data

First-party data is offered by publications as information gathered on their viewers or customers first-hand — through a CRM, website analytics, and cookies.

Second-party data is essentially someone else’s first-party data. The key difference of this type of data is that it does not come directly from the publication. Second-party data, on the other hand, is purchased directly from the company that owns it.

Third-party data is aggregated from several sources. Unlike second-party data, it is not bought directly from a company selling its own data. Instead, third-party data comes from huge data aggregators that purchase first-party data from many publishers and other data owners.

Third-party data is, of course, the data type at the heart of Google’s announcement to sunset third-party cookies in 2024.

17. Data Management Platform

A DMP is what keeps programmatic advertising offerings and campaigns organized. Brands and publishers alike can use the platform to, well, manage data.

Brands typically use DMPs to track campaigns with first-party data and integrate it with third-party data so that onsite and audience extension activities are coordinated.

Publishers typically use DMPs to organize in-house data about users that can then be packaged into audience segments for brands.

18. Demand-Side Platform

A demand-side platform is a technology that automates media buying for advertisers.

DSPs enable ad buyers to communicate with ad exchanges, allowing them to automatically place bids on the ad space they desire. It is a web-based manager for advertisers to find available ad space.

Amazon, for example, has its own DSP. Our post on the unveiling of Amazon Advertising goes into more detail about the uses of a DSP and how it interacts with other facets of the programmatic landscape. Other popular DSPs include DV360, MediaMath, and The Trade Desk.

19. GDPR 

The General Data Protection Regulation (GDPR) is an EU law focused on consumer privacy and personal data in and out of Europe. At its core, GDPR sets standards for protecting consumer data, and companies share data with other publishers. The law also requires consent for collecting cookies, which is why we started seeing “Accept Cookies” banners pop up in 2018.

20. Header Bidding

Header bidding refers to a specific process of how programmatic advertising is executed.

It is one of the latest advancements in programmatic, making the process even more efficient by considering multiple bids simultaneously and considering pre-existing direct buys alongside programmatic buys.

By letting multiple advertisers bid on placements at the same time, publishers can truly maximize the value of their ad inventory while letting less inventory go to waste.

21. Native Programmatic

Programmatic delivers ads that matched the look, feel, and function of the media format in which they were placed. Native programmatic advertising offers the benefits of both native and programmatic. Native advertising is a non-interruptive format for the user experience. Programmatic takes place when the ad is purchased and delivered using real-time bidding via a DSP.

22. Price Floor

In programmatic advertising, the price floor is the minimum price set for any ad placement.

This is a way for publishers to non-directly negotiate with advertisers. Publishers ensure a minimum return on purchased ad space by setting a price floor. No ad will be placed programmatically unless it meets or exceeds the price floor.

23. Programmatic Direct

Programmatic direct is a way for ad buyers and sellers to automate direct ad buys.

In programmatic direct, there is no bidding for ad placements. There are fixed pieces of inventory being sold for fixed prices. But each deal is executed programmatically.

It is essentially the middle ground between direct, human-based ad buying and the completely automated processes of waterfalling and header bidding.

24. Programmatic Podcast Ads

Programmatic podcast ads make ads personalized for specific audiences—based on location, weather, and demographics. A few specialized companies are leading the charge in developing programmatic advertising for podcasts, namely Audry. This type of advertising is still in its infancy but already demonstrates many advantages, including scalability, better attribution data, and improved audience relevance.

That said, advertisers remain hesitant about programmatic podcast ads due to the premium they still place on host-read ads and their desire to vet the content before the ad goes live.

25. Programmatic Video

Programmatic video refers to video advertisements placed programmatically. Advertisers can choose from a variety of options, including in-stream video, pre-roll videos, mid-roll videos, post-roll videos, out-stream video, and in-display videos.

26. Responsive Voice Ads

Adding an interactive element to ads served over streaming services, responsive voice ads let advertisers engage with consumers in a new way. For example, brands can ask a ‘yes’ or ‘no’ question offering more information if prompted.

Pandora launched a test of their interactive audio ads late in 2019, with brands like Wendy’s asking if consumers are hungry. So far, other platforms have hesitated to embrace responsive voice ads due to consumer sensitivity concerns. 

27. SameSite Tag 

In 2024, Google Chrome will block third-party cookies automatically. But developers have the option of using a SameSite tag to allow limited cookie sharing in their network. Check out our blog post on Google’s privacy updates for more info. Google also introduced the concept of a Privacy Sandbox for ad tech last year.

28. Streaming Ad Insertion 

Audio ads for music and podcast platforms are nothing new. But now Spotify is expanding, bridging podcast advertising with ad tech with its Streaming Ad Insertion technology. The development brings Spotify a step closer to becoming a podcast ad network.

According to the company, Spotify Podcast Ads “offer the intimacy and quality of traditional podcast ads with the precision and transparency of modern-day digital marketing.”

29. Supply Path Optimization 

Logistics has Supply Chain Optimization, and ad tech has Supply Path Optimization (SPO). With SPO, advertisers can make their advertising dollars go further by getting better insight into how SSPs use their fees, which SSPs provide the best value, and where they can cut down on overlap.

As the SSP PubMatic puts it, SPO is “really just the process of reducing the number of intermediaries until each is adding value.”

30. Supply-Side Platform (SSP)

A supply-side platform is very similar to a demand-side platform, except instead of being on the buyer’s side of the transaction, it is on the seller’s side. DSPs would aid advertisers, while SSPs would aid publishers.

An SSP is a way for publishers to automate the filling of their ad inventory. The SSP interacts with ad servers to find advertisers; it is a publisher’s automated inventory manager.

31. Unified ID 2.0

Google is getting rid of third-party cookies from Chrome in 2024, and Apple made its Identifier For Advertisers (IDFA) optional for consumers with iOS 14.

As the advertising industry prepares for an internet without cookies, leaders like The Trade Desk, IAB, LiveRamp, Criteo, and Nielsen partnered to create Unified ID 2.0, a new way of approaching identity online. 

This open-sourced ID framework will use encrypted emails to identify users. It will also be independently governed and allow consumers to opt-in or out, giving them an easy way to control their privacy preferences.

32. Waterfalling

Waterfalling is the name for the traditional process of how programmatic advertising is carried out.

In this process, when a web page is loaded, a request gets sent to an ad server, and that server reaches out to ad exchanges to discover bids made for a single ad placement.

Bids are considered one at a time, sequentially, thus not always gaining the highest possible return for publishers. This process was a breakthrough initially but left the door open for further advancements – header bidding, the prime example.

Programmatic Advertising Explained: Build, Test, Tweak

Media buyers with a good portion of their ad spend dedicated to programmatic advertising expect the a la carte ability to build out their creatives as they see fit, test the results of display ads in real-time, and make tweaks quickly and easily.

“It takes more than just money to make a success of programmatic advertising and relies on brands optimizing their campaigns to get the most for their money,” writes Emily Atkinson at Ve, a digital ad agency.

While this list of programmatic advertising terms does not cover the entirety of the advertising avenue, it will definitely help further your understanding of the process.

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In our previous posts, we simplified the process of programmatic advertising.

We covered the process of waterfalling and moved through the innovation of header bidding.

After reading our previous posts, you might think: “All of this talk of price floors… But how do I know what my price floor should actually be?”

That’s an important question. 

Header bidding is innovative, but only if publishers can implement it correctly and maximize their return.

To do that, they need to understand the price floor, why it’s important, and, most importantly, how to set the right one for their ad inventory.

What Does Price Floor Mean?

A price floor is the lowest price or cost per impression (CPM) for which an ad can be sold via an ad exchange. A price floor ensures advertisers can’t purchase ads below their value and ensures publishers can generate revenue from their available real estate.

A price floor in advertising is similar to a minimum wage in that someone cannot be paid below the legal amount determined by the state and federal government.

How to Set a Price Floor for Your Ad Inventory

Setting your price floor is one of the most difficult parts of implementing header bidding, i.e., a programmatic technique allowing publishers to offer ad inventory to multiple ad exchanges before making the call to ad servers.

It can be difficult because they’re deciding their worth, which is not a comment on existentialism but ad inventory.

The best way to start is to observe their peers (remember… ad inventory…).

Study the publishers most closely related. 

What are they charging for their ad space?

It may seem obvious, but price floors vary across different audience demographics as well as the inventory itself, so it’s important to use competitor numbers to stay within realistic parameters.

For example, a high-impact ad at the top of the page will likely warrant a higher price floor than an ad in the sidebar or at the bottom.

It’s also important to use competitor numbers to avoid undervaluing the inventory. This will also help publishers determine if they increase their price floor. With publisher ad revenue going down, undervaluing their inventory is a strategic—albeit unintended—mistake that can cost publishers millions.

Determining the price floor means determining the value of the audience.

As advertisers continue to seek more targeted audiences, the ad space in front of audiences becomes more valuable. This means that publishers with niche, hyper-targeted audiences can charge a premium for their ad inventory.

For example, a niche gaming website would likely attract droves gaming advertisers willing to deal with a higher price floor than they would on a more generalized website that doesn’t align as well with their audience.

That said, a big publisher—think The New York Times—can set a high price floor simply due to its reach and authority; advertisers know they’re paying a premium, but they’re willing to do so to reach millions of active readers.

So then, how can publishers use that competitor data to create the optimal price floor?

Consider the following example for a Regional News Website:

First, see what type of ads are being sold by the competitors, e.g., 728×90, 320×50, etc.

For each type of ad, publishers should observe the internet-wide average CPM and compare it to their competitor’s average CPM.

The answer lies in the difference between those numbers.

For a publisher looking at this data, it’s easy to see the others in their demographic are undervaluing their ad inventory, with average CPMs much lower than the internet-wide CPMs for the same ad units.

Let’s get a little more specific.

For a 300 x 600 ad unit, the internet-wide average CPM is $1.95. For Local News, however, the average CPM sits at $1.36. That’s a difference of $0.59.

In this case, local news networks are leaving extra returns on the table because they’re undervaluing the audience they can offer advertisers.

In studying this, however, publishers now know to raise their price floor to meet the value of their regional, niche audience, which can increase CPMs and weed out unsavory advertisers.

Size Does Not Equal Value

For publishers, it’s important to never think of their site as “small.”

A small audience does not mean inventory loses value; think of a small audience as simply being more specific.

Brands greatly value regional and niche audiences, like local news websites, because for many of them, more specific audiences are better, safer places to advertise. The latter is particularly top of mind, given ongoing concerns related to privacy and brand safety.

Ultimately, setting the price floor is always a guessing game—and even though there may be a certain number in mind, optimizing the price floor to create the most returns over time is always the most important.

Price floors can always be adjusted, so it’s not the end of the world if publishers miscalculate their price at some point.

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If brands don’t want ads, the supply—even if it’s the best—means nothing. (Ads are almost always in high demand, but the down economy, ongoing privacy concerns, and downfall of third-party cookies are scaring some brands away.)

It’s why print publishers are moving digital, online publishers had to get creative after display ad prices dropped (enter branded content studios), and now SSPs are courting advertisers. 

“Brands are the belles of the ball,” writes Seb Joseph at Digiday. “Ever since header bidding made a single impression available through multiple exchanges, SSPs are no longer exclusively in the business of trying to wring the most money from every impression for publishers. Now, they’re trying to run a two-sided marketplace where the most successful SSPs are the ones buyers trust enough to spend more of their money with them over their rivals.”

In other words, SSPs are no longer ‘just another’ programmatic player: They offer bid transparency that brands are typically unable to glean through DSPs alone. 

What Are Supply Side Platforms (SSPs)?

Supply-side platforms (SSPs) connect publishers to demand sources (DSPs), allowing publishers to aggregate, consolidate, and manage the demand for their ad inventory.

Supply-side platforms (SSPs) vs. demand-side platforms (DSPs)

SSPs are for publishers—they allow them to sell their ad inventory. On the other hand, demand-side platforms or DSPs allow advertisers to buy this inventory. The most well-known DSPs include MediaMath, Amazon DSP, and Google Marketing Platform.

Why Are SSPs Prioritizing Demand?

This brings us to an op-ed from Chip Schenck, SVP of data and programmatic solutions at Meredith Corp (the publisher that sold the IP to Sports Illustrated and acquired Time). 

“In the ad tech supply chain, supply-side platforms (SSPs) have traditionally served as a proxy for the publisher, helping manage ad network yield and real-time bidding (RTB) as a true partner to publishers,” writes Schenck. “However, amid recent market changes such as consolidation, commoditization and pressure to grow, SSPs have started looking more like something else entirely: Exchanges that are driven by buy-side requirements. They have been leaning into demand-side needs at the risk of abandoning their core publisher clients in the process.”

Not convinced? Yahoo shut down its SSP in February 2023 to focus on its DSP.

Yahoo CEO Jim Lanzone said, “It’s really about narrowing our focus on the piece of ad tech we do best, which is our DSP [and] not spreading our resources too thinly across every part of the stack.” He went on to say that Yahoo will refine the scope of its DSP to “focus on the premium side of the market, Fortune 500 companies and top agencies instead of the long tail of advertisers.”

Even more telling: EMX filed for bankruptcy in February 2023, while Magnite let go of 6% of its workforce.

SSPs Aren’t Going Away

There’s no denying that many SSPs are shifting their focus on demand due to the commoditization of the technology and intense economic headwinds, but they aren’t going away.

While times are tough—PubMatic saw its revenue drop by 1.7% in Q4 2022—industry players are bullish.

A recent Digiday’s Seb Joseph, said, “They [PubMatic] saw enough in those final three months of the year to believe that their business remains insulated from the worst of the pressures weighing down on the ad tech industry.” He continued, “Over the fourth quarter, the business saw its automotive and food and drink advertising verticals grow at 25%. It helped soften the loss of dollars in shopping, tech and personal finance, all of which in aggregate declined 13% in the same period a year ago.”

According to Joseph, PubMatic believes the tides will turn in H2 2023. “This is when it expects its finances to take a turn for the better on the back of more ad spending, better profitability thanks to cost cuts and optimization to its tech.”

The shuttering of Yahoo and EMX also eliminates a route to publishers that advertisers would have used. As a result, those ad dollars will go to other SSPs.

So, are SSPs going away? No.

“Some industry pundits have concluded that this might be the beginning of the end for the SSP industry,” Magnite CEO Michael Barrett said on the company’s recent earnings call. “We couldn’t disagree more. What we’re seeing now isn’t the beginning of the end of the SSP, but the death of the undifferentiated SSP.”

Let’s Wait and See

SSPs typically focus on giving publishers the tools they need to manage their inventory and demand with price flooring, buyer roles and inventory packaging.

Now, according to Schenck from Meredith, many SSPs have created new tools focused on buyers, allowing DSPs to buy inventory on SSPs more easily in the name of more efficient real-time bidding pipelines. 

But that change had an unintended consequence: “As the demand side provided feedback, the buyer tools, such as enhanced bid reports, have become progressively more like the very tools that publishers had, reducing the publisher’s advantage.”

In effect, SSPs often provide more value to buyers and less value to publishers. Now, DSPs can integrate with publishers themselves, and publishers could reorient their inventory outside the context of an SSP.

Still, some SSPs aren’t hurting. While some are shutting down, others are weathering the storm and, over time, may benefit from the shift as the industry narrows its focus.

Either way, the shifts are a big change to the ad tech ecosystem. 

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