Global Marketers Move to Consolidate Ad Server Rosters Amid Wider Adtech Concentration
Two years ago the average global advertiser would have paid four or five ad serving companies now they’re more likely to work with three, consolidating their spend into fewer businesses in order to curb costs and exert more control over their media.
It’s the standout finding from a study of 30 companies - spending a total of more than $30bn on media globally – that the World Federation of Advertisers (WFA) and Ebiquity conducted this year. From agency rosters to internal expertise, consolidation has been the trend du jour for many marketers trying to wrestle the vagaries of digital and so it’s not surprising that they’ve set their sights on adtech.
In 2014, less than a fifth (16%) of the respondents worked with more than nine ad services. Fast forward to now and only 3% of those asked are working with seven or eight, and just 10% with five or six different providers, according to the study. In the proceeding years with so much of the market going through consolidation – particularly over the last 12 months – a marketer no longer needs different ad servers for different product and technology.
Amid all the consolidation, marketers have become more cost-focused, eyeing reduced costs and greater control over where their ads appear to be had from having fewer ad serving companies on their books, especially when it can account for more than 10% of net digital media spend in some cases, claimed the WFA.
Despite this, marketers are prepared to expand their roster of adtech partners should they feel a specialism such as video or native are needed. This year tools to offer that skillset in frequency and sequencing control, viewability and verification, programmatic integrations and dynamic creative optimisation are all used by at least 60% of respondents.
“Getting better control of, and access to, ad serving offers opportunities to improve media performance and reporting. The range in costs associated with ad serving indicates that this is also one area of media transformation where brands can seek competitive advantage,” said Matt Green, global media and digital marketing lead at the WFA.
Marketers having both control and lower costs is also impacting ad serving costs and payment models. The study spotlighted that fixed CPMs were the most common way of paying ad serving companies, used by four in 10 of the respondents, while a quarter run a variable CPM and a further 11% use a percentage of net media spend.
Regardless of the charging model, when converting the cost back to a share of media spend there’s concentration between 1% and 4% of net digital media spend, though some advertisers are paying as much as 13% to 14%. It’s a gap most likely down to the type of formats being used, with video or rich media ones at the more expensive end. Ebiquity notes that that VPAID ad serving can cost up to 8% of net digital media spend.
The report found that the most common way for advertisers to work with ad services such as Google’s DoubleClick, Facebook’s Atlas (which is due to wind up its ad serving function), Adform, and Sizmek is for the contract to be managed by the media agencies, a preference found in 70% of the cases surveyed.
For those advertisers that would rather their agency ran the relationship with the ad server, they can pay an additional fee, which in the case of four respondents was a percentage of net media, while a fifth had a CPM deal. A fifth (21%) of those advertisers surveyed revealed that they did not pay a fee for this service.
While ceding that control frees marketers to concentrate on other areas, it could also lead to a loss of control and visibility on pricing as well as make it harder to gauge how well campaigns are performing. Three in 10 of the respondents now have a direct relationship with an ad server but do allow the agency to run it. A further 13% would rather operate the relationship themselves (figures add up to more than 100% because brands can use multiple models even in the same market).
As vast as the gap is between those advertisers that would rather their agency dealt with the ad server and those that would rather do it themselves, it’s emblematic of a wider problem.
For all the benefits of automated advertising, its proliferation across media plans worldwide has made it easier for advertisers to have the wool pulled over their eyes if they ignore the importance of media knowledge. Without such knowledge, marketers won’t be able to scrutinise the value of what’s being offered to them.