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Reducing the ad-tech tax

There’s one downside to technology in the ad-space – there’s just so much of it. Obviously innovation and competition is a good thing, but the growth of programmatic technologies and the explosion of companies offering technology solutions is leaving clients confused.

It’s also expensive. For every dollar a digital advertiser spends on placement, the publisher tends to receive less than 40 percent. The rest is claimed between trading desks, DSPs, exchanges, networks, data suppliers, data aggregators, ad verification vendors, tag management vendors, retargeters, optimisation vendors, SSPs and more.

It’s not that these services aren’tvaluable. They drive efficiencies and help targeting, so the operational costs and campaign outcomes more than compensate for the cost, but will that always be the case? As more and more specialist solutions are added to the mix, the “technology tax” involved in moving ad spend from the advertiser to the publisher is only going to increase.

Wasn’t advertising technology supposed to make life easier? Publishers simply want to maximise their yield. Advertisers want to reach the right people. The aim was to bring these groups together, realising their objectives as efficiently as possible. It sounds simple enough, but it’s become shrouded in a technology landscape that has grown too complex and chaotic.

So how do we stop the problem worsening? This region is less susceptible than markets where programmatic is more widespread, but ad-tech players are all readying to play their part here. The map of solutions will quickly become as confusing as it is in America and Europe.

At AOL, we reckon there are three factors that will stop the industry being lost in a technology minefield:

1) Consolidation
It has to happen. We are fast reaching the point where the addition of new technology and providers won’t add to the efficiency of campaigns. It’ll be a cost that advertisers and publishers bear, coupled with greater confusion, more time spend dealing with these technologies and an increased opportunity for mistakes.
The next year or so will see rapid consolidation of providers. When a typical media buy has to involve a dozen or more specialist vendors, it’s a clear sign that the advertising landscape is ripe for consolidation..

2) More transparency
In the current landscape, crowded with hundreds of solution providers, vendors all too often trade on confusion. There’s an ever-growing list of companies, each pitching highly technical ‘necessities’. A few cents of that goes here, a few more goes there, and overworked media planners simply don’t have the time or resources to figure out which relationships actually result in a solid return of investment.

But all those small transactions are adding up, and advertisers and publishers are rightly starting to ask, “What am I really getting for my money?” Increasingly, vendors that don’t offer transparency to their clients – by delivering objective, verifiable metrics – are going to fall by the wayside.

3) Innovation at scale
Innovation is key, but it has to be implemented at a size that’s workable. We need less of those questionable bells and whistles and more time spent building smarter solutions that add legitimate value for end users—at a scale that makes a significant impact on their business.

Optimising a single aspect of an advertising buy is one thing. Optimising the entire process from end-to-end? That’s innovation at scale.

Get ready for the tax cut
The next year or so will see massive changes – for the benefit of the industry. Publishers can look forward to taking a larger slice of campaign costs and advertisers, working in a less cluttered environment, will see significant efficiency outcomes.

The path the industry is following right now is simply not sustainable. At AOL, we’re committed to being more open, and to overcoming the confusion with transparent technology.

Alongside Google, we’re providing one of only two end-to-end technology stacks in the market, enabling customers to both streamline buying and execution, and extract meaningful data that informs “in-campaign” execution and post campaign evaluation. It’s an open and simplified ecosystem and it’s a good thing for our industry. For everyone’s sake we hope others follow our lead.

Alex Khan

Alex Khan is the Managing Director APAC at Smaato.