In a recent article by Xavier Garrido, Programmatic Director for Grupo Prisa and co-founder of ‘The Cookie Afterwork’, he talked about the spend in programmatic and what it actually means for the Publisher. What is clear is that with the ’Tech Tax’ and services, the amount left to for publisher is not a large slice.

 

Lets break it down

The figures Xavier quotes are based on statistics from WARC for global ad trends in 2017 as of March 2018.

WARC is an online service offering advertising best practice, evidence and insights from the world's leading brands. WARC helps clients grow their businesses by using proven approaches to maximise advertising effectiveness.

Advertisers spent on $63.4bn on programmatic but this translated into just $17.8bn to Publishers assuming a 12% loss by ad fraud. A typical view of this:

20% Service fees - Agency Record (5%) and Trading desk (15%)

40% Tech Tax - DSP (10%), Data, Targeting & Verification (25%) and Exchange (5%)

12% - Ad fraud

28% - left for Publishers

 

As low as 15%

Additionally, Publishers need to consider the costs for SSP and data verification which are typically 10% for SSP and 15% for Data and Verification

Then, final figures taking into account blocking the ad fraud will be:

20% Service fees - Agency Record (5%) and Trading desk (15%)

40% Tech Tax - DSP (10%), Data,Targeting and Verification (25%) and Exchange (5%)

25% SSP plus Data and Verification

 

So in summary, that's 20% on Services fees and 65% on the Tech Tax leaving just 15% for Publishers - and that’s assuming no Ad fraud which is unlikely, and will be based on data verification.

 

The new advertising model

So we can see from these statistics thats programmatic is not the revenue nirvana that many publishers hoped for. What it has done is spread more of the ad revenue across many parties, making it a worthwhile revenue channel but not one that will stop the downward spiral trend we are encountering in this space.

What is clear to me is that publishers need to focus on personalisation of their audience, do more with the audience they have and monetise that. They should look at connecting their CMS/DMP, creating personalised journeys for their existing audience and further developing new audience.

There is no single thing, no silver bullet for publishers to restore the model that served them well over many years. However, with the changes brought by GDPR, organisations such as Facebook, Google and others have new problems. This could positively alter the future for the publishers that have a trusted brand, consistently great content and an audience that wants to interact with them.

In turn, personalised content tailored to this audience provides advertisers with a valued segment to target for truly effective ad campaigns. This is the more likely new advertising model, with programmatic featuring as one part of that model. And probably - not the main one.