Consolidation Is Inevitable for Demand- and Supply-Side Platforms - eMarketer
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Consolidation Is Inevitable for Demand- and Supply-Side Platforms

October 17, 2017 | Marketing Technology | Media Buying


Jay Friedman
Partner and COO
Goodway Group

Widespread publisher adoption of header bidding has had a direct impact on digital ad buyers, and programmatic media planning and buying firms like Goodway Group are seeing the effects first hand. eMarketer’s Lauren Fisher spoke with Jay Friedman, partner and COO at Goodway Group, about what header bidding has done to desktop inventory and the long-term effects it could have on the broader ad tech landscape.

eMarketer: How is header bidding changing programmatic advertising?

Jay Friedman: Header bidding, along with the industry’s improved capabilities for eliminating undesirable traffic, has driven up the cost of desktop display significantly—well over 100% to 200% in some cases.

Buyers are dealing with this in different ways. Some are just paying more, and some are doing more private marketplace [PMP] deals to try to focus on a few publishers to get better deals.

But there is a handful that aren’t paying more. They are keeping their bids at the same level and just buying worse inventory. There’s a minority that is burying their heads in the sand and saying, “I don’t care if this is the reality—I don’t want to go back to my client and tell them that prices have gone up tremendously.”

“[Most marketers] understand that if you want quality inventory, it costs more whether it’s open market or PMP.”

eMarketer: When the agencies and other managed service providers that buy this inventory have conversations with their clients—the advertisers—about what this means, how do brands and advertisers respond?

Friedman: The majority of buyers and the marketers we work with do listen. And while they may not like it, they understand that if you want quality inventory, it costs more whether it’s open market or PMP.

eMarketer: What about the buy-side platforms, like the demand-side platforms (DSPs)? How are they affected by header bidding?

Friedman: One of the biggest effects of header bidding is that we’ve gone from one million queries per second two to three years ago to what some estimate will be 9 million by the end of 2017.

There aren’t any more ads for sale, but DSPs are dealing with 10 bid requests sometimes for one ad. Taking flex ad formats into account, a page could generate 120 bid requests for four ads. It’s out of control, and there are less than five DSPs that can shoulder this weight with their infrastructure.

“Header bidding, if nothing else, has created groups of haves and have-nots among DSPs.”

eMarketer: Will this drive consolidation on the buy side?

Friedman: Header bidding, if nothing else, has created groups of haves and have-nots among DSPs. Header bidding will be what pushes DSPs to no longer be self-sufficient. Whether they’re acquired or they go out of business, a lot of DSPs will break due to header bidding. That will have a massive impact on buyers if they’re left with only four big DSPs.

eMarketer: Is consolidation inevitable on the supply side as well?

Friedman: The world probably only needs about five supply-side platforms [SSPs], but that’s way down the road. In the short term, the world probably needs three display, three video, three native and a couple of mobile SSPs.

But even if an SSP started off as desktop or mobile, it needs to be omnichannel now. Any SSP that’s only mobile or only video will not work in the long term. It will all have to be rolled up under one.

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