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Lookbook

DSP

Fees for Demand-side Platforms Typically Less than Ad Networks, Report Finds

Published on .

Programmatic ad revenue totaled $10.1 billion in 2014, accounting for a healthy chunk of the almost $50 billion total internet advertising during that time, according to a survey earlier this year conducted by PricewaterhouseCoopers on behalf of the Interactive Advertising Bureau.

That $10.1 billion represents a massive shift in how advertisers buy media and publishers sell it. It also accounts for more than half of all revenue from online display advertising. But there are also inconsistencies in how industry players define programmatic, as well as transparency shortfalls across ad formats and media marketplaces, making it difficult to clearly delineate the area, the study found. In the report, programmatic refers to display and video ads on desktop and mobile that were bought and sold through automated channels.

Only 10 companies accounted for 66% of total programmatic revenue in 2014, according to the study, and 25 companies accounted for 75%. Ad-tech companies' revenue comprised about 55% of the programmatic total last year, while publishers collected 45%. "Ad-tech companies" in this case includes all industry players that make money from programmatic buying and selling before the revenue gets to publishers, including agency trading desks and a range of technology companies that facilitate sales for publishers and buys for marketers.

The fees those tech companies charge buyers and sellers to use a demand-side platform or ad server, among other technology, can represent a markup from 15% to 50% over the cost of the ad space, according to the report. For example, ad networks, which can facilitate both the purchase and sale of online ad inventory, typically charge 30% to 50% in value-add mark-up fees, with a few networks charging even more, the report said. By contrast, the fees for demand-side platforms, agency trading desks and exchange marketplaces tend to fall below 30%. Specifics surrounding the ad tech fees were derived from a mix of industry sources and were not a part of the PwC survey findings, the IAB noted in the report.

If you are sorting through your options to find partners to help you with programmatic buying and demand-side platforms, turn to Look Book.

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