Google Cloud is having some success when it comes to landing ad tech companies as new customers, but the companies that choose Google to manage their computing infrastructure are making a tricky bargain.
Google recently struck deals with 33Across, a publisher monetization company, and a crypto-marketing startup, Permission.io, to help power their businesses. In this way they are relying on the No. 1 internet ad company, while also competing in areas that overlap. This dynamic raises interesting questions about what ad tech companies need to consider when they choose a cloud provider.
33Across, is a supply-side ad platform, and it expects it will need more computing power as it launches a new product to deliver ads to hundreds of thousands of websites without using cookies. Cookies have been the backbone of online advertising for decades, collecting data about users through web browsers, but browsers, including Google Chrome, are phasing out cookies in favor of stricter internet privacy protocols.
This month, 33Across became the latest ad tech firm to join Google Cloud. “We expected a significant increase in the scale and volume of traffic when we made this cookieless push,” says Shyam Kuttikkad, chief technology officer, 33Across, in explaining why the company tapped Google Cloud.
Google Cloud has become an attractive option when companies like 33Across can’t afford to invest tens of millions of dollars into a private cloud set-up. However, Google’s main ad business competes in many areas with the ad tech companies, publishers and brands that use its cloud. When Google changes how it runs auctions for internet ads on websites, that affects supply-side ad tech companies and publishers. When Google’s Chrome web browser deprecates cookies, that will affect ad tech companies, too.
Google Cloud is not the biggest public cloud provider -- Amazon Web Services and Microsoft Azure are larger -- but when it comes to specific ad tech needs, companies say Google brings competitive advantages. “They do have lot more advertising DNA as a company,” Kuttikkad says. “So they do bring some help and expertise, and they understand, probably, the unique needs.”
There are publishers, retailers, and other platforms like Twitter, on Google Cloud. One of the benefits of being on the same cloud infrastructure is the speed with which all the parties can communicate. Google Cloud customers are using it to handle heavy internet traffic, the kind that is generated by internet ad auctions. Google Cloud also helps customers process data to build machine learning, artificial intelligence-based models for complex business decisions.
“The move to Google Cloud reduced overall latency, especially when sending requests to Google Marketing Platform products such as Display and Video 360,” according to the case study about OpenX on Google Cloud’s website. “It increases the speed that bids come into the OpenX Exchange from potential buyers, driving increased revenue potential by allowing publishers to see greater demand for audiences before an auction closes.”
Google is an internet advertising force, topping $50 billion in digital ad sales in the second quarter of this year, and Google Cloud is a growing piece of the business, bringing in $4.6 billion in the second quarter, up 54% from the same period a year prior. Google Cloud’s ad tech partners say that the company maintains a strict firewall between the different sides of its business, offering no special perks for them to also sign up for cloud contracts.
“If a lot of your demand and supply comes from Google or a large publisher working with Google, there is an advantage from a latency point of view to work with Google directly, but that’s pretty much it. There is no secret handshake,” says one ad tech executive, who works at a company that uses Google Cloud and spoke on condition of anonymity.
Companies acknowledge that it’s not an easy choice to go with Google for cloud services when the tech giant has such a heavy hand in the overall industry. Google is at the center of an antitrust investigation by the U.S. Department of Justice, which is partially looking at all the ways it controls the internet advertising ecosystem through relationships with ad buyers and sellers. Google Cloud has not been mentioned as one of its competitive advantages in government filings, but Google’s advertising footprint is one of the cloud’s selling points.
“That is like a happy benefit,” says another executive at an ad tech company that uses Google Cloud. “Because Google products are built in Google Cloud, you don’t have the cloud-to-cloud cost or latency. It’s all happening in the same giant server warehouse.”
Speed is of paramount concern in internet advertising markets, which in many ways is comparable to Wall Street, where the fastest computers with the best data processing speeds, often make the best buying decisions.
Ad tech executives say that when it comes to picking cloud providers, all the options carry potential conflicts. Amazon and Microsoft are both major advertising companies. “A lot of big marketers aren’t using Amazon Web Service for obvious competitive concerns,” the second ad tech exec says.
Permission.io, which develops crypto-technology to obtain consent from web users to collect data and serve ads, signed up for Google Cloud services last month. Permission.io is trying to help figure out how digital marketing can work in the post-cookie, privacy-enhanced internet.
“We were concerned that Google is the biggest player in ad tech; they’re incredibly dominant,” says Charlie Silver, CEO of Permission.io. “So we envisioned a new model, and it was very important for us try and build a dialog with Google and get them involved with what we’re doing.”
Not all companies are as comfortable with going with Google or any public cloud provider. PubMatic, the programmatic digital ad company, built a private cloud to run its operations. “It’s our biggest competitive differentiator,” PubMatic CEO Rajeev Goel says.
PubMatic operates thousands of ad servers around the world, owning the hardware and software. Goel says that that public clouds like Google and Amazon suck up the profit margins of ad tech companies. “That’s an issue, if you are in Google Cloud, in particular, it’s hard to see how you differentiate from what Google itself can provide to its customers,” Goel says. “Obviously, Google is pretty deep in terms of its presence in the digital advertising industry.”