The Trade Desk is exerting its power in the ad industry, and some insiders fear it's becoming more like Google
The Trade Desk, PubMatic, Magnite
- The Trade Desk is increasing its influence with publishers.
- Some industry insiders worry it's becoming more like Google.
- The Trade Desk's new competitors are fighting back by going after its margins.
Publisher-focused adtech firms that traditionally work with The Trade Desk, which helps advertisers buy digital ads, are now in competition with it.
The Trade Desk has been aggressively building products that will undercut the business of publisher-focused adtech companies, or "supply-side platforms," according to industry insiders.
The Trade Desk has not traditionally competed with SSPs, which help publishers of online content price their ad inventory and make it available to buy. But in February 2022, The Trade Desk released a product called OpenPath which let advertisers buy directly from publishers without an SSP. And in September, it will start undercutting the prices SSPs charge for ads because it claims SSPs aren't setting the right prices.
"In this case, they're taking a tool that SSPs use and making it less effective," said Ari Paparo, a former adtech CEO, who currently runs a firm that reviews adtech vendors called Marketecture Media. "By saying this publicly, The Trade Desk is throwing down the gauntlet."
By building products that resemble SSPs and undercutting their prices, some industry experts believe The Trade Desk is influencing how publishers sell ads, making it more like Google — which goes against the firm's previous positioning as the anti-Google of digital advertising.
Matt Prohaska, CEO of marketing firm Prohaska Consulting, said that it marks a difference in how The Trade Desk has played itself as a "challenger brand for 10 years."
The Trade Desk is trying to stop some SSPs from running unfair pricing practices, said Will Doherty, the company's VP of inventory development. He added that company consulted with a handful of SSPs and publishers before making the change.
SSPs could lose a key revenue stream
SSPs that could see their fees undercut by The Trade Desk include public adtech companies like Magnite and PubMatic, private firms like OpenX and Index Exchange, and private equity-owned TripleLift and Microsoft-owned Xandr.
These firms sell online ads for publishers via an auction and add on a service fee to the price of ads. For instance, if a publisher charges $1 for a digital ad, then the SSP might charge $1.10. Given the billions of ads that these companies sell, those fees can culminate in millions of dollars.
SSPs must do the math to figure out if it's better to take The Trade Desk's lower bids or to reject them.
"The SSP needs to analyze if the 10 cent loss is better than no bid at all," Prohaska said.
PubMatic CEO Rajeev Goel said that while his company might make less money per ad impression, they might be able to sell more because they're cheaper to buy.
"When the ROI goes up in a particular channel, advertisers tend to move budget into that channel," he said.
While The Trade Desk has said that SSPs do not need to accept its bids, it funnels so much advertiser demand to publishers that SSPs might not be able to afford to reject its bids.
"Publishers lose out on demand," said Shiv Gupta, founder of U of Digital, which offers training in digital advertising. "I don't think anyone can cut them off."
SSPs that don't accept The Trade Desk's lower bids could cause their publisher clients to see less revenue, said Prohaska.
Also, the Trade Desk's OpenPath product that launched in 2022 emulates an SSP, said Gupta.
"They won't call it a pure SSP but if you get any honest person from an SSP in a room, they'll tell you, 'yeah, they're coming after us through OpenPath,'" he said.
The Trade Desk's Doherty said that unlike SSPs, OpenPath doesn't provide a digital ads marketplace. He added that other ad-buying platforms besides The Trade Desk have direct deals with publishers, similar to OpenPath.
The Trade Desk has been able to build these new initiatives because it works with a publisher-focused organization called Prebid.org on some products that use publishers' data, allowing The Trade Desk some insight on how SSPs set pricing for ads, which lets The Trade Desk determine how much it actually wants to pay.
"Theoretically, SSPs don't want to send this information to The Trade Desk," said Paparo.
SSPs are fighting back
But SSPs have been fighting back. The largest SSPs like Magnite and PubMatic are rolling out products for advertisers.
"They're all going for each other's margin essentially," an adtech executive told Insider.
In April, Magnite launched a product called ClearLine that can help advertisers manage streaming TV ad buys. In May, PubMatic launched a similar product that lets advertisers buy video ads directly from publishers. And TripleLift is also testing a product that lets advertisers find audiences online.
But some SSPs claim these products don't directly compete with The Trade Desk.
"We do not see the same battleground between the sell side and the buy side that has been made out there," said Adam Soroca, chief product officer at Magnite.
Prohaska said that SSPs are also expanding their services into areas like data services and identity management, so they're not just running ad-selling auctions.
"SSPs are looking for new ways to regain growth and momentum," Prohaska said.
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