Marketers complain regularly about the transparency of digital advertising. This week, Viant's Adelphic announced a price change which, in his view, would solve the problem of a demand side platform ( DSP ]).
What's new? Instead of charging a percentage of media expenses as other CSPs do (typically 10% to 15%), Adelphic will now charge a monthly fee of $ 3,000 at the limit, with a minimum of 12 months. And all the providers involved in the process – the targeted data providers such as data management platforms, inventory providers such as ad exchanges, audit services and others – are billed directly to the advertiser.
For those of us who do not use DSPs daily, it seems surprising that a subscription and direct billing model is new, but the Viant CEO, Tim Vanderhook said in an interview that he was unaware of any other DSP having a similar structure.
SaaS tariff model versus news agency. Adelphic, which Viant bought two years ago, also previously billed a percentage of the media spend and paid the vendors himself. Vanderhook said his company had spent the time since the purchase to reduce Adelphic's general operating costs to such an extent that it could offer a subscription.
After all, he said, managing a thousand dollars in advertising does not cost a DSP more than ten million dollars. The compromise for advertisers, he acknowledged, is that Adelphic needs a 12-month commitment, while other DSPs only charge their expenses to advertisers.
Typically, DSPs use a pricing model derived from media buying agencies, which charge a percentage of the spending on media. Many DSPs, he added, have no fixed percentage, but set these fees based on the volume of business of an advertiser. Instead of using a model based on media buying agencies, Adelphic now offers the software subscription model as a service.
In the traditional pricing model, the advertiser often pays the DSP an additional monthly amount based, for example, on global CPMs, along with data targeting, inventory, auditing and other costs. buried suppliers. Vanderhook added that this monthly amount, separate from the DSP fee, is almost as if the DSP were a publisher itself, billing its impressions.
The 800 kilogram gorilla. This leads advertisers to be wary of sellers' accusations, he said, and whether there are bribes between CSPs and sellers.
"The 800 books [gorilla] here, he says, are that no one trusts and that there must be a pattern for everyone to trust."
Ari Paparo, CEO of the advertising technology company Beeswax, told me by e-mail that it was "naive and a little gadget to propose a unique pricing structure for such a complex product and on measure as a business. DSP. "
But, he added, this decision "clearly indicates that the market is calling for more transparent and equitable pricing models, commensurate with the use of technology, rather than pricing models. arbitrariness that further penalizes media spending and spending on more expensive media. inventory. "
Why this is important for traders. Transparency of ad pricing is essential to make the entire industry more reliable for brands, and a software-service subscription model for DSPs, with direct payment by brands to suppliers, would appear to respond directly at this part of the equation.
This story was first published on MarTech Today. For more information on marketing technology, click here.
About the author
Barry Levine covers marketing technology for Third Door Media. Previously, he covered this space as a senior editor for VentureBeat, and he wrote on these technical topics, among others, for publications such as CMSWire and NewsFactor. He founded and managed the website / unit of PBS Thirteen / WNET; worked as a Senior Producer / Writer Online for Viacom; created a successful interactive game, PLAY IT BY EAR: The first CD game; founded and directed an independent film, CENTER SCREEN, based at Harvard and M.I.T .; and served for five years as a consultant to the M.I.T. Media Lab. You can find it on LinkedIn and Twitter on xBarryLevine.