Supply Side Survivors

On the buy side, digital advertisers always give up a certain amount of control because of the complicated chain used to implement ad purchasing and placement. This lends itself to a vast population of software and data vendors in the adtech sphere. Consolation of these players leads logically to fewer parties driving up advertising costs, or taking their own percentage of a publisher’s revenue or an agency’s fees. Generally, data vendors come in to provide better attribution, eliminate fraud, improve targeting, all to save a brand’s money. On the supply side, they might help publishers develop new streams of users and new business.

For software, some of the solutions used to buy and sell advertising become widespread, and consolidation in this case refers to when a large company near this solution in the chain decides to buy it, making the new acquisition an industry standard. A classic example of this kind of consolidation was Comcast’s purchase of video ad platform Freewheel back in 2014.

In a competitive market like marketing tech, where the pie continues to swell, but so does the number of startups pursuing their slice, consolidation can also mean gaining an advantage by making a convincing pitch to both the supply and the demand side of advertising.

Positioning itself as a global leader in video advertising and monetization, SpotX recently survived a round of consolidation taken up in February by media agency Havas Media. From the supply side perspective, this is a very positive development if you’re a media owner like CW Network, E.W. Scripps, Roku or Sling TV, those who work with SpotX. From February to March, SpotX publishers saw a month-over-month increase of ad spend by Havas buyers of 217 percent. Due to consolidation, the revenue is concentrated on the winners. So far, this means that buyers are buying the rationale behind this shift.

It’s also worth noting that in 2014, SpotX (as SpotXchange) became an RTL Group company when 65 percent of it was acquired by RTL Group, a division of the international media company Bertelsmann (who also owns Penguin Books and BMG). In 2017, SpotX was fully acquired.

I recently spoke with Kevin Hunt, SpotX’s SVP of Global Marketing, about this consolidation in the adtech supply chain. As we’ve seen, the benefits to the supply side are clear enough. But how do brands on the demand side benefit from less choice?

The easy answer is that it really isn’t a choice, but rather a necessary elimination of bad actors and general waste.

“On the demand side,” Hunt said, “the question is, who are the partners I’m working with and how am I getting the best return on investment? This is the process of evaluating tech partners and consolidating, creating efficiencies of scale through a smaller amount of partners, adding transparency and a level of brand safety.”

Consolidation brings about what players from both sides call either “supply path optimization” (SPO) or “demand path optimization” (DPO), according to Hunt, “evaluating the tech partners for requests for video advertising and measuring actual impressions or delivery.”

The measurement piece has always been a main selling point for digital advertising, and this also speaks to SpotX’s origins in digital video, and how the industry has adapted to the evolving TV landscape.

“What we have found over time, as the industry moved from mobile and tablet into connected TV, just as desktop moved to mobile, that a lot of tech players play a part in patching together the ecosystem to facilitate advertising in the medium,” Hunt explained. “We had that chance to do that in desktop and mobile and tablet (ad formats). But now there’s a similar opportunity in CTV, but in a different way.”

He added, “Advertisers want to have an idea, through the entire supply chain, of how ultimately their spend is being used. Transparency for us means total transparency in auctioning, robust reporting we provide to what they’re buying, and how they’re buying it, with services that include log-level data, and transaction by transaction accountability for data science teams to churn through that data.”

Transparency is also the main defense Hunt cited against the criticism that with fewer players between the demand and supply side, the supply chain becomes a “walled garden.”

“We think at SpotX that there’s an opportunity to have consolidation on the supply side and yet create a platform supportive of the open web,” Hunt stated. “SpotX is benefiting from the fact that we have a strong customer base with supply and demand partners that work together to help facilitate transactions between supply and demand partners.”

In other words, by bringing both sides closer together, a better balance and understanding can be reached.

With fewer players, Hunt pointed out that consolidation “creates efficiencies from the human perspective.” Instead of a complicated, mostly automated chain, smaller groups of strong, human teams can orchestrate campaigns that work better for advertisers and media partners.

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