U of Digital Newsletter - 10/17/24 (free)

October 9th-October 16th

Below is a roundup of last week’s notable industry news, with summaries and our opinions. Two fun top stories to unpack in this edition, starting with Sovrn going SaaS…

Check out the recording + deck from U of Digital’s LIVE LEARNING EVENT: TikTok Ban? Google Breakup? Where Will Ad Budgets Go?

In this session, we covered:

• Just how much money could be up for grabs?

• How should advertisers and agencies think strategically about re-allocating their ad dollars?

• If a bunch of money goes up for grabs, which platforms are likely to be the biggest winners? How can you position your platform to be a winner?

With special guests Brian Wieser, CFA and Olivia Morley of Madison and Wall. CLICK HERE TO ACCESS.

Top Stories 👁️ 

To Reduce The Ad Tech Tax, Sovrn Expands Its SaaS Pricing Model 
Source: AdExchanger
October 14th, 2024

Summary: In a bid to drum up more business from small publishers, supply-side platform (SSP) Sovrn is offering flat CPM pricing based on how many impressions a publisher auctions programmatically through Sovrn’s header bidding tool called “Ad Management”. In comparison, other ad networks and sell-side vendors charge a percent-of-media fee. This pricing applies only to impressions that are won through its header bidding tool; SSP fees will kick in for impressions won through Google Ad Manager. 

Sovrn’s savings translate to about 7 cents per impression auctioned via Sovrn’s SSP, according to the company. But the company says the savings aren’t the only draw. Publishers also get self-serve access to Sovrn's header bidding optimization tools, which include A/B testing for multiple wrapper configurations and the ability to consolidate auctions into one page-level auction. Initial testing of some of these features resulted in 10% greater yield from publishers' programmatic auctions.

Opinion: There’s a race to the bottom in supply-side ad tech. You know value is being created when companies launch new innovative, new products. You know value is being commoditized when companies launch gimmicky pricing schemes to try and steal market share. 

Of course, Sovrn has done their math; this pricing gimmick likely won’t hurt the company’s revenue or valuation much at all. They are probably just exchanging immediate revenue upside for more long-term, stable revenue.

For the ecosystem, this pricing gimmick generally makes business sense for two reasons: 

1. Publishers need every bit of savings they can get right now and so they’re probably more open to exchanging other “things” (like long term commitments) for dollars and cents.

2. Buyers are looking for ways to cut their “ad tech tax” and have more of their dollars go towards working media. 

It’s smart for the company to zig while the rest of the industry zags. That will surely open up pockets of opportunity. Regardless, the point remains: no new value is being created here, it’s simply being redistributed. As such, we don’t expect this to create a windfall of business for Sovrn or fundamentally change the economics / pricing models of the ad industry. 

Here is some helpful perspective on the history of SaaS pricing in media from Terry Kawaja of LUMA Partners:

DOJ, NCIS ask ad executives about brand-safety companies 
Source: Marketing Brew
October 11th, 2024

Summary: The Department of Justice and the Naval Criminal Investigative Service (NCIS) appear to be looking into some of the brand-safety problems highlighted by ad industry research firm  Adalytics. The firm has dropped a string of bombshell reports alleging that YouTube collected kids' data and Google placed ads on sanctioned Russian and Iranian websites on behalf of various advertisers, including several government agencies and military branches like the US Army and FBI. 

Caught up in the mix are the verification companies that are paid to help brands detect fraud and ensure that their ads don't appear alongside offensive content, including Integral Ad Science and DoubleVerify. Both companies have been called out in Adalytics reports, including one over the summer that found that ads appearing adjacent to racist and sexually explicit content which contained code from these brand-safety providers. Both Integral Ad Science and DoubleVerify have disputed the reports as misleading and flawed, but that hasn't stopped some industry players from criticizing the brand safety and verification vendors for failing to innovate their capabilities in lockstep with changing market conditions. 

Opinion: We’ll just go ahead and say the quiet part out loud:

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That’s It For This Week 👋

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