Not long ago, advertisers balked at the idea of handing their ad dollars over to a robot (READ: programmatic ad tech).
Luckily, that fear waned as advertisers realized the measurement, performance, and efficiency benefits were too good to pass up. Today, programmatic ad tech is, for the most part, universally loved. In fact, Insider Intelligence predicted that more than 90% of digital display spending last year would be bought programmatically.
But even the mighty programmatic machine isn’t immune to the retreat in spending amid economic uncertainty—nearly 30% of major advertisers say they’re cutting their ad budgets in 2023.
Publishers and supply-side platforms (SSPs) are feeling it—and they’re evolving quickly to steady themselves on the shifting sands.
Publishers and SSPs Change Their MO
In December 2022, Insider Intelligence published an article predicting programmatic spending would slow. While they still predicted a lofty number, the reduction was far from surprising, considering over half of marketers expect a decline in programmatic spending this year.
Even Google is feeling the heat. In its Q1 2023 earnings report, Alphabet cited that YouTube’s ad revenue dropped by 2.6% YoY, making it the third consecutive quarter the video giant saw ad revenue dip.
Understandably, publishers are fighting their way through the turmoil. According to our data sample, 2.3k publishers (down by 5% YoY) used ad tech partners between January and May 2023, investing more than $13.2b across the likes of Google Marketing Platform (formerly DoubleClick and Google), Facebook, Innovid, Twitter, and YouTube.
At the same time, their strategies are evolving. Through May, 66% of publishers (1.5k) partnered with two ad tech providers, down by 21% YoY. Meanwhile, the 430+ publishers (19%) that partnered with three ad tech providers increased by 14% YoY.
Although the number of publishers spending with 3 (up by 14% YoY), 4 (up by 197%), 5 (up by 267%), and 6 (up by 600%) ad tech partners all increased, the real story lies with those that consolidated their tech stacks.
Sam’s Club dives deeper into the battle for retail media dollars
Sam’s Club decreased the number of ad tech partners from three to two through May in what was likely a strategic move driven by the Walmart-owned company’s fight for a larger chunk of retail media dollars. Retail media ad spending is accelerating so quickly that it’s expected to surpass TV spending by 2028.
At the heart of Sam Club’s strategic move is the freshly launched Sam’s Club Member Access Platform (MAP), which launched in June 2022 to allow advertisers to buy sponsored product ads via a self-service interface and target shoppers based on their search behavior, past purchases, and membership info. MAP also allows advertisers to retarget people off Sam’s Club’s platforms through partnerships with The Trade Desk (TTD), IRI, and LiveRamp.
More recently, Sam’s Club launched MAP Partners Club to connect advertisers with a “certified network of agencies and technology providers to maximize campaign performance.”
Other big-name publishers, including Twitch and The Weather Company, reduced the number of ad tech partners they’re working with from three to two through May.
Yahoo exits the supply-side game
Yahoo! Finance reduced the number of ad tech providers it works with from four to three in the wake of Yahoo’s intensified investment in the buy side of programmatic advertising.
According to Yahoo CEO Jim Lanzone, “It’s [the shuttering of its SSP] really about narrowing our focus on the piece of ad tech we do best, which is our DSP [and] not spreading our resources too thinly across every part of the stack.” Yahoo also announced it would refine the scope of its DSP to focus on the “premium side of the market, Fortune 500 companies, and top agencies.”
The shuttering from Yahoo is yet another chapter in SSP’s recent story that’s seen the rapid commoditization of the technology, EMX (an ad tech company) going out of business, and Magnite laying off 6% of its staff.
For Daily Mail, a publisher that previously monetized with Yahoo, the closure of its SSP was surprising, but they don’t plan—at least at the time—to partner with another SSP. Publisher ad management platform, CaféMedia, shared that sentiment. That shared sentiment could foreshadow how other publishers will respond to the consolidation and commoditization of SSPs.
At the same time, Food Network partnered with two ad tech providers through May, down from five during the same time last year, while Fortune and TheCHIVE went from four to three ad tech partners.
What’s Next for Publishers and SSPs?
SSPs and publishers are evolving. Havas recently agreed to a deal with Freewheel to improve its CTV advertising capabilities, while Horizon teamed up with OpenX’s SSP. And despite layoffs, Magnite bought SpotX and Telaria.
While the rapid evolution may seem sudden for such established ad tech, the writing has been on the wall for some time. First, header bidding made it easier for advertisers to buy inventory. Then supply-path optimization (SPO) simplified the overly complex process. Eventually, SSPs started competing on price.
These shifts are forming a new foundation in which fewer, but likely larger, SSPs exist, giving publishers access to a smaller playing field. Most industry experts see this overall shift as a positive move forward for the programmatic industry.
As publishers navigate the consolidation and fight for ad revenue during the economic uncertainty—the New York Times’ digital ad revenue fell by nearly 9% between January and March—they’ll source revenue elsewhere.
For the New York Times, that means increasing the price for 1.5mm subscribers and using promotional pricing to attract new ones.
“Our bundle strategy is gaining momentum, engagement metrics are strong, pricing initiatives are taking hold and we are slowing cost growth,” said Meredith Kopit Levien, CEO of The New York Times Company.
For other publishers, branded content studios, i.e., in-house services that allow advertisers to create native-like ads that engage the publication’s niche audience, will be in the cards as an extra revenue stream and a way to insulate themselves in a world without third-party cookies.
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