This post was most recently updated on January 18th, 2023
As a publisher, you’ve probably been told a lot of lies by ad management companies. But don’t worry, you’re not alone. In fact, we’ve compiled a list of the top 10 lies that are told to publishers by these partners. So before you sign on the dotted line with that next programmatic ad operation partner, be sure to read this post!
Parasite campaigns occur due to supply chain failures in part of the lack of proper event validation. This happens when a programmatic intermediary or reseller deceptively siphons ad revenue away from publishers it’s partnered with.
Resellers replace the publisher’s ID & domain with their own ID and domain while cloning the same user targeting parameters.
Ad revenue here goes to shady third parties when the advertiser bids on what they assume is the publisher’s real inventory, but are actually bidding on the reseller’s substituted domain.
Since the reseller still serves ads on the legit publisher’s domain, they are transmuting some of their revenue behind the scenes. The publisher clearly has no idea that part of their ad revenue is being stolen secretly,
By doing so, the reseller acts as a parasite, secretly robbing revenue from the seller without their knowledge or consent.
Many Ad Management companies have rejected claims of illegal ad auctions and auction manipulation.
They’ve been accused of shady practices in programmatic advertising like forcing publishers into gamed auctions or tying up. Behind the scenes, programmatic auctions are being manipulated.
Let’s say, a buyer with the winning bid is supposed to only have to pay a dollar more than whatever the second-highest bid was. So if the second-highest bid was $5, the winner would pay a clearing price of $6, even if they bid $10 to win the auction.
However, since each DSP is ignorant of what the rest are bidding, there’s no way to predict the price of the second-highest bid here. That power rests solely with the seller, and since each seller and reseller along the programmatic media buying process is a black box, they can hike the floor price and get the buyer to pay more.
Some ad operation partners compete unfairly and deceptively in the display ads business.
Display advertising is visual advertising in banner ads, generally placed by either contextual clues (lipstick ads on cosmetics websites) or behavioral clues (lipstick ads anywhere, because ad operation partners know you, see you on multiple sites, and know you might be getting makeup soon).
What’s deceptive is that they promise they’ll never sell user data to anyone saying that their whole adtech product model depends on third-party data to target ads. Later on, they share this data to external parties for ad inventory valuing and identification purposes.
Most publishers depend on Google AdSense and Google Ad Manager before any other company in the adtech ecosystem to sell their display ad inventory in ad exchanges. From small businesses to e-commerce entities, most of them depend on Google for buying display ads through exchanges.
As the glue that holds all parties in the programmatic media buying game together, it aggregates both publisher supply (available ad inventory) on websites and in apps, as well as demand for that supply.
Since they hold most of the power here, they manipulate many real-time bidding auctions.
Among ad management companies, ad exchanges, ad servers, and ad-buying tools for small advertisers and publishers have monopoly power when it comes to display advertising. They abuse their power by reducing innovation, harming consumers, and obliterating the competition.
Ad management companies have control over most of the adtech stack enabling control over the chokepoints between advertisers and publishers:
In other words, the tool that publishers use to serve ads on their sites are connected to the tools that price and sell ad inventory, and these adtech companies are limiting their ability to use alternative ad servers.
Adtech companies manipulate auctions in order to increase their take rate and then use those ill-gotten gains to manipulate subsequent auctions, significantly suppressing the competition in exchange markets.
They’ve been accused by publishers of not running fair ad auctions reducing price competition for buying ads to win business it wouldn’t otherwise get. Ad exchanges, for instance, can deceptively raise advertisers’ costs for impressions by overriding publishers’ floor prices.
We all know that adtech firms run billions of ad auctions every single day. However, they tell advertisers one thing and do the opposite when it comes to winning bids. Some Google-certified partners switch ad exchanges surreptitiously from a second-price auction to a third-price auction on millions of impressions per month. This may cost publishers more than 40% of their potential revenue.
What’s happening behind the scenes?
These companies pocket the remaining revenue to help buyers who use their own buying tools (starter AdOps package, premium AdOps package) win more companies. Also, AdOps partners may retain the difference, moving it to a whole different pool, which it then uses to inflate the bids of real-time bidding to help them win impressions they would have otherwise lost to advertisers bidding through trusted alternatives like Pubguru.
Publishers around the world rely on the largest adtech companies to process a staggering majority of their display advertising inventory.
This monopoly allows them to impose lock-in contracts and revenue share fees on publishers: 5-10% for ads routed to non-Google exchanges & transactions clearing through ad networks.
They deceptively degrade ad exchange’s performance without fear of losing business or other retribution.
Many ad management companies force publishers to sign contracts demanding them to pay for the whole package including extra non-mandatory AdOps services. Publishers, on the other hand, are forced to manage and sell their inventory with the company with whom they have signed the contract. Through this contract, adtech companies get the data and leverage to tilt the playing field any way it might please.
By shielding AdX from the real-time competition and by allowing AdX to trade impressions at deteriorated prices, Dynamic Allocation technology, which is intended to distribute publisher inventory to the highest bidder on multiple exchanges from multiple companies, actually reduces publishers’ yields.
In other words, it is alleged that they made their ad management technology mandatory for publishers to manage their own ad inventory, and then that software reduced their gross income, making their inventory cheaper and more preferential for adtech companies.
Behind the scenes, they were charging more with less transparency. This seems counterproductive as the higher the price advertisers pay, the more that publishers get, sure, but also the more money ad management companies can extract from the transaction.
Publishers can easily earn more with fewer ads but many ad management companies just place a lot of ads like anchor ads or 2 ad units in the same place. This happens more on mobile devices than desktops. Due to ad stacking, they later have to deal with Revenue clawbacks and policy violations temporarily suspending monetization. Ad dumping also leads to low site speed and ads getting stuck or not showing up at all. This deteriorates the user experience causing the audience to just leave the site due to poor site speed.
When publishers try to make the switch to reliable alternatives, they first decide to go for split tests to check which ad management company outperforms the other.
The excuses that few programmatic companies give to avoid publishers from switching are:
The repercussions of this alleged anticompetitive behavior are the exit of rivals, less ad revenue for publishers, high floor prices, and reduced value.
It is a particularly detrimental situation for publishers of websites and mobile apps as the value and yield they get for the ads they deliver on their platforms are lower than what they could have made with a reliable AdOps partner if the allegations are correct.
In this blog post, we list the top 10 lies told to publishers by ad ops folks. We hope this provides some clarity and helps publishers protect their businesses.
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