Read This First: Texas Lawsuit Ignores The Reality Of Robust Ad Tech Competition
Before parsing through the Texas-led ad tech lawsuit against Google, it’s important to turn to the facts: competition is thriving and that is benefiting businesses and consumers through lower prices and more choices. Specifically:
— Digital advertising prices and ad tech fees continue to fall, benefiting advertisers, website and app publishers, and consumers.
— Digital advertising and ad tech are crowded, competitive, and dynamic, with new entrants, established players, and rapid innovation.
— Retailers and many other companies across various sectors are making major inroads in ad tech, with many developing in-house offerings.
— Publishers and advertisers use multiple ad tech solutions simultaneously—clear evidence of wide choice and competition.
Digital advertising prices and ad tech fees continue to fall, benefiting advertisers, website and app publishers, and consumers.
Internet advertising prices have declined by nearly 40%, remind Manne, Bowman, and Fruits, all while spending has increased. “Over the past decade, the price of advertising has fallen steadily while output has risen. Spending on digital advertising in the US grew from $26 billion in 2010 to nearly $130 billion in 2019, an average increase of 20% a year. Over the same period the Producer Price Index for Internet advertising sales declined by nearly 40%. The rising spending in the face of falling prices indicates the number of ads bought and sold increased by approximately 27% a year. Since 2000, advertising spending has been falling as a share of GDP, with online advertising growing as a share of that. The combination of increasing quantity, decreasing cost, and increasing total revenues are consistent with [growing competition].”
Advertisers and consumers benefit from “more productive” digital advertising, notes Michael Mandel of the Progressive Policy Institute. “We calculate, based on several assumptions, that for every $3 that an advertiser spends on digital advertising, they would have to spend $5 on print advertising to get the same impact. In the economic sense, digital advertising is more productive than print advertising. The benefits of these lower prices flow directly to advertisers and consumers.”
Publishers benefit from falling ad tech fees. As competition rises, programmatic ad tech fees are falling, meaning that websites and apps can keep a larger share of revenue, as shown in eMarketer.
Advanced ad tech saves time, effort, and valuable dollars for businesses of all sizes, as outlined by Catherine Tucker of the MIT Sloan School of Management. “Placing ads in the digital era is much cheaper and easier… Small firms, who previously perhaps advertised by distributing leaflets door-to-door or putting up notices in coffee shops and diners, are now able to advertise digitally because their small budgets are no longer a barrier to them being able to deploy advertising in a world where there are few ‘minimum buys’ and anyone can place an ad in minutes via a self-service platform.”
Digital advertising and ad tech are crowded, competitive, and dynamic, with new entrants, established players, and rapid innovation.
Leading tech services, including Google, comprise less than 30% of US digital ad revenues in 2020. Despite critiques and rising competition across these companies, overall competition in the space is growing, via Suzanne Vranica. “As they compete with digital rivals, TV networks have been beefing up their ability to offer brands targeted ads, while retailers such as Walmart Inc. and Target Corp. are using consumer data they have amassed to ramp up their online ad offerings.”
The 2019 merger between Rubicon Project and Telaria created the “world’s largest independent sell-side advertising platform,” making it the platform to beat, via Rubicon Project. “‘The combination of Rubicon Project and Telaria will establish the world’s largest, independent sell-side advertising platform with scale, capabilities and solutions unmatched by the competition,’ said Michael Barrett, President & CEO of Rubicon Project.”
As shown by Scott Brinker, new entrants have driven continuous growth in the ad tech and marketing tech landscape, which involved a total of 8,000 companies in April of this year. “The rate of new venture creation — or at least new venture discovery in our research — outpaced the forces of consolidation once again. In fact, if we first remove the 615 from last year’s 7,040 count, then the growth of new entries on the landscape was actually 24.5%. Think about that: 1 in 5 of the solutions on this year’s martech landscape weren’t there last year. That’s almost the equivalent of the entire 2015 marketing technology landscape.”
Retailers and many other companies across various sectors are making major inroads in ad tech, with many developing in-house offerings.
This year, Walmart launched a self-serve advertising platform, innovating and competing to “meet the needs of advertisers,” via Allison Schiff. “Walmart Media Group (WMG), the retail giant’s advertising arm, released a self-serve portal so advertisers can directly buy on-site search and sponsored product ads on walmart.com… But Walmart’s retail data, and the ability to attribute online search activity to in-store sales, would be a huge advantage for Walmart” over more established players.
Walgreens recently launched its advertising group, using in-store and online retail data to effectively cater ad offerings. “WAG hopes all of this will unlock its vast bank of first-party data, gleaned from a loyalty program that boasts 100 million-plus members. For instance, an advertiser can work with WAG by cross-referencing their own first-party data set (using suitable data privacy tools) with MyWalgreens data to identify a desirable subsection of users to serve ads to based on prior purchase behavior.”
The Best Buy Media Network is driving its “rapid growth” by pitching its unique ad tech offerings to advertisers, competing with established entrants, as discussed by Kristina Mollnos. The company is looking to compete “in a crowded marketplace by not only giving advertisers a way to connect purchase and advertising data but to give them further insights to help them tailor their advertising around specific audience groups and passion points… The Best Buy Media Network website states that the client base for the platform is growing 50% year over year.”
Etsy is breaking into ad tech using their unique “risk-free advertising service,” offering advertisers no upfront costs, via the Etsy seller handbook. “When a shopper clicks on one of those online ads for your products and purchases from your shop within 30 days, you’ll pay an advertising fee. You only pay an advertising fee when you make a sale—eliminating the risk you could pay for ads that don’t work for you. Offsite Ads is only available on Etsy—we designed it with the unique needs of Etsy shop owners in mind.”
Grocery chain Kroger is “beefing up” its digital advertising offerings to compete with more established players, as shown by Kristina Mollnos. “Kroger is once again beefing up its advertising offering. The retailer announced a new attribution capability Wednesday, where brands that use Kroger’s Precision Marketing (KPM) and use the self-service ad platform will now be able to view in-store and online sales results attributed to the campaigns they run across Kroger properties.”
NBCUniversal’s FreeWheel is driving network television’s movement towards digital ad tech, creating greater choice and competition, as shown by Ryan McConville, EVP of Ad Platforms and Operations at NBCU. “The innovation here is giving one centralized ad-tech stack brain, in this case FreeWheel, both the linear and the digital information in preparation for a future system where things are more fluid … to be able move things from linear to digital, and from digital to linear in real time.”
Ad tech providers like PubMatic are quickly gaining traction in the hyper-competitive space as advertisers and investors seek new opportunities, as outlined in MarketWatch. “Initial public offering priced at $20 a share, above the expected range of between $16 and $18 a share, as the California-based provider of a cloud platform that enables programmatic advertising transactions was valued at $956.5 million. A total of 5.9 million shares were offered in the IPO, including 2.66 million shares from the company to raise $53.1 million and 3.25 million shares from selling shareholders.”
AT&T combined television ad tech division Xandr with WarnerMedia, innovating to “revolutionize the TV advertising business,” as highlighted by Alison Weissbrot. “‘Xandr and WarnerMedia have always worked hand-in-hand to benefit our incredible advertising partners,’ [Xandr Chief Business Officer Kirk McDonald] said in a statement. ‘This is the next logical step to help empower our clients and continue to ‘Make Advertising Matter’ for consumers. I look forward to the work ahead of us as one powerful combination.'”
Pinterest launched a self-serve digital advertising platform, joining the “crowd” of social networks in the ad tech space, via Yuyu Chen. “Social networks like Instagram, Facebook and Snap have all developed self-serve platforms in some capacity for advertisers. Now, Pinterest has joined the crowd, [introducing] a self-serve tool for brands that use Promoted Pins. Now, brands can develop campaigns with around 100 members in Pinterest’s creator network, Pin Collective, in as little as 10 to 14 days. Previously, this typically took four to six weeks, according to Pinterest. Brands like Adidas Originals and Old Spice are early adopters.”
Publishers and advertisers use multiple ad tech solutions simultaneously—clear evidence of wide choice and competition.
Publishers value the tech capabilities offered by different supply-side platforms (SSP), and, on average, partner with six SSPs to fulfill publisher goals and needs, as reported by Advertiser Perceptions. “Publishers used an average of six SSPs, and those polled said they plan to use eight or more next year.”
Advertisers benefit from cost-effective digital advertising formats and the wide range of options, as outlined by Catherine Tucker of the MIT Sloan School of Management. “…advertisers can effectively use any format at any place in the funnel and evaluate whether it is effective for that particular target audience. Ultimately, an advertiser is indifferent between whether it is a video ad, or a static text-laden ad that influences a customer to purchase as long as they can measure how effective that format was relative to its price.”