Publishers Get Just 40% Of Programmatic, Time For A More Direct Approach?

If you do one thing this week, take a look at the Warc figures in eMarketer showing who gets what from digital advertising. It's an eye-opener.

The Guardian has been a brave voice in the media pointing out that it can't be right that it -- as a quality publisher -- gets only a third of the revenue from programmatic. It does sound rather low, doesn't it?

Well, the Warc figures suggest that it is indeed on the low side, but is representative of an advertising landscape in which the majority of revenue goes to the tech vendors, not the publishers or the advertiser's agency. 

The breakdown is pretty bleak. Publishers get around 40%, assuming there is no fraud while the advertiser's agency gets 5%. That means 55% goes to tech vendors and is what eMarketers refers to as a "tech tax."

So where does all the money go?

According to eMarketer's number crunching, data targeting and verification takes the largest non-publisher slice, with a share of 25%. The trading desk through which ads run takes a 15% bounty and the demand-side platform (DSP) takes 10%, leaving 5% for the ad network. 

The 40% slice that goes to publishers can easily be reduced if there is fraud in the system. If one in ten placements prove to be fraudulent, Warc estimates publisher revenues dips down to 36%. That's not far off a third?

It hardly seems like a sustainable landscape, and so it is increasingly likely that publishers will use fewer platforms and try to hone down on those that offer the best return. Direct programmatic is also a term doing the rounds whereby there is a more direct relationship between publishers and advertisers. Buying and selling space would still be done by machines, but without so many outside actors taking large pieces of the cake. 

That has to be the way forward, doesn't it? Using first-party data held by a publisher rather than buying in targeting data and paying for it to be remotely verified?

Ad tech vendors and trading desks are not going to disappear and are, of course, a vital part of targeted advertising being delivered and verified. But when this important role takes more out of the revenue pot than the publisher, alarm bells have to start ringing. 

3 comments about "Publishers Get Just 40% Of Programmatic, Time For A More Direct Approach?".
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  1. Matt Prohaska from Prohaska Consulting, April 18, 2018 at 9:40 a.m.

    Strange to see such a gap b/w this stat & ANA's - curious on methodology/regional diffrences because the trend is certainly moving to a lower tech tax overall due to competition, M&A, streamlined services, 1st party data>3rd party data...

  2. Lubin Bisson from Qzedia Media Inc, April 19, 2018 at 4:42 p.m.

    ATTENTION: Cost structure w/ #newspapers cut the cake in a similar way.

    Bottom-line contribution of circulation revenue used to cover printing/ distribution.

    In 2015 this worked out to publishers keeping only 44.53% of revenue.

    Not apples/oranges yet... should be considered.

  3. Ed Papazian from Media Dynamics Inc, April 19, 2018 at 5:33 p.m.

    Leslie, they are not reporting on the publishers' costs of maintaining their websites, staffing, rent, btaining editorial content, etc, merely the amount they net on ad revenue relative to what the advertisers actually spend. Once the publisher gets his/her 40% these other costs need to be applied and any other incomes---like subscription fees if they exist, added in order to calculate gross, pre-tax---profit margins---if there are any.

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