- The Trade Desk is increasing its influence with publishers.
- Some industry insiders worry it’s becoming more like Google.
- The Trade Desk’s new competitors are fighting back by going after its margins.
Publisher-focused adtech firms that previously collaborated with The Trade Desk, which helps advertisers buy digital ads, are now competitors.
According to industry insiders, The Trade Desk has been aggressively developing products that will undercut the business of publisher-focused adtech companies, or “supply-side platforms.”
The Trade Desk has traditionally not competed with SSPs, which assist publishers of online content in pricing and making their ad inventory available for purchase. However, in February 2022, The Trade Desk launched OpenPath, a product that allows advertisers to buy directly from publishers without the use of an SSP. And, beginning in September, it will begin undercutting the prices SSPs charge for ads, claiming that SSPs aren’t setting the right prices.
“In this case, they’re taking a tool that SSPs use and making it less effective,” said Ari Paparo, a former adtech CEO who now runs Marketecture Media, a firm that reviews adtech vendors. “By saying this publicly, The Trade Desk is throwing down the gauntlet.”
Some industry experts believe The Trade Desk is influencing how publishers sell ads by building products that resemble SSPs and undercutting their prices, making it more like Google — which contradicts the firm’s previous positioning as the anti-Google of digital advertising.
According to Matt Prohaska, CEO of marketing firm Prohaska Consulting, it marks a shift in how The Trade Desk has positioned itself as a “challenger brand for 10 years.”
According to Will Doherty, the Trade Desk’s VP of inventory development, the company is attempting to prevent some SSPs from engaging in unfair pricing practices. He also stated that the company consulted with a few SSPs and publishers before making the change.
SSPs may lose a significant revenue source.
The Trade Desk may reduce the fees of SSPs such as Magnite and PubMatic, as well as private firms such as OpenX and Index Exchange, as well as private equity-owned TripleLift and Microsoft-owned Xandr.
These companies use an auction to sell online ads for publishers and charge a service fee on top of the ad price. For example, if a publisher charges $1 for a digital advertisement, the SSP may charge $1.10. Given the billions of ads sold by these companies, those fees can amount to millions of dollars.
SSPs must calculate whether it is better to accept or reject The Trade Desk’s lower bids.
“The SSP should consider whether a 10 cent loss is preferable to no bid at all,” Prohaska said.
PubMatic CEO Rajeev Goel stated that while his company may earn less money per ad impression, they may be able to sell more because they are less expensive to purchase.
“When the ROI in a particular channel improves, advertisers tend to shift budget into that channel,” he explained.
While The Trade Desk has stated that SSPs are not required to accept its bids, it directs so much advertiser demand to publishers that SSPs may be unable to reject its bids.
“Publishers lose out on demand,” said Shiv Gupta, founder of U of Digital, which provides digital advertising training. “I don’t think anyone can cut them off.”
SSPs that refuse The Trade Desk’s lower bids may cause their publisher clients to lose revenue, according to Prohaska.
Furthermore, according to Gupta, the Trade Desk’s OpenPath product, which will be released in 2022, emulates an SSP.
“They won’t call it pure SSP, but if you get any honest person from an SSP in a room, they’ll tell you, ‘yeah, they’re coming after us through OpenPath,'” he explained.
According to Doherty of The Trade Desk, unlike SSPs, OpenPath does not offer a digital ad marketplace. He also mentioned that, like OpenPath, other ad-buying platforms besides The Trade Desk have direct deals with publishers.
The Trade Desk was able to launch these new initiatives because it collaborates with a publisher-focused organization called Prebid.org on some products that use publisher data, giving The Trade Desk some insight into how SSPs set ad pricing, which allows The Trade Desk to determine how much it actually wants to pay.
“Theoretically, SSPs don’t want to send this information to The Trade Desk,” Paparo explained.
SSPs are retaliating.
SSPs, on the other hand, have been fighting back. Advertiser products are being developed by the largest SSPs, such as Magnite and PubMatic.
“They’re all going for each other’s margins, essentially,” an adtech executive told Insider.
Magnite launched ClearLine, a product that helps advertisers manage streaming TV ad buys, in April. PubMatic launched a similar product in May that allows advertisers to buy video ads directly from publishers. In addition, TripleLift is testing a product that allows advertisers to find audiences online.
However, some SSPs argue that these products do not directly compete with The Trade Desk.
“We do not see the same battleground between the sell side and the buy side that has been made out there,” said Adam Soroca, chief product officer at Magnite.
According to Prohaska, SSPs are expanding their services beyond ad-selling auctions to include data services and identity management.
“SSPs are looking for new ways to regain growth and momentum,” according to Prohaska.