DSP take rates. What did you think they took?

In five recent studies on supply chain transparency, trade associations within the industry have reported that merely 40 to 60 percent of an advertiser’s dollar actually makes it to the publisher for ad displays. The remaining portion is consumed by adtech intermediaries, including major players like Google and Facebook, as fees for their technological services in the advertisement procurement and delivery stages. These numbers might be termed ‘optimistic’—the actual situation is likely far more dire than presumed.

Further research from Adalytics in 2022 has also confirmed SSP take rates in the 20 – 60% range, with a high of 99% (see SSP #3 in the chart below).

In the following article from earlier this year — https://www.linkedin.com/pulse/publishers-cut-zero-percent-programmatic-how-dr-augustine-fou — I showed data from AIDEM which showed 1) DSP take rate by frequency (purple chart) and 2) DSP take rate by advertiser CPM bid. The purple chart shows that most of the take rates are in the 17-18% range, followed by 32% and 10%. That seems fine. But, when you cross reference the chart in green, you can see that the DSP take rates go up to 99% as advertiser CPM bids go up. That means, the higher the advertiser bids, the greater a percentage the DSP takes, so little to none of the incremental CPM flows through to the publishers for showing ads; the DSP pockets all of the incremental CPM.

AIDEM re-ran the numbers across 10s of millions of impressions and we swapped the axes. Advertiser CPM bid $ is the X-axis (horizontal axis) now, the independent variable. As you read from left to right, you see higher advertiser CPM bids. The Y-axis (vertical axis) is the DSP take rate, as a percentage.

As you can again see, the higher the advertiser CPM bid the higher the DSP take rate. Looking at the right side of the chart, when the advertiser bid is $2.50 or more, the DSP take rates are 80% or more, with a high of 99%.

Advertisers, if you are spending money at $10.00 CPMs, are you OK with only $0.10 CPMs going to publishers to show your ads, because middlemen took a 99% toll? In what other industry would buyers be OK with someone taking a 15% tax, let alone a 50% tax, let alone a 99% tax.

Finally, citing observed data from this Adalytics blog post https://adalytics.io/blog/cpm-bid-data, we can see what CPMs advertisers paid, compared to the CPMs publishers got. Consider this preliminary data and directional only. But if you eyeball the average CPM that advertisers paid ($8 – $10, with a high of $18 CPM) and compare it with the average CPM that publishers got ($1 – $2, with a high of $2.46), it is clear that publishers are getting only 10 cents on the dollar. 90% of the advertisers’ ad spend goes into the pockets of middlemen. Who thinks 90% tax is an acceptable tax to pay?

So what are the next steps?

Advertisers, if you buy media directly from the media owners/sellers, most of your dollar goes to them for showing your ads — a.k.a. “working media.” Advertisers can do this (“buy media directly”) in a number of ways: 1) use the media sellers’ self-service interface https://danads.com/clients/, 2) buy through an adtech intermediary that has direct relationships with the sellers, so they are the only “hop” in the middle https://www.aidem.com/, and 3) ask the media seller which 1 exchange they prefer to sell through and which 1 dealID you should target in your campaign set up. Any of the above will work to reduce the number of middlemen, the percentage lost as tax instead of going to working media, and reduce supply chain complexity, fraud and waste, and carbon emissions, all without having to pay additional adtech leeches to do those things for you.

If you’re skeptical, consider verifying the actual CPM bids your media agencies are making in the marketplace on your behalf. Request the specific data from the DSP to see the CPM bids made for your inventory. It’s essential to know whether the CPM you’re paying aligns with the bids. You might discover that a significant portion of your dollar isn’t reaching the intended destination for your ads.

In a forthcoming study that examines a scenario with only one adtech intermediary, we’ll be able to demonstrate the precise cut taken by this intermediary. We’ll compare the CPM received by the publisher with what the advertiser paid. Imagine if 90% of your investment reached reputable publishers instead of just 1%. Advertisers need to question why so many of their ads end up on low-quality sites. It’s often due to a lack of awareness about the substantial cuts taken by intermediaries, which inadvertently directs your advertising to less desirable locations.

Please read the full article here – https://www.linkedin.com/pulse/dsp-take-rates-what-did-you-think-took-dr-augustine-fou/