Global brands consolidate ad server rosters

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02/12/2016
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Major global brands are consolidating their roster of ad serving companies, with the average number of partners dropping by a third in the last two years. Most companies now work with three ad serving companies compared to 4.5 in 2014.

The findings come from a 2016 survey by the World Federation of Advertisers (WFA) and Ebiquity and is based on responses from 30 companies in 14 sectors with a total global media spend of more than $30bn.

Back in 2014, some 16% of respondents worked with more than nine ad servers but the 2016 data shows that only 3% are working with seven or eight and just 10% with five or six different companies.

Due to the evolution and growth of most ad serving companies' geographical footprint, it's now possible for marketers to obtain near global coverage with fewer suppliers.

Additionally, the goal for many marketers is to seek more control and reduce costs, which can account for more than 10% of net digital media spend in some cases, depending on format, with video costing significantly more.

However, some brands do wish to work with a variety of partners where they have distinct specialisms such as video, rich media or native for example. This is another distinct change from 2014 with advertisers adding complex functionalities beyond desktop, mobile and video ad serving, which are utilised by near all respondents.

In 2016, tools to provide frequency and sequencing control, viewability and verification, programmatic integrations and Dynamic Creative Optimisation are all used by at least 60% of respondents.

Such changes are part of a wider trend among major brand owners to transform their marketing for the digital age, making moves to bring greater knowledge of the technology landscape in-house often as part of organised 'Media Transformation' programmes.

The WFA and Ebiquity survey found that the most common way for advertisers to work with ad servers such as Atlas, DoubleClick, Sizmek, Adform and DCM was for the relationship or contract to be owned and operated by media agencies, an arrangement found in 70% of cases.

However, such arrangements can lead to a loss of control and visibility on pricing as well as challenges in data access and reporting. Some 30% of respondents now have a direct relationship with an adserver but allow the agency to operate this. A further 13% now own and operate the relationship themselves (figures add up to more than 100% because brands can use multiple models even in the same market).

The survey also found significant differences both in ad serving cost and payment models:
  • Ad serving can be charged for in various ways but fixed CPM is most common – used by almost 40% of respondents, while 25% have a variable CPM payment model and a further 11% using a percentage of net media spend.
  • Whatever the charging model, when converting the cost back to a share of media spend, there's a clear concentration between 1% and 4% of (net) digital media spend, though some respondents are paying as much as 13-14%.%u2028This is probably determined by the blend of formats being used. Ebiquity notes that that VPAID ad serving can cost up to 8% of net digital media spend.
  • Where the agency either owns and operates or simply operates the relationship, clients can also pay an additional fee, typically as a percentage of net media in the case of one in four respondents or as a CPM fee in the case of 21%. However, some 21% of respondents reported that they did not pay a fee for this service.

Although most brands now use the same model of third-party ad serving globally, in China the current custom is that it is provided by publishers. However, brands are pushing back as it makes it harder for brands and their agencies to get data on delivered impressions and actions.

Many brands appear to be moving budgets away from publishers who are uncooperative and will not accept ad tags. “There are no technical reasons why ad verification cannot be conducted in China” commented one respondent, “only commercial ones”.

“Getting better control of, and access to, ad serving offers opportunities to improve media performance and reporting. The range in costs associated with ad serving indicates that this is also one area of media transformation where brands can seek competitive advantage,” said Matt Green, Global Media & Digital Marketing Lead at the WFA.


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