Wait a minute, there’s a programmatic hardware race going on right now?
You heard that right.
The rapid development and adoption of cloud-based tech have led to new splits in how third-party programmatic vendors position themselves in the market. The positioning essentially comes down to owning one’s own cloud infrastructure or renting bandwidth and cloud infrastructure from public clouds, which are Google Cloud, Amazon Web Services (AWS) and Microsoft Azure.
The importance of framing between ad tech vendors that run essentially the same services is not new to the category. The Trade Desk’s early success was built on its differentiation as an agency solution among other DSPs that attempted to jump direct to brand. Tides of opinion cyclically change in regard to whether companies should represent one side of the online ad exchange or span the whole chain.
Nowadays, programmatic vendors, and SSPs in particular, are carving new paths of differentiation based on their type of adoption of cloud infrastructure, Magnite CTO Dave Buonasera told AdExchanger.
Take, for example, the dispute between whether SSPs ought to entirely own and operate their cloud infrastructure. For the SSP, this entails owning racks of servers within data centers, which are themselves serviced by a specialist vendor that manages server tech and does Flash file compression. The default programmatic partner for this type of infrastructure service is Aerospike.
And there are great advantages.
For one thing, programmatic companies observe so many bid requests and units of data at such a rapid clip that renting out the cloud servers is just too costly. That is why ad tech as a category stands out for not defaulting to Azure, AWS or Google Cloud.
But there are also just cooler things one can do in their own cloud.
“In AI, faster feedback loops lead to better models, and better models attract more advertising activity,” PubMatic CEO Rajeev Goel told investors last month during a quarterly earnings report. “By owning our infrastructure, we keep that compounding advantage within PubMatic.”
Just this week, PubMatic launched what it calls Decision Fabric, which is a product for DSPs to use containerized models within PubMatic. This means curation and audience targeting can happen within the SSP. Decision Fabric enables impression targeting by a DSP or custom bidder without any restraints on QPS (or “queries per second” – an important factor since there are so many online ad impressions that programmatic vendors must throttle their output to reduce cloud data costs). The DSP can also observe data that isn’t passed by OpenRTB packet, such as how many ads are on a page or if video ads have sound on.
Index Exchange has a similar product it calls Index Cloud. In April, it claimed to have run the first “containerized DSP deployment” in partnership with Bedrock Platform.
Many startup DSPs and custom bidders prefer that setup, where SSPs own their own server networks (this is referred to as “on-prem,” rather than in the public cloud), according to Buonasera.
“At the end of the day, the container argument really just boils down to who is paying for the infrastructure,” he said.
For DSPs doing pure audience targeting or curation, a container is ideal because it can easily contain that bid-pricing model. But a large DSP running global campaigns with frequency management and pacing, and that relies on many more vendors, cannot be easily contained, so to speak, by the cloud container tech.
Although vendors in the space have been “misleading” when it comes to their total commitment to owned-and-operated cloud infrastructure, Buonasera said. “It’s weird to brag about being only on-prem.”
Live sports would be the canonical example, he added. When Magnite was used as the SSP partner for the cricket World Cup last year, it would have made no sense to invest in servers to spin up for the event, which would sit idle when there wasn’t the same surge of streaming ad impressions.
One of the advantages of the public cloud is that the bandwidth can be used as needed, when there’s a major live event or just happens to be a strain on the network, like a data center going down or certain publishers having mega-viral stories at the same time. Maybe there’s a flu going around, and everyone’s at home.
Buonasera alluded to a similar dynamic on the demand side. Some DSPs and bid-modeling companies have wrangled recently over differentiated investments in their own server infrastructure or in containerized SSP products.
The same theoretical ad tech capabilities exist in both scenarios, he said. “It really boils down to who is paying for the infrastructure.”
In the cloud infrastructure space, “containers” and “on-prem” are not new concepts.
What we’re seeing in the ad tech market right now, he said, in terms of companies framing themselves based on how they’ve adopted cloud infrastructure, “is marketing that’s wrapping on top of some concepts that people want to make cool.”
