Platform Wars Will Reverse The Ad Tech Tax

lornebrownupdated-2The Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Lorne Brown, CEO at Operative.

There is a battle brewing in media land.

For years, Google and Facebook have been the ultimate rulers of the digital advertising landscape. Not only do they command consumer attention, they have more data and technology than any competitor online, attracting massive numbers of publisher distribution partners.

But, the digital landscape is changing. TV is moving in.

Comcast, Verizon, AT&T and other companies are all investing in digital technology and data to position themselves at the nexus of the digital and TV convergence. At the same time, companies from Apple to Amazon are pushing hard to claim some territory.

Apple looks at the world very differently from a cable company, Google or Facebook. It isn’t selling its own advertising. It is selling content subscriptions, hardware and apps. To sell more, it has no problem letting publishers capture all of the advertising revenue. When given a choice, publishers will prefer distribution partners that don’t have competitive interests.

The ensuing platform battle is good news for publishers. These platforms need content, and premium content providers have a window of opportunity to tell the platforms what they need.

Ask a publisher how many different digital technologies and vendors stand between them and their advertisers, and the number is likely to be in the double or triple digits. With every Neustar, AppNexus or Spongecell that gets added to the party, publishers miss out on revenue. The advertiser’s budgets don’t change, so publisher CPMs get depressed, creating the ad tech tax. Platforms hoping to gain publisher attention can’t just focus on making content distribution easy; they must help publishers sell and deliver advertising in a streamlined, profitable way rather than add to the ad tech tax.

A fight for publisher content will improve operational efficiency for advertising and likely decrease the ad tech tax. Most publishers don’t have the resources to work with every platform out there. Any platform that wants to attract publishers needs to be a nearly seamless partner (or promise a huge payday). The most important advertising elements that will help platforms attract publishers are robust APIs, rich reporting and data activation.

Platform APIs need to allow media companies to access things that are important for everyday transaction. From inventory forecasting to proof of delivery, platforms need to offer access to the information needed to transact effectively. The less a publisher needs to develop to hook into a new ecosystem the better. Platforms need to consider building into the entire ecosystem that matters to publishers, ranging from Salesforce and Moat to Great Plains.

Facebook and Google provide limited reporting for publishers. Other platforms might be willing to concede more transparency for a piece of publisher content. What’s more, Facebook and Google are walled gardens that often require publishers to use their own systems, dashboards and numbers. Platforms that allow reporting to flow into the publishers’ systems in a format that can be more flexible and granular will attract interest from publishers that want to consolidate their operational complexity.

Facebook and Google also limit the use of data within and outside of their walled gardens – another opportunity for other platforms. Publishers want to activate their data. They want to mine data on content and advertising performance. They are eager to augment the audience data profiles in their data management platforms. They value differentiated audience data from specific platforms that have cache or scale.

To capitalize on this rare moment in digital history, which may favor content publishers, it’s important for publishers to prioritize. The best way to start is to create a complete picture of the costs and benefits of working with every distribution partner and raise issues that might persuade them to distribute their content on a new platform.

Publishers are always angling for higher rates, which they may or may not actually get, but trading on technical efficiencies, data and reporting might be more effective. Understanding which partners are most profitable overall and creating clear expectations will give publishers more bargaining power.

Follow Operative (@Operative) and AdExchanger (@adexchanger) on Twitter.

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