Why should you read this Q&A?

Because you need to know how the lack of transparency in ad tech is impacting publishers.
Maya Lawrence

Smart AdServer is a European supply side platform (SSP) that has one of the highest growth rates in recent years. Ad-exchanger.fr spoke with the company’s CEO, Cyrille Geffray, and the COO, David Pironon. They discuss, among other things, the lack of transparency that exists in publisher-focused ad tech platforms, explaining that such platforms are consolidating in a quite a disturbing manner, which is particularly detrimental to European players.

You tell us that the supply side platforms on the market lack transparency. Can you explain what are you referring to exactly, and why?

Smart Ad Server’s Cyrille Geffray: These platforms do not display real revenues: either they are not transparent, or they display an amount that does not match the reality of what has been purchased.

Smart Ad Server’s David Pironon: When analyzing the annual reports of companies listed, we find that the average take rates advertised (that means the average revenue sharing for publishers) is very different than those displayed at the moment the deal is signed. On the market, it’s around 15%, whereas the annual reports of these players, these rates can be higher than 20%.

CG: Contracts are designed so that these actors announce some rev-share, while leaving open the possibility to charge for other services in a non-transparent and non-justified manner. Publishers don’t know what’s going on; their inventory is assigned an apparent value, but since there is no indication of the real price charged to trading desks, they don’t really know the real revenue earned for their inventory. And this is happening everywhere, globally.

Do the major platforms in the market operate in this opaque manner?

CG: Yes. I even think it’s more the rule than the exception.

And by denouncing them, in a way, you want to show everyone that Smart AdServer doesn’t work that way?

CG: I do not think the term “denounce” is quite right. I think there is also hypocrisy on the publisher side; they want to pay their tech providers as little as possible. Now they face fairly massive costs, which is prompting them to find convoluted solutions to successfully make ends meet. Moral of the story: either we all have access to a rev-share that allows us provide proper service and grow as a company, or we’ve got to figure out another way to do business. In the end, we’re caught in-between, and that’s not a healthy place to be.

Are you finding publishers by doing things differently?

CG: From our side, we’re willing to bet that maximum transparency is becoming increasingly popular with publishers.

Publishers are most impacted by this. If you’ve observed this, why aren’t they taking action?

CG: They don’t have the information. You also have to realize that in the context of significant programmatic growth, publishers are happy because they’re seeing revenues increase substantially. They are not looking at the actual margins or the real profits these platforms make.

We’ve been seeing a number of small players converging and re-appearing as major platforms in charge of monetizing content published online. How do you analyze this situation in the market today?

DP: The numbers that are advertised are global figures, so the publisher is not supposed to know the different take rate levels per market. We dissected the numbers more carefully because it is important for us to know where we stand in relationship to our competitors. That way we can assess our performance.

CG: On one side, we have a huge concentration of digital media budgets in the hands of a few publishers. For the rest, it may seem like there is an abundance of companies, but there are really only a few platforms that have captured market share. Technology platforms are indeed becoming the backbone of monetization for publishers. And those that are capable of managing direct and indirect sales will become fewer and fewer. That means there’s a risk that they’ll attract an increasing proportion of digital revenues with the goal of making publishers more and more dependent on them. In the end, this may result in an uncompetitive market with an abnormally high share of media budgets taken by these platforms. Some of these platforms are not European. Therefore, this can decrease the amount of taxes these types of companies pay. Since most of the work will be done by servers, employment levels may also decrease. We’re already seen that the number of smaller, local players, and start ups in particular, is declining. This is really only the beginning.

You are one of the big platforms that positions itself in this market. How would you like to address this problem? Market regulation?

CG: That would be ideal, but I don’t see how we could do it. First, it’s necessary for everyone to become aware of the implications of what is happening now. We have to also think about the fact that a publisher that is completely dependent on both his acquisition of traffic as well as his revenues from one or more platforms has extremely limited editorial freedom.

This article was written by Luciana Uchôa-Lefebvre. It was originally published in French by adexchange.fr on September 28, 2016. The second installment of this article will be published next week. 

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Quality is an issue that affects everyone in the ad-tech industry ecosystem. Smart AdServer was originally founded within a premium publisher, so quality awareness is part of our DNA. For publishers, quality can mean the creatives that appear on their websites. For buyers, quality signifies the sites on which their ads appear and the content that surrounds those ads.