In today’s market, demand partners are facing escalating programmatic inventory costs due to various factors such as made-for-advertising sites, invalid traffic, and an abundance of intermediaries. As a response to this challenge, demand partners are exploring new solutions to access supply in 2024.
In a guest post by Mintegral’s General Manager for the Americas, Jeff Sue, the advantages and disadvantages of three viable options for demand platforms are examined: utilizing ad exchanges, working with demand-agnostic exchanges, and developing a custom SDK for integration with supply partners.
With the increasing costs associated with programmatic inventory supply, demand platforms are encountering a complex landscape. Factors like high levels of invalid traffic and the prevalence of MFA (Made For Advertising) sites contribute to inflated inventory costs. An Association of National Advertisers (ANA) report from June 2023 indicated that MFA sites make up 15% ($13 billion) of annual ad spend, with approximately 20% of programmatic auctions originating from MFA publishers. The report also highlighted that the average programmatic ad campaign spans over 44,000 websites, presenting a vast and challenging terrain for demand platforms.
Ad exchanges provide quick access to inventory but come with relatively high take rates.
To navigate this landscape, demand platforms have three main options, each with its own set of advantages and drawbacks. Let’s delve into each option:
Option 1 – Leveraging Ad Exchanges
Ad exchanges offer demand platforms rapid access to inventory, allowing them to set up quickly with minimal effort. While they provide a well-entrenched route to market with vast impression options and spending control, the trade-off is the high take rates, averaging around 20% or even higher. Pricing transparency issues and potential limitations in rendering capabilities for advanced ad formats can further complicate the efficiency of ad exchanges.
Option 2 – Integration with SDK-less Mediation Platforms
SDK-less mediation platforms like Amazon TAM, Amazon UAM, or Nimbus present an alternative with lower take rates (2.5% to 10%). These platforms streamline integration without the need for an SDK, reducing costs and potential conflicts of interest. However, they may have limitations in rendering complex ad formats, particularly for video ads.
Building a custom SDK involves significant time, resources, and financial investments.
Option 3 – Developing a Custom SDK
The third option involves creating a proprietary SDK and integrating it directly into apps through mediation layers. While this approach offers more control over creative rendering and lower bidding fees, the process requires substantial time, resources, and financial commitments. Building and maintaining an SDK network can be a long-term investment with extensive planning and execution.
In evaluating these options, demand platforms must consider the trade-offs between costs, control, and complexity. Each choice offers unique values in the ecosystem, and a tailored approach may involve leveraging multiple solutions concurrently.
Finding the Optimal Strategy
The optimal strategy for a demand platform depends on its programmatic journey and objectives. Whether seeking rapid access, cost-effective integration, or enhanced control, each option presents distinct advantages for demand partners. Balancing the need for speed, cost efficiency, and autonomy will be crucial in shaping the future of demand platform strategies.
Edited by Paige Cook
