It may seem that Google and Meta live through hard times. Over the past decade, Google has already faced more than 8 billion euros in EU antitrust fines. Recently, Google had a lawsuit in France for adtech abuses and was fined for $268 Million.
Facebook has not been spared trouble too. The company keeps losing money on its stock after rebranding. Furthermore, currently, both Google and Facebook are under antitrust investigations in relation to their online display ad businesses by the European Commission and the U.K., which will drastically affect the reputation and income of those companies.
Let us tell the story from the very beginning. It all started in 2007 when Google bought DoubleClick.
DoubleClick was one of the leaders in display advertising that developed and provided Internet ad services. DoubleClick was in collaboration with large brands such as Microsoft, General Motors, Coca-Cola, Motorola, L’Oréal, Apple, Visa, and many others.
Suddenly, Google acquired DoubleClick for $3.1 billion and immediately started implementing its rebranding. That is how DoubleClick became Google Marketing Platform brand, DoubleClick Bid Manager is now Display and Video 360, DoubleClick Search became Search Ads 360, and DoubleClick for Publishers turned to Google Ad Manager 360. Through this purchase, Google obtained its cash cow that Google protects with its full determination.
This occasion made advertisement analytics see the obvious red flags: there is reason to assume that if the leader in search advertising had acquired the leader in display advertising, it would consequently lead to the antitrust law breach.
Advertisers recognized a hidden menace in the Google Ad platform as well. That is why they started developing and open-sourcing a system called Header Bidding. This system allowed to launch a bid for several ad exchanges at once and in a much more transparent way than through Google’s systems. Thus, Header Bidding became a threat to Google’s dominance by improving the playing field for competition.
Exactly at this point, Facebook goes to the stage in this story. In 2017, Facebook began demonstrating a strong interest in Header Bidding but then suddenly backed off. It turns out, Google was trying to make friends with Facebook and gave the company a fantastic offer, which was not given to anyone else: a guarantee of a 90% (!) of auctions regardless of the bids; more time to bid, which is 300 milliseconds compared to the 160 offered to other companies, at the risk of pages loading more slowly, identification of 80% of smartphone users and 60% of web users. This agreement obtained a code name Jedi Blue.
Before we continue our story, let’s take a step back to understand why the monopoly of the tech giants is dangerous.
The Jedi Blue case is one of the examples of the abuse of Google and Facebook’s privileged positions and proof of why the tech giants need regulation.
For those, who are not familiar with the ad industry, Google and Facebook look like the undoubtful guarantee for quality since they reach dominance in the industry. However, this statement is misconceived, we will share some constructive criticism on the Facebook and Google ad products in a separate article. Furthermore, the monopoly of the large tech companies leads to a range of negative consequences.
The most obvious reason that comes to mind is decreasing the quality as a result of monopoly. If there is no competition, there is no motivation to produce a quality product. This will consequently impede progress.
Today billions of people are dependent on services like Amazon, Apple, Facebook, and Google. Almost 3 billion people monthly use social media that belong to Meta (Facebook, WhatsApp, or Instagram), and this number will grow. If a large social capital is concentrated in one tech conglomerate, this can lead to a range of different problems such as disinformation or censoring.
Referring to the previous problem, lack of confidentiality deserves special attention. Collecting, selling, exploiting, and abusing data have long been a serious problem for tech companies. Currently, this is one of the reasons for antitrust and monopoly concerns about big tech companies.
The dominance of big tech companies is oppressing the small companies and preventing innovative brands and startups from entering the market. This will consiqencelly limit the customer choice.
And this is only the tip of the iceberg. There are more reasons why the power of the big tech companies should be under control. Nevertheless, there is a counter-power that prevents the domination of big companies and fights against the appearance of a monopoly.
Returning to the Jedi Blue case, it doesn’t happen for the first time when the tech giants, such as Apple, Google, Meta, or Amazon, are close enough to breach the antitrust law. For such cases, there is the European Commission’s commissioner of competition in Europe.
Very recently, EU antitrust authorities began their investigation regarding Google and Facebook’s Jedi Blue.
“On Friday, we just opened a new case with Google and Facebook, now Meta. It’s called Jedi Blue, named after the codename for an agreement that they seem to have entered back in 2018, with the aim, seemingly, to kill off Google competitors in the advertising ecosystem. We also have another Google case exclusively focusing on Google and the ad-tech stack, looking at some of the behaviors that seem to be anti-competitive.” - said Executive Vice President Margrethe Vestager, a European Commission’s commissioner of competition in 2014 and an executive vice president in 2019, she’s pursued antitrust cases.
If the investigation confirms the antitrust law breach from the side of Google and Facebook, the companies should expect another big fine.
Representatives from Facebook and Google have already commented on the situation.
“The allegations made about this agreement are false. This is a publicly documented, procompetitive agreement that enables Facebook Audience Network (FAN) to participate in our Open Bidding program, along with dozens of other companies. FAN’s involvement is not exclusive and they don’t receive advantages that help them win auctions. The goal of this program is to work with a range of ad networks and exchanges to increase demand for publishers’ ad space, which helps those publishers earn more revenue. Facebook’s participation helps that. We’re happy to answer any questions the Commission or the CMA have.”
Meta also has declared their statement:
“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms have helped to increase competition for ad placements. These business relationships enable Meta to deliver more value to advertisers and publishers, resulting in better outcomes for all. We will cooperate with both inquiries.”
Facebook and Google are experiencing not only financial but also reputational losses due to the range of lawsuits. Remember when Zuckerberg lost in court because of Facebook’s privacy breach? After the range of claims from the EU privacy regulation administration, Meta is threatening to leave the European market.
Or did you notice how Google is losing its trust in privacy and ad products quality? For one, these consequences have already led to Google being completely banned in Austria.
Other European countries can follow the example of Austria and ban Google ads as well.
All those occasions will not be traceless for those companies. The question is if users will still want to collaborate with those tech giants after what happened.
While continuing to monitor the situation, we at Adello adhere to our mission to deliver the most transparent, reliable, and effective mobile advertising services to our valuable clients!
Programmatic is another type of advertisement. What makes programmatic advertisement special is the automated process of buying and selling online advertising. This allows making transactions more efficient and effective by optimizing the process and consolidating the digital advertising efforts in one technology platform. While traditional advertising includes requests for proposals, quotes, tenders, and negotiations, programmatic buying uses algorithmic software to buy and sell online display space.
Machine learning is essential in any programmatic advertisement platform. Processing the number of different kinds of data helps enhance the probability of campaign success.
It allows optimizing campaigns in real-time by analyzing campaign inputs, user behavior, and dynamics of audiences that are most likely to convert are identified and targeted.
However, the ad buying process is not completely automated. As a rule, there is a marketers’ labor involved. They manually prepare insertion orders or ad tags. Nevertheless, without automatization, this process would be much longer.
Just a year ago, the spending by marketers on programmatic ads in the U.S. reached the amount over $79.61 billion, and it keeps growing. It is expected that by 2022 expenditures will increase to nearly $95 billion.
The programmatic ecosystem comprises the different technology platforms, available advertising deal types, methods of buying programmatic media and spans across a variety of ad formats.
All of the components communicate and interact with each other and create an ecosystem. This allows making the process of automated media transactions more facile.
As a rule, each programmatic platform is owned and operated by either a publisher, an advertiser, or an intermediary.
Let’s take a look at each component of the programmatic ad ecosystem.
SSP stands for the supply-side platform. As a rule, SSP belongs and is operated by an SSP service provider. Publishers (also referred to as the first-party) pay for the services to access the SSP platform and place inventory for the advertisers.
DSP stands for the demand-side platform. Advertisers (also known as the third-party) use DSP to manage the process of programmatic media buying. Usually, the third-party requires to pay the fee to have access to the platform. The demand-side platform is owned by a DSP service provider.
DMP stands for a data management platform used as a third-party data repository. Those databases provide information about users for whom the advertisement is made. Since the era of third-party cookies is close to its end, most of the DMP would have to redesign their business model because they contradict the new privacy regulations.
CDP stands for customer data platforms. It creates, unifies, and stores customer data accessible to other marketing systems. Customer data is normally collected from multiple sources, cleansed, and merged to create a single customer profile. Since the first-party data is acquired with user consent, its use in programmatic advertising becomes more privacy-friendly and trustworthy.
Ad networks play the role of facilitating and amalgamating publisher ad inventory for convenient purchase. It is supposed to help both publishers and advertisers.
On the other hand, ad exchanges automate the process of buying and selling on an impression-by-impression basis through real-time bidding (RTB).
The main difference between Ad Networks and Ad Exchanges is that the last one doesn’t involve human interactions.
There are different kinds of offering and acquiring inventory in the programmatic ecosystem, and each of the ways has its benefits and flows. Generally, they can be divided into 2 types: real-time bidding (RTB) and programmatic direct.
RTB includes an auction for the inventory and can be subcategorized into open auction and private exchange. Meanwhile, Programmatic direct offers a fixed price and 1:1 relationship between a publisher and a marketer. Let’s take a closer look at each way of the programmatic deal.
Open auction has open access for everyone. That means that any marketer on the exchange, SSP, or ad network side can participate in the bid on any available inventory.
Although the publisher sets the floor price for an advertisement, marketers’ demand still determines the final price. In the end, the highest bid wins. Open auctions are considered the most convenient and cost-effective way of purchasing media and have the highest reach to the audience.
However, the inventory is not guaranteed, which means there can be certain risks.
Another risk is blind bidding. Publishers are not always acknowledged who was bidding the inventory. At the same time, the marketers can also not be aware of what kind of inventory they obtain. This has some risks for brand safety.
Unlike an open auction, the marketers can participate in the private exchange exclusively with an invitation from the publishers. The marketers receive a time-sensitive deal ID. The publishers set up the floor price, and the highest marketer bid wins. The benefit of a private exchange over an open auction is transparency. Both sides are aware of what kind of inventory they get. Moreover, marketers have access to brand alignment, contextual placements, and better UX delivery.
Same as in open auctions, private exchange inventory is not guaranteed.
Preferred deals are private, where publishers offer premium inventory to the marketer. The necessary condition is a pre-negotiated fixed eCPM price. As a rule, marketers pay to get the“first bids” on premium ad space. When an ad request is received, there is an option for the marketer to bid at the pre-negotiated fixed eCPM price in real-time before the inventory is sent to open auction. One of the main benefits of the preferred deals is the predictability of the revenue stream. Marketers have an opportunity to look at premium inventory without price fluctuations. At the same time, marketers are able to choose high targeted placements. Meanwhile, the publishers can sell the premium inventory at a more competitive price.
Same as in RTB, the inventory is not guaranteed in the preferred deals.
As the name suggests, it is the way of a programmatic deal, which guarantees the inventory.
Both sides negotiate the price for a guaranteed volume of impressions and flight date. This kind of programmatic deal is transparent and brand-safe, as marketers know where their ad is published. Meanwhile, publishers can control what content is displayed on their app or site.
Combining the programmatic deals makes cherry-picking possible and therefore allows to get the most out of the campaign in terms of performance and/or price. That is why Adello combines different types of programmatic deals.
Before defining which programmatic deal type to use, Adello would have to define the ad campaign goal. If the aim is to reach out to the new audience, learn their behavior, and open new opportunities to push your brand awareness – an open auction would be a suitable option.
Most of the traffic used by Adello is bought through the open auctions. Open exchanges have millions of different publishers that provide an opportunity to advertise the product to the mass. One of the main benefits Adello provides to its clients is a near real-time intermediate campaign reporting. Using Adello Direct reporting dashboard, advertisers can assess their campaign performance and re-adjust different targeting options, thus targeting a more precise audience. Adello Direct allows narrowing audiences based on their location, interests, demographic feature, etc.
If there is no inventory available through the open market and Adello doesn’t have to fulfill advertiser preference for a specific publisher, Adello chooses preferred deals. Such deals negotiate the preferred price but don’t require securing the inventory. That way, Adello can buy the traffic needed or fit to an agreed price or can pass it if there is a better matching inventory or price somewhere else.
However, some publishers sell only a part of their inventory on open markets or don’t sell there at all. If Adello needs to secure the inventory of those specific publishers, we use a private marketplace.
Programmatic guaranteed is the most favorable option for most publishers since they can sell a guaranteed amount of inventory for a fixed price. Adello uses this type of programmatic deal in 2 cases: 1) if the advertiser asks for a specific publisher, or 2) if inventory shows a good performance for a reasonable price.
Programmatic advertisement is a deep and quite exciting method of marketing. Knowing how programmatic works allows marketers to make more informed and assessed decisions. The information provided in the article is only a basic foundation of the programmatic ocean. Nevertheless, Adello is always glad to share valuable insides about marketing and answer your questions. In the future, we will provide deeper information that will help you to understand programmatic advertisements better.