News

TechCrunch’s Baseless Accusations About Google & DSPs

Written on
Nov 24, 2010 
Author
Gavin Dunaway  |

google_recruiting_small.jpgADOTAS – Hey everybody — TechCrunch’s Erick Schonfeld just discovered these nefarious things called DSPs! Apparently the rapscallions are giving independent ad networks trouble.

Oh, and because Google is offering white-label technology to agencies that plug into the DoubleClick Ad Exchange (as well as others), he makes a lot of accusations about illegal kickbacks and rebates without showing the smallest shred of evidence. Google’s display business is drawing more revenue because they’ve resold their technology and partnered up with agencies to streamline media buying through various intermediaries — including across the AdSense network.

Somebody call the FTC! The FCC! The SEC! Run DMC!

An anonymous industry insider claims Google is offering incentives to agency DSPs not via its actual display revenue but funds brought over from the search side. In other words, Google is trying to buy display market share — a bold accusation with nothing but faceless whispers to back it up (Schonfeld even admits “there is no evidence other than anonymous hearsay”).

Later on Schonfeld writes: “Since Google controls a lot of the inventory through AdSense, it can make money at different points along the chain, from publishers as well as advertisers. And therefore it can ‘pay’ for a bigger share of ad agency’s display budgets in different ways.”

In other words, Google can offer agencies sweet deals as it does a lot of the gruntwork. It’s what’s known as an end-to-end solution. Sure, you can complain about a lack of transparency in the buying process, but do advertisers really care about all the nitty gritty details? If their campaigns aren’t showing results, advertisers will move on.

A large independent ad network (I can do anonymous sources too!) recently told me they had several agencies come back after forsaking the network for DSPs and trading desks. Why? The agencies simply weren’t getting the same results.

In fact, indie ad networks are increasingly reaching to advertisers themselves as agencies are notorious for their technological incompetence in the digital arena. Ad networks are branching out their services to offer holistic digital solutions for advertisers unimpressed with agencies’ digital performance.

It’s true that many ad networks can do everything a DSP can do, which is why struggling ad networks are increasingly rebranding themselves as DSPs. They’re called demand-side platforms because they’ve moved from the middle — where ad networks stand and ad exchanges stand — to the buyer side, in particular snuggling up with agencies, which are also struggling in the ever-evolving digital ad space.

And then there’s Google, which is has a vested interest in improving its display game, building “strategic partnerships” and facilitating media buying on its network (and others) by offering technology to agencies. The DoubleClick Ad Exchange is arguably an ad network since the transactions all go through Google, unlike the Yahoo Right Media Exchange, which simply serves as a marketplace for buyers and sellers to meet up. Filling in the technological gaps stymieing the agencies is proving a fruitful way to increase its display share

That great anonymous source comments: “Google’s growth in display and agencies profits are tied together.”

No kidding. That’s… not the least bit shocking. Once it gets enough of a stake in display, will Google eventually forgo agencies and reach out to advertisers directly? Yep, if the company is smart, which it’s shown time and time again.

Publicis’ Vivaki, which gets an awful lot of attention, buys through the DoubleClick Ad Exchange as well as the RMX — a good DSP or trading desk will have access to all the major exchanges. Vivaki’s big crime seems to be not informing clients that its Audience on Demand DSP tech is based on the stuff Google inherited in the Invite Media acquisition.

“The battleground is the client,” Vivaki SVP Kurt Unkel wisely intones. ”We used to have a reliance on intermediaries who gave the appearance of adding value. They were able to take on risk and remove complexity. I now can create that inhouse, and don’t have to pay as much.”

There is no scandal here — just more proof the display ecosystem is realigning.  DSPs won’t kill ad networks or vice versa, but the competition will continue to be fierce — and Google will continue its growth as a major display player.





Gavin Dunaway is Editor, U.S. at AdMonsters, a leading trade publication, event producer and service provider for the online advertising industry. Previously, he had been Senior Editor of Adotas, where he arrived after years of ping-ponging around various industry publications. This Washington, D.C. native and George Mason University graduate also enjoys playing electric guitar so loud that the walls shake.

Reader Comments.

Well done, Gavin!

Posted by Uriah Av-Ron | 2:38 pm on November 24, 2010.

VivaKi: “…I now can create that inhouse, and don’t have to pay as much.”

If creating something in-house means outsourcing media buying to Google, then yes, it’s true.

Posted by John | 3:14 pm on November 24, 2010.

@John – we don’t outsource media buying to Google. As a provider of ad tech, we certainly take advantage of their software to support our buying process. But the technology and relationships to make a successful media buy work don’t run themselves. Strategic design, campaign optimization, gleaning and activating insights, vetting media and data partners, and just generally supporting the broader agency base of VivaKi while this marketplace moves at a lightspeed pace are critical elements of media buying. All of that and so much more is done in-house.

Posted by Kurt Unkel | 8:31 pm on November 24, 2010.

Is a kick back something new. A dinner, lunch ball game concert is a kick back
All ad networks give kick backs as do all agencies receive them

Posted by Michael Jackson | 10:10 pm on November 24, 2010.

“kick backs” is inaccurate BUT media trading desk are building in their own margin into the CPMs without disclosing this to their clients. This is fact. Ask them. Ask B3, Audience on demand, OMG trading desk how they make their revenue and tell them its on the record

Posted by andrew | 10:43 pm on November 29, 2010.

Gavin, great article. It’s true that DSP’s have moved from the middle as you mentioned in this article, but the polarization seems to be between Content which is the stalwart media foundation and ever expanding Digital Technology. Aqua is an online media company that bridges this gap, not by straddling the middle, but by offering the best of both worlds: Top Content AND RTB, BT, Recency, and remote buying, too.

Posted by Tom Doyle | 1:59 pm on November 30, 2010.

Leave a Comment

Add a comment

Tags: , , , , and
Article Sponsor

More News