How a wild-west exchange increases the ‘tech tax’
January 21st, 2020
What’s a ‘tech tax’? I’m new
The ‘tech tax’ refers to all the fees in programmatic advertising that vendors take from the ad spend before it gets to the publisher. ‘Working media’ is the amount of ad spend that winds up in the publisher’s pocket. E-marketer estimates that 33% of ad spend is lost to the tech tax. It’s not that vendors don’t deserve their cut, but there is room for efficiencies, and a lack of transparency over costs can make buyers and sellers queasy about the whole programmatic ecosystem.
How does a lawless exchange increase the tech tax?
If exchanges improved the quality, transparency, and source of the supply they offer, there would be less emphasis on verification vendors making sure the ad is viewable. Verification takes place at each step in the programmatic chain which means a verification fee is taken at each point. The demand for such a vendor would decrease if each entity in the ad supply chain––brand, agency, trading desk, DSP, SSP, publisher––didn’t need to verify as frequently whether every impression or website is brand safe. If exchanges maintained a quality supply, there would be less reliance for verification vendors as well as verification duplication. These vendors are an important part of the programmatic ecosystem, but they don’t have to be involved at every turn, charging multiple entities in the ad supply chain for the same auction.
Does a cleaner supply make the tech tax work more for buyers and sellers?
If you clean up your exchange, you won’t feel the full sting of the tech tax. You’ll be getting better results from the vendors on the supply side that are taking their fee. Granular tagging makes for more precise targeting, even if we don’t have access to a third-party cookie. And more precise targeting leads to more clicks, more engagements, and more conversions.
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