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PubMatic is letting buyers purchase inventory directly from agencies and brands, without using demand-side platforms, via a new product called Activate. It’s the latest ad-tech platform to recently release products driving supply-path optimization, aiming to make programmatic buying more efficient.
The tool, PubMatic’s first new product since 2020, helps buyers access connected TV and online video inventory, much of which still goes through the manual insertion order process rather than programmatic pipes.
Launch partners include Dentsu, Havas, GroupM, Mars and Omnicom Germany on the buy side and Fubo and LG on the sell side.
While Activate was developed to answer buyer demand, it also reflects a vision for the programmatic supply chain that has fewer intermediaries, PubMatic’s CEO Rajeev Goel told Adweek.
“We’re really focusing on eliminating the DSP/SSP paradigm and instead having a single layer of technology,” Goel said.
PubMatic is not the only one. Magnite, one of PubMatic’s largest supply-side platform competitors, launched a similar tool called ClearLine last month that lets advertisers buy video inventory directly.
PubMatic’s Activate only intends to replace deals that would have been conducted manually—60% of CTV and 18% of online video transactions are expected to be made via non-programmatic insertion orders in 2023, per PubMatic—and doesn’t have DSP features like creative or bid optimization. Magnite has stressed ClearLine is not meant to replace the DSP.
Still, the moves signal a programmatic supply chain in the process of dislocation. On the buy side, DSP The Trade Desk launched OpenPath last year, cutting out SSPs for buyers wanting to purchase select publisher inventory directly.
In addition to concerns about DSPs coming for their customers, SSPs are contending with distress in the industry. Earlier this year, Yahoo shuttered its SSP and EMX declared bankruptcy. On the subsequent fourth-quarter earnings calls, Magnite and PubMatic executives positioned themselves as victors amid the sector-wide dislocation.
Filing a gap in the market
Advertisers are still more likely to buy online video and connected TV manually because of the higher cost CPMs. They are more wary of taking on the risks inherent in the programmatic supply chain, like match rate challenges and opaque fees, Goel said.
By going direct, Activate helps avoid these concerns.
“The consistent feedback that we got for high CPM transactions is … the discrepancy, the latency, the match rate … can all be challenges to moving those high-priced IOs into programmatic,” Goel said.
Both PubMatic and Magnite are trying to pick off buying scenarios that are kind of simple
Ari Paparo, CEO, Marketecture Media.
Also, cookie targeting is less important in CTV deals, which tend to be direct or take the form of programmatic guaranteed, where a buyer has to buy 100% of what a seller delivers. In these scenarios, a DSP is not as necessary, said Ari Paparo, CEO of ad-tech media company Marketecture Media.
“DSPs don’t add enough value to justify their fees,” for CTV buyers, Paparo said.
The focus from Magnite and PubMatic on the buy side can also be interpreted as a response to The Trade Desk’s OpenPath, which carries the risk of the second-largest DSP biasing demand to its own supply, meaning less revenue directed toward traditional SSPs, Paparo said.
“Both PubMatic and Magnite are trying to pick off buying scenarios that are kind of simple. They’re not trying to go after a hard DSP optimization problem,” Paparo said, noting The Trade Desk’s OpenPath is a simpler solution than an SSP by aggregating top publishers. “They’re trying to pick off easy stuff and thereby get a foothold and over time expand into more and more technologies.”
Not all SSPs are evaluating the competitive landscape this way. Index Exchange CEO Andrew Casale penned an open letter to DSPs reaffirming the SSP’s commitment to the sell-side, following Magnite’s announcement.
Casale later told Adweek that an SSP could not serve the buy side without conflicts of interest and that instead, SSPs should make buying open web inventory as cheap and efficient as possible in order for publishers to win back market share from walled gardens.
“We disagree with our peers on how this market gets to its end stage,” Casale told Adweek. “We need to grow the pie. [We] don’t want a few extra points of a smaller dollar.”
Publishers express cautious optimism
For all the hand-wringing about what it might mean for SSPs to expand their client roster, publishers who spoke to Adweek expressed cautious optimism about the trend. A direct path to buyers could mean fewer ad-tech fees eating into revenue and more of their inventory coded as premium.
“On the publisher side, we need to be where the demand is coming from,” said Amanda Martin, SVP of partnerships and business strategy at publisher network Mediavine. “If that means it’s coming from 100 pipes or 10 pipes, 10 pipes would be a lot easier to manage.”
Still, there is a risk that the proliferation of supply paths will balkanize publishers’ inventory, said Paul Bannister, CSO at publisher network Raptive.
“When is it possible that our sellers and their sellers are going to the same people and trying to sell similar things?” Bannister said. “The ad market is large. There are plenty of places for everyone to fish if you pick those places logically and coordinate teams.”