- The Trade Desk will start undercutting the fees publisher adtech firms tack on to digital ads.
- The adtech used by publishers often inaccurately prices their inventory, said a Trade Desk exec.
- It’s the latest example of The Trade Desk’s growing clout with publishers.
Adtech firm The Trade Desk is about to execute a plan to lower the price advertisers pay for digital ads.
The Trade Desk operates software called a “demand-side platform” that advertisers use to buy ads across the internet. It is the largest independent DSP, handling $7.8 billion in ad spend in 2022, according to its year-end earnings report, and competes with giants like Google and Amazon.
Last week, The Trade Desk said that starting in September, it will bid below the asking price on ads, according to an email viewed by Insider that was sent to publishers of ad-supported online content and their tech partners. The Trade Desk confirmed this new initiative.
Digital ads are often bought in an auction, and these ads have price floors, which are the minimum rate that ad sellers will accept for online ad space.
Publishers work with tech partners called “supply-side platforms” to set their prices based on CPMs — or the cost to have an ad viewed by 1,000 people. SSPs also run the online ad auction, and tack on a fee for its services.
However, publishers work with multiple SSPs. And different SSPs charge a wide spectrum of different fees, Will Doherty, VP of inventory development at The Trade Desk told Insider.
For example, a publisher might charge a minimum $1 CPM, and one SSP they work with will auction it for a minimum of $1.20, another will auction it for $1.50, and a third for $1.75. An average premium publisher has 26 different floors set by the SSPs, Doherty said.
The Trade Desk’s new strategy is meant to standardize these price floors, he said, adding that it could weed out SSPs that “manipulate or create unfair auctions.”
“You don’t need data science to tell you that these floors are inaccurate or do not truly represent what the minimum bid is to win,” he said. He added that he hopes other demand-side platforms follow suit, and that it will help publishers better understand how much their ads are really worth.
Chris Kane, founder of adtech consultancy Jounce Media, agreed that price floors set by SSPs are often not accurate. “The floor prices declared in bid requests no longer represent the publisher’s actual floor price,” he said.
The Trade Desk hadn’t previously bid on ads with floor prices that were too high, and now that it will, publishers will see more bids for their ads, he said. To see these bids, publishers must set up their auctions to accept bids below their price floors.
While other DSPs occasionally send low-ball bids, publishers might be more willing to look at The Trade Desk’s bids due to the large amount of advertisers using its platform.
Adam Soroca, chief product officer at the SSP Magnite, said in an email that The Trade Desk’s software is designed to find “favorable” pricing for advertisers and that without SSPs, publishers will increasingly find their ad rates decreasing.
Doherty said that publishers aren’t compelled to accept The Trade Desk’s lower bids: “You’ll know what we would have paid if you let us bid.”
The Trade Desk’s move comes at a time when tech for advertisers and tech for publishers are becoming increasingly competitive with each other. In 2022, The Trade Desk launched a product called OpenPath that lets advertisers buy programmatic ads directly from a publisher without going through an SSP’s auction. Meanwhile, SSPs like PubMatic and Magnite have rolled out new products to connect their publisher communities directly with advertisers.
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