US Programmatic Fees 2019

US Programmatic Fees 2019

Concerns About the ‘Ad Tech Tax’ and Transparency Haven’t Gone Away

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About This Report
US advertisers are spending about a third of their nonsocial programmatic display ad dollars on fees this year—aka the “ad tech tax.” Read on to learn more about our inaugural estimates of spending on programmatic fees.

Executive Summary

For years, advertisers and publishers alike have complained about the “tech tax,” the programmatic fees they see as eating into media budgets. But programmatic trading requires infrastructure and partners just to function—let alone effectively. And those partners have to get paid.

How much are advertisers paying for the “ad tech tax”—the programmatic fees collected by ad tech firms to facilitate or complete ad transactions?

We estimate that US advertisers will spend almost $12 billion this year on the fees that make programmatic display transactions possible, including payments to demand-side platforms (DSPs), supply-side platforms (SSPs), and other technology and service partners.

Are programmatic fees getting higher or getting lower for advertisers?

As a share of programmatic display ad spending, programmatic fees are getting lower, little by little. But the absolute level of spending on programmatic fees is going up, due to healthy increases in programmatic display spending outside social networking sites.

Is the “ad tech tax” really a problem? What about transparency?

Whether the current level of programmatic fees is a problem depends on who you ask. Publishers would like to see more of those dollars. But media buyers have mostly moved on from considering media as a proxy for audiences and believe that at least some of the fees associated with automated trading are worthwhile. The bigger problem is in transparency, both in terms of costs and ad placements—including the possibility for fraud.

WHAT’S IN THIS REPORT? This report presents a new estimate of US advertiser spending on programmatic fees and explores the problems of the ad tech tax and the lack of programmatic transparency.

KEY STAT: We estimate that almost one-third of US advertiser spending on programmatic display ads this year will end up with tech intermediaries and other programmatic partners, rather than publishers.

Here’s what’s in the full report

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18expert perspectives

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Table of Contents

  1. Executive Summary
  2. Programmatic Fees in 2019
  3. Should Advertisers Worry About the Tech Tax?
  1. The Future of Programmatic Fees
  2. Key Takeaways
  3. eMarketer Interviews
  1. Read Next
  2. Sources
  3. Media Gallery

Interviewed for This Report

Mike Caprio
Zeta Global
Divisional President
Interviewed June 17, 2019
Greg Collison
Adobe
Head of Product, Advertising Cloud
Interviewed June 25, 2019
Shailin Dhar
Method Media Intelligence
CEO and Co-Founder
Interviewed June 5, 2019
Jeffrey Hirsch
PubMatic
Chief Commercial Officer
Interviewed June 13, 2019
Jeremy Hlavacek
IBM Watson Advertising
Head of Revenue
Interviewed June 25, 2019
Walter Knapp
Sovrn
Founder and CEO
Interviewed June 11, 2019
Ryan McConville
President and Chief Operating Officer
Kargo
Interviewed June 20, 2019
Quentin Michon
Smart
Chief Financial Officer
Interviewed July 2, 2019
John Nardone
Flashtalking
CEO
Interviewed June 4, 2019
Michael Nevins
Smart
CMO
Interviewed July 2, 2019
Ari Paparo
Beeswax
CEO
Interviewed June 14, 2019
Tyler Pietz
MightyHive
Vice President, Global Consulting
Interviewed July 17, 2019
Jon Schulz
Viant
CMO
Interviewed June 27, 2019
Robin Strauss
Ranker
Vice President, Ad Technology and Yield
Interviewed June 6, 2019
Michael Tiffany
White Ops
Co-Founder and President
Interviewed June 13, 2019
Nikao Yang
Lucidity
Chief Operating Officer
Interviewed July 18, 2019
Andy Ellenthal
Staq
CEO
Interviewed July 3, 2019
Mitchell Gray
AppsFlyer
Head of Mobile Partnerships
Interviewed June 25, 2019

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authors

Nicole Perrin

Contributors

Ross Benes
Analyst
Lauren Fisher
Principal Analyst
Monica Peart
Senior Director, Forecasting
Tracy Tang
Senior Researcher