This Ad Tech Shakeout Seems Real

The bloodletting has begun

Is ad tech finally having the ‘shakeout’ that has been predicted umpteen times over the last dozen or so years?

It’s risky to declare anything ‘dead’ in this most-resilient category. Yet something seems different this time around.

The most prominent example of category turmoil of course came a few weeks ago, when industry pioneer MediaMath effectively went out of business, before being pulled from the ashes by Infillion in an eleventh hour $22 million deal.

But this really started a few years ago, when various factions started touting ‘Supply Path Optimization’ - the idea that it was time to cut out all those data hops and middlemen and ad tech taxes and streamline digital advertising.

This seemed mostly theoretical for several years, until companies like The Trade Desk launched OpenPath, promising direct access to publisher inventory, while threatening supply side players with irrelevance. This move was followed by similar tactics such as Magnite’s Clearline and even Yahoo’s Backstage products.

Yahoo’s launch of Backstage followed the suddenly resilient company’s decision to shutter its SSP and lean into its DSP business.

I had Yahoo’s Adam Roodman , SVP, Product Strategy and Management on my podcast this week to talk about what went into these decisions.

For Yahoo, it was time for a “focus and decisiveness that’s been missing from the last decade in ad tech,” Roodman said. These were "overdue type decisions. We were standing up three [different] ad platforms in the market.”

That hardly seems ideal, especially as we seem to be in an era where the gloves are off, and ad tech exclusivity is looking to win out over the last decade’s promiscuity.

“We had customers who actually really liked our DSP,” Roodman told me. “I can’t say we had nearly the same amount of traction on the sell side…the sell side platform business is a tough business to be in when you are one of 15 SSPs [working with a given publisher].”

So Yahoo opted to focus, and lean into relationships with a few hundred publishers with which it had strong relationships and could provide unique demand. It’s likely we’ll see more of this, as publishers and brands seek to chose sides and declare winners.

“I do think consolidation is going to happen,” said former Xandr GM turned Captify CEO Mike Welch in another recent pod episode. “I think what we’re really seeing is a move…toward trying to differentiate what had become pretty commoditized over the years.”

“You’re now seeing the buy side try to disintermediate the sell side, and the sell side doing the same thing. The players that can truly differentiate their offerings are going to be the ones left standing, or go the way of MediaMath.”

It remains to be seen what becomes of MediaMath within Infillion. Meanwhile, the Trade Desk is wasting no time in trying to force more consolidation/casualties. In case you missed it right before Labor Day, but Insider reported that the company is looking to blunt the need for SSPs but undercutting them on price.

Some compared the company’s power move to that of Google, which the Trade Desk has long presented as the big bad walled garden it’s trying to disrupt.

Speaking of Google, that company is still facing the possibility that its ad tech business will need to be spun off, or broken up, but regulators. While that could create opportunity for lesser ad tech players, it seems more likely that if any publishers or brands relying on Google ad tech want to look elsewhere, they’ll be drawn to big players (like say the Trade Desk).

At that point, we may actually see a smaller ad tech industry. Still, I probably wouldn’t bet a lot of money on it.