How advertisers and media owners are dealing with programmatic fragmentation

The majority of advertisers and media owners (88 per cent) would reduce the number of ad tech partners they work with but fear such a move would negatively impact revenue, and are increasingly turning to managed service players (as well as building their own tech) to deal with the fragmentation, according to research.

Fragmentation continues to be an issue in the ad tech sector

The findings were unearthed in a study published this week by ExchangeWire, and commissioned by BidSwitch, also reveals that although over four in 10 (44 per cent) of media buyers and sellers expect programmatic technology consolidation to increase, equally as many (45 per cent) feel a range of new tools will simultaneously enter the marketplace.

Advertisers in Europe are faced with even greater problems of market fragmentation (compared to their US counterparts), according to the results, which found that with 85 per cent of the EMEA sell-side participants and 93 per cent on the buy-side inclined to reduce the number of ad tech players they work with.

The dynamic was further demonstrated when the results demonstrated that nearly one in 10 (7 per cent) of US buyers require a team of 16 people to implement intricate solutions, compared to the EMEA region, where over 10 per cent of both buyers and sellers require teams of over 10 experts to integrate new vendors with their internal stack (in a smaller addressable markets).

James, Prudhomme, managing director, EMEA, for Index Exchange, participated in the study, and observed: “Within the EMEA region buyers and sellers have to manage their way across multiple currencies, disparate regulatory regimes, unique languages and distinct cultures.

“Media owners in EMEA tend to have smaller scale in their home market and as a result have been quite successful at building global audiences. This has meant that they have had to apply more effort and diligence to monetising those international users and have tended to rely on a broader set of programmatic partners.”

The complexity of the ad tech sector is beginning to be addressed through the acquisition strategies of some of the industry’s largest names – such as Facebook, Google, plus telcos like Verizon Wireless.

Although, while this may reduce the number of companies in the sector, leads to less transparency, less available inventory, and a more fragmented and narrowing holistic view of media for the advertiser, according to Rebecca Muir, head of research and analysis at ExhangeWire.

This may also explain why over half (58%) of respondents feel greater consolidation would have no overall impact on their business. As once nascent solutions reach profitability, deliver a strong return to shareholders and are ultimately purchased by larger tech companies, she explained.

The ongoing complexity means the industry will see continued growth in specialised technology, data, and managed service players, in addition to advertisers building their own specialised technology, according to Muir.

He added: “Although the journey to programmatic mastery for a dynamic and fast-growing market like the EMEA region will not be without its challenges, it is clear that new technological developments are helping to make the transition feasible. As the industry evolves, new issues will arise and both buyers and sellers must learn to wield the power of multiple solutions and managed services to succeed.”

A free copy of the report from ExchangeWire and BidSwitch can be downloaded here

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