Unraveling the SaaS Proposals of Magnite and PubMatic

1. The Blurring Lines in Digital Advertising
2. The Emergence of New Revenue Models
3. A Veil of Secrecy
4. The Aftermath of MediaMath Bankruptcy
5. The Publishers’ Dilemma
6. Concluding Thoughts
7. References & Further Reading

The Blurring Lines in Digital Advertising

Over the previous year and a half, demand-side and supply-side platforms have modified their propositions in a way that obscures the boundaries of the customary media-trading sector. The Trade Desk’s OpenPath is often identified as the initiating trigger of this change.

These developments are broadly perceived as precursors to a near future where the ad tech landscape, historically intricate, becomes less crowded. This prediction is further reinforced by The Trade Desk’s recent indication that it will cease allowing publishers and SSPs to ‘dictate’ pricing strategy, suggesting increasing competition.

Leading SSPs, such as Magnite and PubMatic, have followed suit, launching their own ‘buy-side offerings’ early in the year.

The Emergence of New Revenue Models

Earlier this year, Digiday reported that PubMatic was considering an “Access Membership program” for publishers. Anonymous sell-side sources also claimed that Magnite proposed a similar offering.

None of the parties provided extensive details when questioned by Digiday, such as whether any trials are currently in progress. Yet, sources within the SSPs spoke of the chance to progress towards revenue models that resemble software pricing.

A Veil of Secrecy

In August 2023, when directly asked about such moves, PubMatic CEO Rajeev Goel told Digiday that he “does not have anything to share” regarding product announcements. He added, however, that “we’re always experimenting and exploring new product opportunities with our customers.”

Similarly, unnamed sell-side sources informed Digiday that Magnite has been contemplating “service fees,” or “seat fees,” in addition to its traditional percentage of media fees and revenue-share for programmatic traded ads.

When asked to clarify these reports, a Magnite spokesperson acknowledged the company’s appetite for experimentation in an email statement but declined to provide any specifics of its intentions.

Magnite offers a dynamic pricing model. Seat fees have long been part of the pricing structure for our business, and there are various tiers based on the level of technology and services our customers utilize.

The Aftermath of MediaMath Bankruptcy

The initial proposals from both companies predate July 2023, but they arrived at an interesting time, particularly in light of Magnite and PubMatic’s respective decisions to implement contractual terms over sequential liability following the MediaMath bankruptcy.

The MediaMath downfall left both players in a deficit — PubMatic owed $10.4 million, and Magnite owed $12.6 million. Ultimately, however, it was the publishers who bore the brunt of the loss. Media owners are likely to be cautious of additional ad tech fees from the pair in the near future.

The Publishers’ Dilemma

Rob Beeler, founder of sell-side consultancy service Beeler.Tech, noted that many publishers are figuring out how to shield themselves. He suggested that if any SaaS-like offering from traditional SSPs could mitigate the risk of trading with risky buy-side partners, it could be received positively.

“There is some animosity right now [among publishers] and the way the MediaMath stuff has been handled,” he stressed, “there’s plenty of people out there wanting to know what the play is.”

Industry consultant Lulu Phongmany told Digiday that many publishers claim they desire “seats” on supply-side ad tech, such as an ad exchange or SSP. This direct connection to advertisers theoretically means they are subject to a lesser “ad tech tax.”

Phongmany likened it to “the difference between buying at wholesale or buying at retail,” but also noted that not many will have the expertise to fully utilize a SaaS-like offering from SSPs.

“Traditionally, you need to transact at huge volumes to make a seat worthwhile,” she told Digiday, adding that any publisher that is pitched such an offering needs to ask precisely what they will receive in return.

Concluding Thoughts

The ad tech industry, with its ever-evolving landscape, is unpredictable but full of opportunities. Magnite and PubMatic’s recent SaaS proposals are indicative of the shifting sands in this space. While the industry watches these developments closely, it also anticipates more innovative solutions to arise in the near future.

References & Further Reading

• Magnite and PubMatic’s recent SaaS proposals herald ad tech’s shifting sands