Demand vs. Supply In Mobile Advertising: Resolving the Inevitable AdTech Conflict

AppLift recently announced the acquisition of Bidstalk, an enterprise DSP provider with some amazing technological capabilities, thereby adding another important ingredient to our demand stack. This evolution didn’t come in a day, but was rather the result of our market vision and our understanding of the future of adtech (advertising technology) and martech (marketing technology, solutions enabling you to manage your existing customer base).

Here I would like to give a bit more background on one of the main reasons why it was important for us to invest in a programmatic DSP with RTB capabilities and, having spent years on both the demand as well as the supply side, explain how I see the industry evolving forward.

In 2015, unless you are a Google or a Facebook with unlimited access to audiences, the ad network model is dying. Networks, serving both publishers and advertisers, suffer from an inherent conflict of interest within themselves:

  • Publishers’ main KPI for profitability is eCPM, which means that ad networks need to invest in optimizing their demand towards eCPM and fill rates to keep the former happy in today’s competitive landscape.
  • Advertisers, on the other hand, measure CPA and return on investment (ROI) as their main metric to gauge the success of the traffic provider.

This conflict sometimes made ad tech players resort to aggressive business moves in order to keep both advertisers and publishers happy, such as subsidizing publishers, under-reporting impressions to advertisers to make performance look better, as well as other shady tactics, often on the grey area of business ethics.

Ad networks, if they try to chase both sides, are doomed to systematically fail either their clients (advertisers) or their partners (publishers), which also explains why some of the smarter ones went for the obvious solution of picking a side.


Demand or Supply – Take Your Side

Ad networks having a better track record with publishers became exchanges and SSPs, while those with stronger ties to advertisers went for the demand side.

That said, picking either side requires heavy investment in technology, as in a world where programmatic advertising already represents almost 70% of the ad spend (also see the excellent “Ad Tech is dead – Long Live Marketing Tech”), technology is the new weapon of choice.

programmatic inhouse

Having spent almost 10 years in the desktop advertising world, I had already witnessed the first clear chasm in the industry between demand and supply desktop adtech companies. Very few online adtech players retained their “full ad stacks”, and those were only the Googles and Facebook’s that had “free” access to supply to begin with.

At AppLift, we predicted this evolution of the mobile industry to take less time than desktop advertising, simply because mobile programmatic supply side platforms had become the de facto standard. This was due to mobile advertising’s original problem: a clear unbalance between supply (a lot) and demand (not enough). MoPub, for instance, started offering free mediation to publishers as early as 4 years ago after detecting the opportunity to become a market leader, while newer supply side platforms such as PubNative are now offering open APIs for native monetization, allowing every publisher to customize the experience in order to monetize their app.

At AppLift, since our beginnings as a mobile marketing platform, we took several steps in the programmatic space: we developed a real-time API (as well as an XML API), we completely deprecated our publisher-side SDK, and we finally launched DataLift, a transparent programmatic media buying platform. This way we can focus on where we believe we have the most understanding and expertise – the demand side.

With Bidstalk, we added real time bidding capabilities for DataLift, giving our advertisers control and access to almost any type of programmatic supply, thereby accessing the entire pool of mobile inventory available. Only this way will we be able to solve the decenal conflict between demand and supply.