The Ad Tech Tax Goes Down. Even so… is it worth it?

Today, AdExchanger reports on eMarketer research that the ‘Ad Tech Tax’, the fees that marketers pay intermediary technology providers, have decreased. That’s great! However, it’s a good time to revisit if the Ad Tech tax is worth it in the first place.

One of my favorite articles of Ad Tech tax skepticism is from the Ad Contrarian in January this year: The High Cost of Online Trash. He outlines how a marketer can whittle away their dollars on tech fees that have little discernable benefit. He points out the prevalence of fraud cost of tech and comes to his point:

” if directly-bought (contextual) advertising delivers 100% working media, and programmatically-bought (behavioral) advertising delivers 32% working media, behavioral advertising has to perform at about three times the level of contextual advertising to be a break-even proposition.** Put another way, the technology we are paying for only pays out if the resulting media buy is three times as effective”

https://adcontrarian.blogspot.com/2019/01/the-high-cost-of-online-trash.html

Risking a spoiler, there doesn’t appear to be evidence that programmatic inventory is 3x as effective.

Adding to this point is the case study of what happened when the New York Times stopped using ad exchanges in Europe after GDPR.

“The fact that we are no longer offering behavioral targeting options in Europe does not seem to be in the way of what advertisers want to do with us,” he said. “The desirability of a brand may be stronger than the targeting capabilities. We have not been impacted from a revenue standpoint, and, on the contrary, our digital advertising business continues to grow nicely.”

-Jean-Christophe Demarta, svp for global advertising at New York Times International re: Digiday

On top of the mounting evidence that ad exchanges aren’t as valuable as they have been claiming to be, there is the fact that 83% of consumers find behavioral advertising to be immoral and the fact that those businesses are under fire from world governments to curb their privacy practices.

These are all factors that the Ad Tech tax is lowering to respond to, but it remains to be seen if they are truly adding enough value even at the lower prices.