With the rise of digital channels, advertising has undergone a drastic change. You’ve probably experienced the new opportunities online advertising has opened up, from search ads and affiliate banners to sponsored content on social media. At the same time, this greater availability of digital advertising space and originality of the format allows brands like yours — whether a smaller organization or a large corporation — to compete in advertising at the same level. These benefits are what led digital advertising to overtake more traditional channels — in 2017, digital ad spend topped $77.37 billion, making it more than $5 billion more valuable than the year’s TV ad spend.
Digital advertising also offers your brand other advantages compared to analog ads. The nature of the internet makes it possible for you to reach a much wider audience, regardless of your organization’s size. While the reach of traditional ads was limited based on budget, your online campaigns can scale to reach a much larger and broader audience. In addition, every element of the online advertising process can be tracked, from the number of times your ad is viewed to the campaigns that result in the most clicks and sales.
The Rise of the AdTech Tax
However, taking full advantage of digital advertising capabilities can require an extensive amount of time. You have to refine targeting settings, test and create multiple ad variations, and analyze and optimize your future ads based on the results. The other option is to pay for a third-party adtech solution to manage these complex aspects of effective digital advertising — which far outpaces the ability to manage ad campaigns manually, not to mention the outcomes.
As a result, advertising technology companies have been able to charge publishers like you a high fee for these services — also known as the “adtech tax.” This is a high-cost investment for you to be able to implement and maintain a strategic online campaign using advertising technology for automation and optimization. This adtech tax effectively recreated the cost barrier that digital tools had once removed, giving larger brands that can afford these tools an advantage in the advertising market.
Value-Focused Advertising Technology
This system put control in the hands of the adtech providers, who could then set a high “adtech tax” for their solution with very little transparency or accountability. Fortunately, as publishers demand a clearer return for their investment in advertising technology, this is changing. Agencies have changed their approach in response, adopting a payment model that is more focused on driving conversions.
In the new structure, the adtech tax is moved — and you only pay for the most premium online advertising strategy, based on a cost per acquisition (CPA) approach. You’re charged only for the conversions that come from the ad campaigns, meaning that the value of your customers are all you have to pay. You will no longer have to pay “fluff” costs to agencies that can’t be attributed to the acquisition of new customers or sales.
This latest change gives the control back to you as the buyer. It also eliminates your risk of ad fraud or exploitation from an agency. With the elimination of the “adtech tax,” your advertising spend is dedicated solely toward results, helping you bring in new customers.
April 24, 2018
Performance, The Winning Curve