Amazon’s pending price hike stirs debate among media owners

Amazon Advertising is arguably adland’s rising star, with its Amazon Publisher Services posing a realistic competitor to market Google in place when it comes to the industry’s sell-side monetization options.

However, an upcoming price increase for a service that helps media owners access lucrative demand from APS buyers could have some weighing their options with the age-old dilemma of “who should foot the bill?” — fueling the debate among those concerned.

In recent weeks, representatives from Amazon Publisher Services have begun contacting supply-side platforms, ad-tech companies that connect publishers with advertisers, advising them of an impending boost for its Transparent Ad Marketplace (TAM).

“Effective May 1, 2023, APS will implement a change to our TAM buyer fees,” reads an email attributed to APS that was shared with Digiday by a publisher-side source, who declined to be named. . “We are replacing the current CPM fee of $0.01 on paid impressions with a 2.5% fee on net revenue paid to publishers. There will be no change to bidding mechanics as buyers are contractually required to submit net bids to Amazon.

An Amazon spokesperson was unable to provide a recorded comment at press time.. though, multiple sources pointed out how the statement asserted “that it is against buyers’ contracts with APS to charge publishers after the auction.”

According to multiple sources, the wording of the above poses a dilemma for sellers in the industry, as SSPs have always borne CPM fees under the previous APS billing model. An intuitive reaction would be to pass these price increases along the supply chain, with publishers (ultimately) footing the bill.

Pre-auction or TAM?

However, the above wording suggests that such a move is outside the bounds of the storyline, prompting debate over what they should do next. One option would be to switch from Amazon’s TAM to PreBid, open-source software that can help publishers meet the demand for open independent SSPs without the fees often associated with Big Tech platforms.

Meanwhile, Matt Barash, vice president, Americas, global publishing, at Index Exchange, told Digiday that his outlet will bear the increased purchase fee for APS in May. “In a tough economy, margin matters and therefore the alternative in PreBid becomes profitable for a publisher willing to integrate and recoup the investment over the long term,” he added. “We’ll pay the tab for the first month to help buyers better understand their options.”

David Kohl, CEO of TrustX, a sales service for publishers, told Digiday that “sophisticated publishers” are likely to opt for sourcing routes in which the industry’s notorious “tech tax” is minimized. . However, separate sources told Digiday that migrating to a different platform would likely result in reduced revenue from TAM, as much of its demand comes from Amazon DSP.

“Publishers now need to optimize yield and see if they could get the request/budget through other sources. I think most of the time not,” added a separate source who requested anonymity due to his employer’s public relations policy.” That means it’s almost a mandatory fee, unless advertisers withdraw their Amazon DSP spending, which means they lose access to Amazon Audience Targeting.”

Costs keep rising

Rob Beeler of publisher advisory service Beeler.Tech further told Digiday that this will negatively impact publishers’ ability to optimize their programmatic setups. “Amazon or the SSPs must resolve [issues] so that publishers have accurate data on auctions and the revenue they collect [via TAM],” he added. “It’s going to cause discrepancies, it’s murky.”

Chris Kane, CEO of the consulting services source, called the latest developments “a pretty clear move by ad tech vendors to weed out other ad tech vendors,” but that publishers are always going to face an increase in their “ad tech tax” no matter what.

“It seems publishers are unanimously saying, ‘Our effective ad tech costs are going up and we don’t really have leverage to push them back,'” he added.

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