We’ve seen many antitrust investigations and inquiries into major tech companies and their role in the advertising ecosystem launched on both sides of the Atlantic over the past five years. We’ve seen little in the way of concrete results.
That could be about to change. Reuters reported on Monday that Google has offered to open up access to YouTube for third-party ad tech companies, as part of a settlement for an ongoing EU antitrust investigation.
This is some way short of a full divestment of Google’s ad tech business which some in the industry are pushing for, but would certainly be significant. The privileged access which Google’s ad tech tools have to YouTube’s inventory, which is a high priority on many media plans, effectively forces advertisers to work with Google’s tech.
But just how big of a change would Google’s proposed change have?
First things first…
There are a few big glowing asterisks which have to be addressed.
For a start, Reuters’ report says that Google has offered the move as part of a potential fine-free settlement, not that the EU has accepted it, so it’s not yet a done deal.
Secondly, the impact of this specific change will depend a lot on the eventual outcomes of other antitrust investigations and legislative efforts. For example, a bill was recently proposed in the US Senate which would force Google to divest its ad tech business. If that were to pass into law, this deal could become pretty much irrelevant.
And lastly, the exact nature of Google’s offer isn’t yet clear. Reuters’ report says that Google has offered “to let rival ad intermediaries place ads on YouTube”. This could mean several things – from liberalising access for third-party ad servers (Google currently allows a select few, which have to integrate with Google’s own systems via an API) to allowing third-party demand-side platforms to once again buy YouTube inventory.
Most are reading Reuters’ report as suggesting the latter – after all it would be much more consequential – the former seems unlikely to convince the EU to drop a fine equal to ten percent of Google’s global turnover. But it’s worth noting that this has not actually been said outright.
Goodbye walled garden, hello porous hedge?
If access were to be opened up to other DSPs, there could be significant benefits for advertisers.
“This would be great news for advertisers in that it creates more options for effective cross-channel media buying and measurement,” said Adam Chugg, head of big tech activations at the7stars. “To date, if YouTube was a significant part of your media plan then it made sense to consolidate this with other available channels through DV360. Of course, there are several reasons why advertisers might have another DSP of choice dependent on media choices, resulting in fragmentation that poses challenges for efficient delivery, frequency, and measurement. Those challenges become easier to navigate with this move and turns somewhat of a walled garden into a porous hedge.”
DSPs themselves of course would stand to benefit, getting access to a major source of video/connected TV inventory. As Adam Chugg suggested, non-Google DSPs could win more than just fees from YouTube sales. If buyers no longer have to use Dv360 for YouTube, they may choose to consolidate all their buying with one or two DSP partners, bringing other spend which previously went through Google’s pipes into third-party DSPs.
“Platforms such as The Trade Desk couldn’t access YouTube inventory meaning that brands are forced to use Google buying platforms for campaigns that include YouTube,” said Will McMahon, head of ad tech at Spark Foundry. “With this news, all of that could change and we could activate a relatively complete video campaign across a single platform other than Google owned properties.”
For publishers, the benefits would potentially be more muted.
Damon Reeve, CEO of The Ozone Project, said the move would be a positive overall, since it would create greater competition for premium publishers’ audiences across the platform. But he emphasised that what would be more beneficial for publishers would be full control over their own digital supply chain.
“We would hope any move by Google will place the publisher at the centre of any decision that involves monetisation of their content,” said Reeve. “Similarly, we hope this ‘democratisation of YouTube’’ would provide the mechanics for publishers to realise the full value of the video content they so heavily invest in.”
Google always wins
But while this could have major benefits for advertisers and DSPs, it’s also very possible that Google doesn’t come out too badly either.
For a start, opening up access to third-party DSPs does have benefits for Google itself, bringing in more demand for its inventory.
“From a tactical point of view, one should ask “why now?”,” said Richard Kramer, founder and managing director at Arete Research. “It may be no coincidence that as YouTube ads growth rates slows, and subscriptions are accelerating, Google might be looking for fresh sources of demand for YouTube ad inventory.”
YouTube could also choose to save its best inventory for itself, lessening the impact for advertisers and third-party DSPs.
“Unfortunately I feel like what will happen is some DSPs will get access to some inventory,” said Dan Larden, head of UK at TPA Digital. “Remember, not all YouTube inventory is the same, there is the massive long tail of people watching videos of cats and then there is a more valuable premium layer of people watching long-form broadcast content. I expect Google will keep that second layer to themselves. Combine that with all of the audience data and measurement capability that you will only get when you buy YouTube via Google tools, and it’s likely in two years time Google will still be the only place advertisers will want to buy YouTube through.”
Kramer agreed that even if other DSPs have access to YouTube, that access may be far from equal. “It comes as IDs are disappearing across the web and mobile, and CTV has been less data driven from the start,” he said. “Without the ability to upsell data, other DSPs would be relegated to workflow management solutions, simply becoming YouTube’s outsourced sales force.”
And Kramer added that any new ad tech partners buying YouTube inventory could face scrutiny for their fees.
“Any approach to buying YouTube is likely to expose the egregious and often unjustified ad tech take rates (e.g., agency 10 percent + DSP take of ~20 percent and SSP of ~7 percent, before settlement/ad serving), typically seeking to arbitrage supply and demand in new “experimental” formats,” he said. “We think premium content owners will not sanction these sorts of fees, and nor should YouTube, given Google’s knowledge of ad tech.”
