Supply-side platforms have recently faced significant difficulties amid turbulent economic conditions for the advertising sector, with Yahoo shuttering its SSP and letting more than 1,600 employees go, SSP EMX declaring bankruptcy, and layoffs at other companies.

The turmoil among their competitors was reframed during their fourth-quarter earnings calls by Magnite and PubMatic, two of the biggest independent SSPs and among the few that are publicly listed.

On the company’s Q4 results call on February 22, Magnite CEO Michael Barrett stated that “some industry pundits have concluded that this might be the beginning of the end for the SSP industry.” “We strongly disagree. What we are currently witnessing is the death of the undifferentiated SSP rather than the beginning of the SSP’s demise.

On the company’s Q4 earnings call yesterday, PubMatic CFO Steve Pantelick stated, “The recently announced closure of several sell-side platforms gives us even greater opportunity for incremental share gains over time.”

The executives’ remarks generally agree with the industry’s perception that there are too many SSPs on the market today without enough genuinely new features. SSPs that only generate demand will be eliminated as more parties on the buy and sell sides focus on supply route optimization to assure quality, efficiency, and sustainability.

According to sources, Magnite and PubMatic are well-positioned to weather the current ad-tech storm given their scale and extensive inventory holdings. Both are nevertheless susceptible to market challenges.

While Magnite experienced growth in topline revenue for the quarter and the full year, it also experienced a net loss for the last three months of the year, which contrasts negatively with the net income Magnite experienced for the final three months of 2021 and the full year. While reporting positive, but smaller net income for both the fourth quarter and the entire year 2022 when compared to 2021, PubMatic reported increased revenue year over year but a decline in revenue for the fourth quarter of 2022.

The shares of PubMatic were down between 4% and 8% in after-hours trading, while those of Magnite dropped 16% the day after its earnings call, despite both businesses’ attempts to soothe the market.

A rise in ad-tech vendor late payments
As they hoped to convince investors on their earnings calls, Magnite and PubMatic may have survived this moment of market turmoil, but their road to dominance is rocky.

According to the most recent data from ad-tech company Oarex Capital Markets, 43% of payments from ad-tech vendors were made late in the second half of 2022. Following a primarily decreasing trend line in 2021, the percentage of late payments increased from 2021 to 2022. The lengthiest time since the company began compiling data in 2018 was the second half of 2022, when the estimated timeframe to pay publishers was 64 days on average.

According to Oarex’s executive vice president Nick Carrabbia, the data shows a return to normal after pandemic-era liquidity kept some businesses afloat.

According to him, “many companies that might not have survived the past three years under normal circumstances were saved by emergency funding.” “Those companies will continue to experience pressure and possibly tremble.”

In light of this, Magnite let go of 6% of its workforce in January. Executives from PubMatic announced the company was slowing down hiring during its earnings call.

Demand difference, SPO, and CTV
Publishers anticipate that the winning SSPs will feature cutting-edge technology, therefore Magnite is highlighting a number of its products in an effort to stand out from the competition in the SSP market.

These include its demand manager, which aids publishers in maximizing the header, its demand facilitation team, the SpringServe CTV ad server Magnite bought in 2021, the identity products Carbon and Nth Party acquired in 2022, and its demand manager, which helps publishers make the most of the header.

PubMatic emphasized its supply route optimization initiatives, adding that since the service was introduced four years ago, approximately 100% of SPO ad purchasers had remained with the company. SPO increased from about 20% at the start of 2021 to more over 30% of total activity in the fourth quarter.

Both businesses claimed they were in a good position to profit from the sale of Yahoo inventory, one of the biggest web publishers, now that Yahoo’s SSP would no longer be Yahoo’s primary broker. Additionally, they both projected that the closing of the SSP would result in higher bid densities, despite the fact that the majority of publishers using Yahoo would also have been using Magnite or PubMatic, respectively.

Both businesses might see small increases in market share and are unlikely to fail due to adverse economic conditions. However, Ameet Shah, partner and svp of publisher operations & strategy at ad-tech consultant Prohaska Consulting, said that Google Ad Manager continues to be the market’s leading SSP, making it challenging for any company to transform the SSP sector in its likeness.

According to Shah, “[Ad Manager] is still 40–60% of a publisher’s programmatic revenue when you talk about capturing revenue share.


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