Performance marketing insights, discussions and expertise

As verification services grow, agencies and publishers duel over who pays

By on April 5, 2017

Originally written by Ross Benes for Digiday.

Publishing execs spend a lot of time thinking about who will pay for vendor fees, and these anxieties aren’t going away.

As fake news, viewability, methbot and platform measurement errors created problems for advertisers over the past year, the demand for third-party verification increased. As these services become more widely used, the negotiations over who pays for them becomes a bigger deal. Agencies push these fees onto publishers, who try to account for this by raising CPMs. But publishers’ ability to get advertisers to play along is determined by whether or not their content is integral to the brand’s campaign.

“As these services have come into the mainstream, many agencies have attempted to make the pub pick up the costs as they experimented with them,” said a publishing exec, requesting anonymity. “The budgets for these expenses weren’t preallocated in their client contracts so they did what they could to have these services not eat into their margins.”

What makes matters more frustrating for publishers is that many of them already use a verification service, but because they use a different vendor than what the agency uses, the publisher is asked to pay for the same type of service twice. One publishing source said that he’d be happy to share the reports his site gets from Moat, a widely used verification service, but if the advertiser wants to use a competitor like Integral Ad Science or DoubleVerify, the advertiser is usually dead-set on adding another middleman and passing its associated fees off to the publisher.

Moat CEO Jonah Goodhart said that he’s not a proponent of advertisers charging publishers in this manner. But he believes that advertiser clients of measurement companies do “literally send their bills to the publisher.” Amit Joshi, director of data science at anti-fraud firm Forensiq, said that even if agencies pay Forensiq directly, he has no way of knowing if the money came out of their own pockets, their client’s pockets or the publisher’s pockets.

“The agency can get the money wherever it wants,” he said.

Cristina Calderin, director of programmatic at Thought Catalog, said that her company tries to accommodate advertisers, even though the fees might seem excessive to publishers who are already paying fees to ad servers and programmatic platforms.

“But we do bake it into our total cost so that we’re definitely seeing lift in yield even with those extra fees,” she said.

Other publishers said they also factor in verification fees when negotiating rates. If the publisher can get the agency to pay for a higher CPM when additional vendors are used, then the advertiser will indirectly pay for this service even though specific budget allocations for verification weren’t originally built into the contracts agencies had with their brand clients. But many agencies balk because they have to protect their margins.

“If you are endemic to their brand, they will be more flexible and work with you,” a publisher said. “But if you are seen as just a regular and replaceable site, they will say, ‘We are going to this other site that will pay for these fees.’ It really depends on your strength as a publisher for that particular brand. This is something we have to train salespeople in the field to know how to handle.”

Another publishing source said that the fees aren’t always baked in because some agencies don’t demand that publishers pay the verification fees until after they’ve already negotiated the ad price. The source said, “But your tech fees are your tech fees, so why are you trying to assign them to me?’”

The fees for verification vary depending on how many of the vendor’s products the advertiser wants to use. If the advertiser wants to use a combination of tracking, anti-fraud and viewability products, then fees can add up to nearly $2 per CPM, which is a big cut for publishers with $8 CPMs. Publishers may gripe, but they also understand that passing along fees has become part of the digital supply chain.

“I think that agencies try to push off those costs whenever they can,” said Julie Clark, vp of programmatic at Hearst. “I think that it’s always been a part of the transactional part of the business.”