The total scale of the programmatic advertising market size is massive and continually growing. In 2021, the global mobile advertising market reached $96.46 billion in revenue. It’s projected to reach $782.12 billion in 2028 at a CAGR of 34.8%.
While the scale of the market itself is massive, it would be groundless to think any one walled garden could reach a majority of the total addressable programmatic advertising market. Below, we tackle the concept of scale in the programmatic space, and how to use it to better understand the size of the programmatic advertising market.
Scale in the programmatic advertising market
When it comes to programmatic advertising, scale refers to a DSP’s reach in serving ads to available users. In this regard, a metric known as queries per second (QPS) gives a sense of a DSP’s reach. QPS is the number of times a request is sent to a server per second. The more queries per second (ad calls) the more successful a DSP is. In this way, QPS provides a sense of a DSP’s infrastructure, capacity and throughput.
What’s scale got to do with it?
We’ve written a lot about how to choose a DSP and, specifically, how to choose a DSP retargeting partner. One key consideration is a DSP’s scale. For example, a DSP with a 5 million QPS that makes over 1 trillion bids monthly is highly scalable.
That being said, QPS should not be a standalone metric when considering potential partners. Why? Because it doesn’t take into consideration experience, unique algorithms and data science, customer service, creative design services, etc. All these details affect scale too. For example, a DSP might have the ability to serve a high volume of QPS but if their creatives are lacking then the ads served won’t be effective regardless of reach. In this way, depending on QPS alone can oversimplify the nuance of scale in programmatic advertising.
The importance of scale in a post-device ID world
As device IDs become a thing of the past, scale will be even more important in the programmatic advertising market. While contextual targeting will make dynamic bidding available to DSPs with advanced infrastructure, most players will have much less capacity to intelligently bid in the programmatic market.
In other words, advertisers will have much less certainty about the outcome of serving their ads. With less control and certainty comes more expense. To achieve ad costs that are comparable to a pre-IDFA-less reality, advertisers will aim for low cost bidding and broad scale.
Other ways to evaluate programmatic advertising scale
Rather than using QPS as a standalone metric, consider the following attributes when evaluating partners’ potential scale.
Diversity of supply can vary dramatically for one DSP versus another. An argument could be made that a walled garden has less publisher diversity than a programmatic DSP that offers a wide variety of publishers. Scale-wise, a DSP with a higher volume of supply integrations would be more able to provide a robust service.
More supply integrations means more data points to optimize against. In other words, depending on the brand’s needs, a DSP with a more diverse set of supply partners could optimize for a more diverse set of attributes. This might include publisher, supply partner, creative type, OS, bid rate, to name a few. A DSP with more supply partners will also be able to mitigate diminishing returns by offering many formats and traffic sources with which to access an audience.
High scale also gives a DSP access to more auction outcome data. This helps them learn market prices more efficiently. From here, they can iterate how to buy the same amount of traffic at a lower price and yield better performance results. As programmatic supply takes on a first price auction structure, buying efficiently is even more important; as overpriced bids can result in you overpaying for the same impression and wasting money. With that said, as you consider a retargeting DSP’s potential scale, think of it in terms of their ability to efficiently bid on traffic at an optimal price.
A diversity of supply partners requires robust infrastructure, which can be costly. For DSPs that leverage Amazon Web Services (AWS) to house their bidding processes, scaling up their infrastructure capacity to manage more supply partners can be more difficult. However, leaning on an external cloud provider can be more cost effective, in turn, lowering service costs for advertisers.
On the other hand, for DSPs that have built their own infrastructure, scaling up can be much lower cost compared to DSPs using cloud infrastructure. With that said, this latter group has also invested more in up front costs to build out the network and hardware required to build their own infrastructure. This, in turn, could increase service costs for advertisers.
With these matters in mind, do a cost benefit analysis of your budget and supply diversity needs. While a partner with their own infrastructure might offer greater opportunity for programmatic advertising scale expansion, their service costs could be too high to make it worth your while.
When it comes to programmatic advertising, scale refers to a DSP’s reach in serving ads to available users. QPS gives a sense of a DSP’s reach, infrastructure, capacity and throughput. However, it’s not the only metric to consider when evaluating a DSP’s scale.
- Supply Diversity: More supply integrations means more data points and attributes to optimize against — such as, publisher, supply partner, creative type, OS and bid rate. Furthermore, a DSP with more supply partners will mitigate diminishing returns by offering many formats and traffic sources with which to access an audience.
- Traffic Pricing: High scale gives a DSP access to more auction outcome data. This helps them learn market prices more efficiently and iterate bidding to yield better performance results. As you consider a retargeting DSP’s scale, consider their ability to efficiently bid on traffic at an optimal price.
- Infrastructure: There’s a tradeoff to consider when it comes to infrastructure and diversity of supply partners. While a DSP with its own infrastructure can oftentimes more easily add supply partners, it will likely come at an additional cost to advertisers. DSPs that lean on cloud providers to manage their infrastructure might offer their services at a more efficient cost.
Looking for scale in your retargeting campaigns?
As intelligent bidding becomes more expensive and less effective, scale is key. We can help you find the right user, in the right place, with the right ad, at the right price. Reach out to us to schedule a meeting.