Unpopular Opinion Time
Remember when the cookie deprecation posed the biggest apocalyptic threat to publishers? Come Monday, we have a whole new level of Googpocalypse to worry about.
Lots of speculation is brewing ahead of the upcoming DOJ trial focused on Google’s ad business. I’ve seen little discourse on how potential outcomes could impact the publishing landscape beyond the hope that an equal playing field bolsters competition and feeds capitalism.
With that, let’s assume Google loses and…
Scenario 1: Google must separate the Ad Exchange from the Ad Server.
Did Google already start acting towards this potential outcome by changing the AdSense payment model to CPM instead of CPC (News Link)? I could be reading too far into the gesture but I think this change prepares Google to position their unified demand portfolio as a stand alone service under the AdSense program. Imagine if Google packaged DV360 and AdWords as a “header bidder.”
With the entirety of Google demand accessible on a net CPM bid basis, the market for ad server solutions opens up to compete with Google Ad Manager (GAM née DFP). There’s seems to be a good amount of witness testimony mounted against failed market traction in the ad serving space because of Google’s demand privilege and self-fulfilling prioritization. Allow Google Ads to integrate with other ad servers via a prebid solution, bada bing bada boom…we open the door to a thriving market segment.
Except, I find it hard to believe any ad tech company will catch up to the quality or depth of Google’s ad server functionality. Even without the demand, it’s still exceptionally well featured. Is there another Ad Tech company who is going to invest enough to meet Google where they are? I’m not confident… and so in this scenario, probably not much changes for anyone. GAM continues to lead the market in ad serving, AdX still thrives in Google’s ad serving ecosystem, and maybe pubs bolster their product roadmap by “testing” ad server alternatives.
Forget the demand component of the ad serving equation, it’s very unlikely another company can match Google’s ad serving feature set AND meet or beat them on pricing. Which, leads to the next scenario…
Scenario 2: Google must separate the ads business from the search business.
Not going to lie, this one scares me. If the horsepower of AdWords is tied to the privilege of bidding and ad serving, drawing curtains between these businesses could seriously handicap publishers. There isn’t anything that can simply come to market to bolster the pain we would feel from AdWords softening.
I’ve heard speculation that Google could be forced to “sell” GAM. I highly doubt anyone could or would buy it.
GAM would be very, very expensive to acquire
Ad Serving is largely a loss leader which makes an acquisition tough to back out
They already have dominant web market share and growth can only be realized through conquesting new markets (maybe OOH or CTV)
From an M&A perspective, I can’t see how any company who could afford GAM would evaluate it for anything other than - privileged data insights and demand prioritization…i.e. the alleged problem at hand. Publishers aren’t going to benefit from breaking up one monopolistic beast to feed another.
I think it’s more likely the ads and search businesses will have to operate under separate entities, a la Google/Alphabet. This hypothetical outcome could result in softer AdWords demand for publishers and potentially steadily increasing ad serving fees. Neither are good for the publisher bottom line, which is already squeezed.
Scenario 3: Penalties seek to correct and regulate problematic behaviour without breaking the stock market.
I’m hedging my bets here. It’s practical to posture Google has amassed a monopoly that went unchecked and unregulated over the 15 year course it took to realize. Dramatic action could present more challenges (and individual financial consequences) than the industry would gain through a competitive revival. We are much more likely to see an action plan that takes years to design, a compliance period that takes years to meet and an enforcement period that could be irrelevant by the time it’s realized.
Regardless, I will bank on one thing that rings true no matter who or what we love to hate at any given time…. the cavalry isn’t coming. Solutions aren’t going to rain from the heavens because because of a anticompetitive ruling. We should all be diversifying our businesses to protect ourselves from any single, dominant revenue stream. Where are my options at? Especially ones that aren’t powered by the same 2-4 sources - of which one is still Google.
Thank you to my homies in the Beeler.Tech happy hour for sanity checking me and fuelling my confidence to get this post out.