As publishers clean up automated supply chains, education-title Chegg cut ad resellers and saw no negative impact on revenue

At the beginning of 2020, after seeing no data suggesting positive lift from resellers, the publisher trimmed any supply-side platform partners that delivered less than 5% revenue. Of the nine SSPs remaining, down from 15, it cut loose all ad resellers from those partners, according to its ads.txt file, so any deals are done direct with those exchanges. 

“We were told as publishers that resellers were so important,” said Emry Downinghall, vp of advertising at Chegg Inc., “but no [publisher] has communicated to me they removed resellers and lost X% lift.”

Programmatic ad revenue is a “small but meaningful” slice for the publisher, which wouldn’t say exactly how much. While the majority of its revenue comes from subscription services, most of its ads are sold on the open exchange and non-guaranteed. Downinghall said it delivers between 20 and 25 billion impressions a year. In April, Chegg, based in the U.S., had 9 million monthly unique users, according to Comscore.

Ad reseller activity is one theory accounting for the lost 15% of revenue within the programmatic supply chain, according to the transparency report by the Incorporated Society of British Advertisers, the Association of Online Publishers, carried out by PricewaterhouseCoopers and released early May. Additionally, a cross-industry task-force has been set up to improve transparency but the AOP and others have recommended publishers scrutinize contracts and reduce intermediaries to potentially reduce the 15% gap. Examples of untangling the mess under the umbrella of supply-path optimization will likely continue to grow. 

But given the murky nature of the programmatic ecosystem, it’s difficult to pin down every single reseller in a given impression sold and it’s also hard to track the reseller fees throughout the chain.

“Publishers are asking more questions of SSPs about ‘why does this reseller exist,’” said Ari Lewine, co-founder of exchange Triplelift. “It’s the indirect paths that are being questioned.”

Chegg gradually removed resellers from its ads.txt file, while keeping a close eye on the data as there’s no clear way of A/B testing SSPs with and without resellers.

“I never heard a fully compelling reason why resellers were there,” said Downinghall. “In some instances, I was told they were required to be in the exchange in order to run some [private marketplaces], I was never able to prove that out. It’s up to publishers to decide what they will and won’t run.”

Other publishers, like Bloomberg Media, are taking a closer look under the hood through demand-side optimization, analyzing how impressions are being bought rather than sold. Similar to supply-path optimization, DPO-minded publishers collect different data sets—like win rates, response time, page load and ad quality— to work out exactly which partners make sense for it to work with.

Bloomberg Media has been on this route since the end of 2019 and pegged this summer as when it should have worked out which SPO and DPO options make the most sense. 

“Unquestionably it will improve yield, more revenue will be back in the hands of the publisher, clients will have full transparency of where the money is being spent,” said Simon Baker, Bloomberg’s head of programmatic Europe, the Middle East and Africa. “Bloomberg is a data and tech company with transparency at its core, that’s why DPO makes so much sense. Ads.txt has gone a long way, but not far enough.”

Earlier tight economic market conditions forced publishers to incentivize short-term gain over longer-term health. As demand became more scarce and the ad premium fell when marketers pulled ads out of the open exchange, the temptation would be to plug in more demand sources in order to increase bid density. That could drive short-term revenue but makes for a more complicated picture of which buyer is bidding on what inventory. For publishers, managing multiple relationships takes up time.

For Chegg, having direct relationships with SSPs and confidence in their solvency was imperative to protecting its ad business for the long term.

“I couldn’t say resellers are bad, but I can say they haven’t helped drive up lift in 2020,” said Downinghall. “In 2018 or 2019 that might be different. Now with further emphasis on SPO, this is at least putting you in the best position to succeed, especially when removing resellers did not hurt performance.”