The Automotive industry is no stranger to digital advertising.

Both US and Canadian markets are continuously increasing investment in digital advertising and marketing. eMarketer experts forecast consistent growth in digital ad spending for Automotive through 2020.

2018 was the first year when marketers spent more on display advertising than on search engine marketing. The Automotive industry was not an exception – their ad spend increased by 22%.

Automotive marketers can’t ignore reality: shoppers are are turning to digital outlets to do their research. They used to walk into several dealerships to compare brands, but now they conduct most of their research online.

Digital advertising is the most proactive way to engage shoppers during their consideration stage and make your dealership stand out. Chances are, when you examine your next ad report from a tech vendor, you may wonder how the ad fee is determined.

In this post, we will take a closer look at how your tech vendor ad fees are calculated and how you can save up to 25% of ad cost.

How are your ad fees calculated?

As long as dealers have worked with advertising providers, they’ve questioned how much money vendors receive. While it’s not easy to quantify the ad fee, a recent study provides visibility into how much cash is allocated to every aspect of media buying.

In March, Warc estimated that the total “tech tax” accounted for 55% of all programmatic spend worldwide.

“Tech tax” is a budget allocated for programmatic ad spend that covers the range of data and tech services – from targeting and trading to verification for digital ad placements. In particular:

Trading desk (5%)

The media trading desk is a layer between the brand and the media buying platform. Sometimes, agencies develop their own trading desks. In other cases, Independent Trading Desks (ITDs) emerged, acting as a third-party vendor.

Trading desks can genuinely improve the accuracy of targeting and show the incremental performance of media campaigns by linking first and third party data.

To sum up, media trading desks are a key component in the journey to show (or exclude) the right ad to a customer in the most effective way, combining the necessary channels and devices all at a time that will drive post-click conversions now and engagement or post-view conversions later.

Demand Side Platforms (10%)

Demand Side Platforms, or DSPs, allow advertisers to purchase impressions across a range of publisher sites. The potential accuracy of targeting depends on the quality and accuracy of the data used, while impressions can be highly-targeted and based on customer data. DSPs automatically decide which impressions are best for an advertiser to buy – the better quality the data, the more accurate the DSP can be.

When a visitor comes to a website, the DSP establishes the value of an incoming impression and places a bid accordingly. It matches the most relevant ad with a visitor depending on their purchase intent, based on the information available about them and how much the advertiser is willing to invest to get in front of the customer. The process results in the most relevant ad being placed in front of the person who is most likely to purchase. No need to negotiate prices with buyers – impressions are auctioned off to the highest bidder. DSP makes it happen in real time – the time it takes a webpage to load.

Ad Exchange (5%)

An ad exchange is a digital marketplace of real-time auctions that allows advertisers and publishers to buy and sell advertising space. They’re most often used to sell display, video, and mobile ad inventory. Typically, advertisers and agencies use DSP or their own bidding technologies to buy and sell ad space, but ad networks and other entities also buy ads from exchanges.

You could think of an ad exchange as a big pool of ad impressions. Publishers put their ad impressions into the pool, hoping someone will buy them. Buyers choose which impressions they wish to purchase, relying on DSP and other technologies. Those decisions are often made in real-time, based on data such as the previous behavior of the user who encountered an ad, device type, ad position, time of day etc.

Exchanges enable advertisers to easily buy ads at once across a range of websites, as opposed to negotiating buys directly with specific publishers. It’s considered to be a more effective and efficient way to buy and sell advertising.

How to cut out the middleman to save 25% of ad fees?

Data targeting and verification takes up 25% of your ad fees. Ad targeting and verification is a process which allows advertisers to check if their ads are displayed on the right websites, in the right context, in the right part of a page, to the right audience.

The goal of verification is to blacklist publishers with high fraud or low viewability traffic, increasing the chances of an ad campaign to succeed.

The whole point of ad verification is to have a third party verify the delivery of the campaigns. The majority of advertising providers in Automotive rely on third-party data.

sMedia is cutting out unaccountable middlemen. Instead, we aggregate and use our own targeting and placement data, accumulated from hundreds of dealerships. It means that every ad campaign you run with sMedia saves you 25% of ad fees, acquiring more quality traffic for the same budget. Our targeting results in higher quality ad impressions, greater user experience, and a smaller number of bad ads.