The Kubient Blog

Fees, Fees and More Fees

By Chris Francia | 2017-08-04

If you are looking to buy ads on the web or simply allow advertising on your website, you have encountered the world of AdTech vendors. Whether the vendor is Google, Facebook or The Trade Desk, all of them charge you to use their systems to offer or purchase ads. Although they use different terms, in the end all of them charge a fee, and too often people may not know what the fee is for or if it truly is competitive. Furthermore, we don't attempt to negotiate these fees or shop around--we just accept it and move on. Some companies even bury those fees in the contract hoping you won't notice them--so you may never even know you paid an extra fee.

Before we get into what the fees are for, it is important to understand who is who in the AdTech space. For the most part we can divide companies into two camps: Demand Side Platforms (DSP) and Supply Side Platforms (SSP). DSP's facilitate the buying of ad space and SSP's facilitate the selling of ad space.

For DSP's there are really only a few that are worth mentioning by name: MediaMath, The Trade Desk, DoubleClick, Oath, and RocketFuel There are other smaller DSP's that fall into niches and have truly direct brands and advertisers (Kubient for one).

The problem is these DSP's charge a variety of costs for using their services.

DSP

Setup Fees: Probably the worst type of fee. We have seen these range from a few hundred to a few thousand dollars. We even saw one company try to charge us to fly a person out to our New York office from California to walk us through the platform. Setup fees typically include the cost of sending you an account manager or a support person to help you get going on the platform. Rarely do these setup fees satisfy the customer’s needs; they are just there to pad the budget of the platform and perhaps give commission to the salesperson. Not all the DSP's charge this, and we found many will waive it if you just put your foot down. So always ALWAYS avoid agreeing to these and if they won't budge try another system. If their system is too confusing for a customer to learn on their own or with a simple online walk through, then they need to fix that--you shouldn't foot the bill for UI/UX.

Monthly Minimums: Not necessarily considered a fee, but many of these companies are clever in how they word it. They may structure it so that it sounds like as long as you spend more than that amount each month there is not another fee, and it's only there to cover the costs for setups that don't end up spending money. Often they will charge a monthly minimum plus all their other additional fees, and what is worse they will add language so even after you wish to terminate the contract you may still have to pay for three more months until the contract finally ends (Note: this is extremely common!), trapping you in a cycle where you either give 10k with no media buys or spend the minimum and pay the additional fees on top of that each month.

Platform Fees: This is usually a fixed rate and is applied to your spending each month, so if you bought $10,000 worth of ads and the fee was 10% you would owe a total of $11,000: $10k for the ad space you purchased and $1k for the fee. For the most part this fee is pretty standard, although the rate can differ greatly. We have seen some as high as 40%! We feel anywhere between 10% and 30% is fair depending on how much you plan to use on the platform. It costs a lot of money to run AdTech systems so this fee provides the bulk of the revenue for them. One worrying trend that was brought to our attention was what we are calling the Office Space Scam. What some companies are doing when they bill you is add a small decimal place to the end of their fee calculation, like 10.0001% instead of just 10%. For a small balance, this doesn't seem like much, just a penny or so. But when some of these companies have revenues in the mid billions or higher that can come to a significant amount. They bank on you not noticing or checking it each invoice so you don't see it add up to the larger amount. Our advice: if you ever see a fee a penny higher than what you expect, then you know that something is wrong and you should immediately alert the company and audit your dealings.

Other Hidden Fees: A large problem with AdTech is that as a buyer you may not know where all your spend is going. Just because the DSP tells you something cost $7 doesn't mean that $7 was what the publisher was asking for, there could be multiple middle men reselling your buy to others each taking a small fee before it ever gets to the publisher. Make sure your DSP is transparent and tells you exactly who you are buying from and how much is going to the publisher. Some DSP's have a hidden markup where they buy the inventory cheaper than what they sell it for and don't consider that part of the platform fee, it’s just (to use a whiskey term) the Devil’s Cut. We would like to point out that some of the higher quality DSP's do not do this and try to be transparent, but it’s up to you the buyer to make sure you are getting fair treatment.

SSP

For the SSP's of the world there are a few good options and a lot of not so great ones. Some of the good ones have a DSP side as well, such as Oath and DoubleClick which are two of the biggest, AdSense can be included here as well, but they have a high revenue share, so take that in consideration. App Nexus, Rhythm One and Sovrn are good choices for SSPs outside of the megaliths. However there is still a lot to watch out for.

Setup Fees: See DSPs

Monthly Minimums: Usually they want you to hit traffic minimums or they charge a fee, so it’s a little different than DSP's, but the same concept, and their out clauses can be structured in a similar way.

Platform Fees: See DSP's, but they may call this a “revenue share” instead of a platform fee. They’re essentially the same thing. Revenue share takes a chunk out of your gross revenue (the amount the buyer or DSP paid the SSP). Either way the same things apply when dealing with this fee, and beware the Office Space Scam.

Exclusivity: Many don't think this is a fee but in a way it is. We know many SSP's who add this language with penalties and legal damages if you use any other system similar to theirs during the contract period. That can include using AdSense on your site while using their service. There is never a need for this and if an SSP attempts to sell that to you, you should find another SSP. In the end you will lose revenue and could be liable for a lot more than a simple fee.

Other Hidden Fees: SSP's have a range of fees, from charging you for every opportunity they couldn't get a buyer for, to paying for excess data transfers. Either way they are just there to pad revenue and do not benefit you, the publisher, or contribute to your success. If their system is built in such a way they cannot handle large requests cost effectively, then they are not a good SSP. Another common fee is the hidden margin: they say the revenue share or platform fee is based on one number, but they mark it up before they actually sell it and that markup is excluded from you the publisher. If your SSP is unwilling to be transparent about who they sell to, then tread carefully. You deserve to get the most out of your property and shouldn't be cheated.

When it comes to either a DSP or SSP (or both like Kubient), you should expect a fair deal:

  • No Setup Fees (unless you are asking for some very custom features)
  • Low Monthly Minimums with <30 days out clauses
  • <30% Platform Fee
  • No Hidden Fees
  • No Exclusivity
  • Full Transparency

Word of Caution

Not all DSP's and SSP's are created equal, and just because they bill themselves under those titles doesn't mean they are more than just middle men. Go direct: your SSP's should only sell to brands, advertisers and other DSP's, not other SSP's. DSP's should buy as close to the source as possible, but when they can't the SSP's should have a direct relationship with all of their publishers and not resell to other parties.

As always if you want a free consultation or review of your current setup just email help@kubient.com .