In industry shift, Adelphic tries subscription-based pricing for programmatic

November 7, 2018 10:00 am

Credit: Composite by Ad Age

Viant-owned Adelphic is aiming to upend the way programmatic is used to buy ads, saying Wednesday that marketers can purchase unlimited impressions through its demand side platform using a subscription-based pricing model at a cost of $3,000 per month.

Aldelphic began offering the program to some clients about two months ago, but is rolling it out to everyone today.

Demand side platforms (DSPs) often take a cut of roughly 15 percent of media spend from brands and agencies who use their software to buy ads. But Adelphic’s new pricing model charges one fixed rate no matter how much or how little a client spends. By eliminating the percentage charge, Adelphic says it is reducing the so-called “ad tech tax” for marketers. The method fits the mold of offering software as a service, known as SaaS, which has risen in popularity with players such as Adobe and Salesforce, but hasn’t gained traction in the programmatic arena.

Viant says its DSP business has grown more than 40 percent year-over-year. It is counting on the new pricing model to build more momentum.

“It’s a big play and it is a big vision for us,” Viant CEO Tim Vanderhook says. He adds: “Most DSP platforms do not have enough customers to make a profit at a fixed cost. We’ve hit a critical threshold to offer this model without it being detrimental to our business.” He declined to share the names of clients using the new subscription model.

For marketers, the decision to use the subscription model comes down to how much they plan to spend. A brand that spends $1 million on programmatic, for example, would traditionally pay a DSP $150,000, or 15 percent of its $1 million media spend.

Adelphic’s offering, however, offers a fixed rate of $3,000 per month for unlimited ad buys. However, users must commit to a 12-month contract. Also, the $3,000 fee is charged per login, or “seat,” and some bigger-spending clients might buy multiple seats. The fee includes other services such as Viant’s identity graph that helps brands target consumers online.

Breaking industry norms

Olivia Bias, VP of marketing at Goodway Group, whose services include digital media planning and buying, says Adelphic’s move should bode well for brand marketers. “If you’re a media buyer — or any sort of advertiser — when your DSP is being paid based on how much you spend, it puts motivation into question,” Bias says. “Do they want me to spend more because they want more money or because spending more is the right thing for my business?”

Bias, who spent several years as a media buyer at Goodway Group, says Adelphic can now tell its clients that spending more on its platform is in the best interest of their business. “It is more conducive to growing a good media plan versus growing the bottom line of Adelphic,” she says. Still, “it is very hard to break out of the norms of an industry and this might make it so much more complex for partners to transact this way,” adds Bias.

Kelly Brown, senior director of media services at digital agency Merkle, says having a fixed cost allows buyers to invest more dollars into working media. “But if we’re investing in channels outside this DSP, you would be paying for a platform that you are not using,” Brown says. “So it’s similar to Netflix: regardless if you watch 100 hours or zero hours, you are going to pay.”

Time Inc. acquired Viant in 2016 for $87 million. In 2017, Meredith purchased Time Inc. for $2.8 billion and in August, said it intends to sell several assets under the Time Inc. umbrella, including Viant.

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