Last week, I wrote about why calculating ad tech vendor costs requires real nuance rather than quick assumptions. Using my “Pirate Gold” analogy, the goal was simple: you have to look closely to trace where every coin actually goes before assuming it’s automatically being stolen.
One sharp response called my argument “partial nonsense because the math doesn’t work out,” sharing a detailed breakdown of how middleman fees systematically destroy campaign ROI.
Rather than wage a knee-jerk flame war on LinkedIn, I went on vacation to Singapore, let the ideas simmer, and reflected on them when I got back. 😃 You definitely can’t accuse me of being reactionary!
Their core argument boils down to two main ideas:
- The 50% Haircut: Intermediary fees consume 35%–50% of budgets before a dollar hits working media, forcing complex stacks to perform 50% better just to break even with basic buys.
- The Precision Tax: Hyper-targeting rarely generates enough real, incremental sales lift to offset the massive loss in working media scale.
Here’s the catch: Advertisers can still go direct to publishers. You can skip RTB, bypass third-party verification, and drop complex data layers.
But doing so doesn’t eliminate friction—it just exchanges a technology tax for an operational tax. Managing dozens of publisher sales teams, handling manual IOs, fragmenting billing reconciliation, losing cross-site frequency capping, and inflating agency labor hours carries a massive hidden price tag.
Those are the two extremes: a bloated programmatic stack eating half your budget in tech fees, or a pure manual strategy eating your team alive in labor and execution friction.
What about the middle ground? Intelligent buyers don’t purchase every tool blindly. If verification or precision targeting doesn’t deliver value for a specific campaign, smart marketers turn those layers off.
While markets are imperfect, it’s difficult to argue that sophisticated advertisers consistently purchase technologies that create no value whatsoever.
Marketers pay for tech layers—even while complaining about the invoice—because trading tech fees for operational efficiency and control is often a rational trade-off.
Advertisers aren’t dumb; they know what they are paying for.
Sophisticated marketers run incrementality tests. They compare vendors. They negotiate contracts. They switch providers. They eliminate tools that fail to justify their cost.
Despite our differing conclusions, my critic and I actually agree on two foundational principles:
- Simplicity beats complexity.
- Advertisers must demand full supply chain transparency.
Where we disagree is the single-minded mandate to maximize working media above all else.
In my original “Pirate Story,” I compared working media to the physical hotel room over the pirates’ heads, while ad tech services represent room service, housekeeping, and door locks.
Prioritizing 100% working media is like booking the largest, cheapest room available in a dank warehouse—sure, you maximized square footage per dollar, but you sacrificed safety, comfort, and service.
A great marketer doesn’t just buy raw volume; they find the right balance of working media and control layers to maximize overall business outcomes.
Verification,Identity, Fraud Services, Brand Safety, Measurement, Targeting each have their own ROI.
The objective isn’t to minimize vendor costs.
The objective is to maximize the return on every dollar spent across the entire system.