What is are Tech Fees?
AdTech Education Series - Fundamentals - Tech Fees
- 5 min read
Our AdTech Education Series
Welcome to another installment in our series of posts wherein we dive into the basics of AdTech so you can fully understand what everything means and why it matters. We want to empower you to make the best decisions you can for your business. So sit back and join us!
Fees, fees and more fees
I’ve been around long enough in the tech world to know that we started off really trying to just make the internet happen, the boom it did and suddenly everything started to cost more and more. Then subscriptions hit, and while the economics make sense there seems to be a sense that it happens just because sometimes. So in an effort to be transparent, because thats one of our core values, we are going to dive into a tech fee, what it pays for and why you should know exactly what it is before you give your money to a DSP.
What is a tech fee?
A tech fee is a blanket term for the fee to run the entire stack of services we need to ultimately take your campaign and deliver it to a potential customer. I’m going to break it down into some critical categories.
Billing/Processor Fees
This one is the easiest to understand. In order to process your credit card payment, a payment processor will charge a fee and its probably more than you think. At time of writing here’s a few current fees that some major processors charge, there’s others with more complicated billing practices (charging a markup + Interchange fees) thats outside the scope of this article.
| Processor | Flat Charge | Variable | International |
|---|---|---|---|
| Braintree | $0.30 | 2.9% | 2% |
| Stripe | $0.30 | 2.9% | 2% |
So every dollar you spend gets hit with ~3% or ~5% if its international.
Infrastructure/Development + Staff Fees
Infrastructure and Development costs largely depend on the architecture of the company and product in addition to all the staff they employ. Every person thats available to help you has a salary and by in large the only way your DSP gets paid is through the overall tech fee.
Depending on how many exchanges/SSPs your DSP is connected to, the bid stream comes in with hundreds of thousands of requests per second (QPS). Like everything in life, if the system is designed well the costs are significantly less than one that isn’t.
If you’re optimizing for a low tech fee, look for a company with a modern development stack and effecient processes (perhaps less employees as well).
Data Costs
Data costs can be very expensive, it could be a couple cents to several dollars on top of your CPM just for the data alone. If you want to target a specific salary range, or business type, etc that comes with a cost. Ensure you know the cost of the data you’re looking to add to make sure that it works with what your plan is, the cost isn’t trivial.
Add-On Product Costs - Brand Safety
Any additional products your adding to your campaign (third party services, brand safety, etc) all have costs associated with them. Make sure you understand what they are and ensure the ROI works for your business.
SSP/Exchange Fees
The SSP/Exchange will take a fee on every advertisement served and that generally isn’t made available to the DSP. The DSP will typically see what the end win price is and apply their fees on top of that.
Tech Fee Example
Now you have a sense and a breakdown of typical items that are usually included in a DSPs tech fee. Here’s an example with three DSPs utilizing different services and AdverIQ:
| DSP | Your CPM | SSP CPM | Total Tech Fee | Infra/Staff | Processor | Data Costs | Add-Ons |
|---|---|---|---|---|---|---|---|
| DSP-A | $6.195 | $3 | 206% | 15% | 3% | $2 | $0.25 |
| DSP-B | $5.9 | $3 | 197% | 15% | 3% | $2 | $0 |
| DSP-C | $3.835 | $3 | 28% | 15% | 3% | $0 | $0.25 |
| DSP-D | $3.54 | $3 | 18% | 15% | 3% | $0 | $0 |
| AdverIQ | $3.39 | $3 | 13% | 10% | 3% | Incl | Incl |
Some DSPs are completely transparent, others aren’t. That said you can see how important it is to understand what goes into each dollar you spend. You can evaluate what is worth it for you and what isn’t.
What does AdverIQs Tech Fee Include?
AdverIQ does not use third party data providers, this is a choice that aligns with one of our core values, respect our end user privacy. In addition our product is engineered from the ground up to provide you maximum return on your goal utilizing cutting edge algorithms and AI. You get to tune your campaign for your goals (including how safe you want to be from a brand safety perspective) and we take care of the optimization and keeping your CPM as low as possible. We will also tell you exactly what you have paid us in every bill broken down by the fees.
How are we this cheap?
We’re a small, hyper effecient team with a strong technical background thats committed to maximizing your ROI by keeping our costs low and our product as effective as it can be. Our goal is to provide you with strong value for your dollar.
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