The End of GAM Networks on Mobile?
For the last few years Google Ad Manager reseller networks have been one of the most profitable ad monetization hacks in mobile advertising. By using one or more GAM resellers mobile publishers could pit Admob demand against yet more Google AdX demand and thus pushing up the average Ad ARPDAU significantly on mobile. Ad Mon managers could have Google demand being forced to increase their bids by other Google demand, it was beautiful. But sadly this hack looks like it will come to an end on October 31st, when Google will move completely to bidding on mobile. What will this mean for GAM networks? What will the future look like for publishers? In this blog post I will share my thoughts on this major shakeup.
What are GAM networks?
GAM networks are resellers of Google Ad Exchange demand. Fundamentally, GAM resellers are running an arbitrage play by taking AdX demand and pitting it against Admob demand on mobile. Admob traditionally charges mobile publishers around 30% to display ads while Google Ad Manager charges their publishers 20%. GAM networks bridge the gap to allow AdX demand to compete on mobile against Admob and can thus pocket the 10% difference as their margin. Of course in reality its a bit more complicated as most GAM networks also have their own demand but thats how it works in a nutshell.
Why do GAM networks exist?
So why does Google allow vendors to profit 10% by running arbitrage on Google traffic? It seemed a bit strange to me at first too, until I had it explained to me at 4am during a conference by an insider with knowledge of the subject (take this with a grain of salt). Admob and Google Ad Manager are their own standalone entities inside of Google. Admob has been given the task to serve only mobile publishers, while Google Ad Manager had been given the task to serve only desktop publishers. Makes sense on paper, in practice it got messy.
It didn't take long before Google Ad Manager realized that many of their desktop clients also had mobile apps. What to do? Do you simply send that supply to another corporate entity (ie Admob)? No, it made more sense to keep it grouped together in the same corporate entity. That's when GAM resellers started appearing to bridge this gap and let mobile first publishers take advantage of the lower margins on GAM. For the last couple of years mobile publishers who took advantage of the bridge to GAM made a lot of money. Personally for me and my clients GAM networks tend to be in the top 5 networks by revenue in all of my client's ad stacks.
The end of GAM resellers?
On the 31st of October 2023 Google will withdraw bid requests for placements across for all Admob partners on mobile and push all demand through their bidder at the same time they will pull support for AdX demand in GAM. My speculation here is that Google will use Adx demand in their bidder to close the eCPM delta between placements and bidding as much as possible. The eCPM delta on bidding and placements currently can be as high as 50-70%. This will mean that GAM resellers will no longer be able to access AdX demand which on some GAM networks is about 80-90% of their traffic. Rumours are also circulating that with the rise of bidding, Google will no longer buy traffic through 3rd party sources (This has not been confirmed publicly). For example Google will not buy traffic through 3rd party SDKs like Vungle Liftoff or Inmobi. This will essentially re-funnel all Google demand in a more efficient way for Google which will come at the expense of publisher profits.
So what does this mean for GAM networks? Is it the end? Not necessarily. GAM resellers have direct relationships with mobile publishers and they've been given 6 months warning of what's to come to their AdX demand. Any nimble and hard pushing GAM network has two options. They can either bolster their demand with private PMP deals, or re-broker traffic for via exchanges or do both. Important thing to note is that in the ad tech space getting the supply side publisher SDK integrations is always the hardest, a feat that some large GAM networks has already managed to do. Will it be as profitable for publishers? Only time will tell. One thing that's for sure is that all GAM networks have a lot of ground to cover in the next 6 months to bolster their demand.
What should publishers do?
I had recently had a discussion with a fellow Ad Monetization Manager who asked me if they should still add GAM partners despite the October deadline. I replied "We have 6 months left of the most profitable Ad Monetization hack in mobile history. I have no idea why you'd not want to take full advantage of that for as long as you can. After October 31st it's simply up to the GAM resellers to stock up on as much demand as possible to decide their own future."
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