As Programmatic Moves from Adolescence to Adulthood, What’s the Role for Private Marketplaces?

Private marketplaces (PMPs) have played a key role in the programmatic industry thus far, ensuring brand safety for publishers whilst taking advantage of the growing market. However, with increasing trust in the open market and regulatory maturity, will PMPs retain their status going forward? In this piece for ExchangeWire, Moti Tal, CTO & co-founder at Simplaex, discusses the position of private marketplaces in today’s programmatic environment and how the ad-tech market of the future may be shaped.

In the ad marketplace’s teenage years, DealID and private marketplaces have played a starring role. Emerging in response to the market’s growing liquidity and accompanying pricing pressures, they were a safety net for publishers – against fraud and arbitrage primarily. The benefits weren’t all one sided too, since they catalyzed the programmatic shift from remnant to quality, bringing buyers new premium placements and audience-based exclusivity.

But the PMP story isn’t all sunshine and light. Their downside, to this day, is the legwork, monitoring and tweaking on delivery, and all of the manual work that entails. The hours lost that don’t even guarantee a valuable return at the other end of the tunnel.

Some have been quick to point out the irony here – private marketplaces’ drawbacks are the exact same ones that programmatic had always promised to solve. So much for the benefits of automation. How can publishers draw the right line between the higher yields promised by PMPs, and the lower touch of the open marketplace? If ad tech really is reaching adulthood, where do private deals fit in?

Market Meritocracy

Another question immediately also occurs: if, in a post-ads.txt world, fraud and arbitrage are down, how does this tip the OMP/PMP balance? Especially if, as we’ve pointed out, private marketplaces were created specifically in response to those challenges. And let’s not forget, those anti-fraud measures are crucially now also evolving to include in-app too.

Since ads.txt gained adoption, there are whispers of businesses – even entire markets turned on their heads. This suggests real change – not just another sticking plaster at work. That if implemented correctly, publishers really are now starting to be in the driving seat. And also, that resellers of inventory, alongside domain spoofing, could soon be things of the past. Ads.cert promises to take us even further towards a truly meritocratic marketplace, where value is fairly rewarded, and that is anything but a ‘market for lemons.’

But if trust in the open auction is on the rise, does that mean the role of private deals necessarily lessened? And what of the fact that we hear more and more buzz in the market around the promise of programmatic guaranteed? If higher yield in return for exclusive access on the sell side is combined with cast-iron delivery, surely that is one step towards resolving one of PMPs’ key flaws.

Open Market, Guaranteed

In short, it’s not so much (as some have argued) that PMPs are doomed, and everything will be ultimately traded on the OMP, in real-time. More that the RTB protocol is evolving, to include both guaranteed (at the highest level) and real-time (everything else.) In such an efficient system, the manual work around managing individual deal delivery just falls away, and the old direct/IO deals find a new home in programmatic guaranteed. Scott Bender of Prohaska Consulting has argued something similar might happen, with particular emphasis around both the limitations of PMPs as impetus. He also rightly calls out the organizational changes required inside publishing businesses, to effectively grow guaranteed alongside the real-time open auction.

On the other side, the research keeps telling us private marketplaces are in fact taking over – although it’s very possible we are using different terminology, but making the same argument. According to eMarketer’s definition (“an invitation-only RTB auction”) the PMP category could well also include programmatic guaranteed. Meanwhile, ‘programmatic direct’ (a term sometimes, confusingly, used interchangeably with guaranteed) is considered separately from both OMP and PMP, “transacted as blocks of inventory using a non-auction-based approach via an API.” And we can probably surmise that ‘direct’ here refers mostly to social network ads rather than programmatic display.

Programmatic Adulthood

Is programmatic truly stepping out of its teenage years, towards adulthood and maturity? Perhaps so, if the ongoing GDPR process, or even the US IAB now volunteering regulation, rather than self-policing are a guide. With further consolidation arguably also on the cards, the market evolution continues apace. Alongside so much change, we should continue to evaluate – and iterate – not just the tactics at our fingertips, but also how we use them.

Ultimately, whether it’s OMP, PMP, HB or PG, we should look beyond the acronym, to the overall business and operational effect of the technology itself. With the right checks, security and trust in place, the open auction can evolve to play a larger role – to include both guaranteed, and of course, real-time bidding too. All under the auspices of header bidding.

As Binet and Field have shown, a high level of creativity can make campaigns up to 11 times more effective. And the impact of creativity may be even more important in a digital context, outshining anything planning and targeting can do. That means more priority should once again be placed on freeing up time from menial tasks. Whether it’s monitoring, optimizing, or checking on delivery – all of these tasks (or the lack of them) take on critical importance.

Growing up never seemed so urgent.

Originally published on Exchangewire

Why a Fresh Take on Header Bidding Marks the Way Forward in 2019

Header bidding has provided a new opportunity for publishers, to take control over their programmatic advertising. While for brands and agencies, it promised to make a new whole range of quality inventory options available via real-time bidding.

For every extra lane, we add to the RTB motorway, it seems there’s an accompanying pile up somewhere further down the road. So it proves with header bidding, where leaping traffic and bid request volume has turned into a bottleneck risk to be constantly monitored. For publishers, what that means a heavy barrier between the promise of the tech, and the reality: you might well want to add every SSP under the sun to your wrapper – but to do so right now could have a far greater negative impact further down the road – one that overshadows any short-term upside on yield. Latency and the effect on mobile data usage on client-side integrations, and cost on server-side header bidding are just a few such factors to consider.

In short, as the never-ending publisher search for ROI rolls on, our evolution is still far from complete.

Enter SPO

As we know all too well by now, ad tech loves an acronym. Header bidding’s firehose volume problem already has its own in the form of SPO, or supply path optimisation. Whether it’s supply, or indeed demand path optimisation we’re talking about, the approach is ultimately short-sighted. As we’ve seen time and again, tactics that favour one side of the auction over another are doomed to fail. For instance, in the case of bid caching, they may even prove detrimental to trust and the reputation of the sector as a whole. While solutions that benefit everyone may be harder to execute, that doesn’t mean they don’t exist.

Of course, at the birth of the whole header bidding phenomenon, it’s understandable there were rough edges to the tech. In time, we saw those smoothed out, not least with the launch of Prebid, which added open source, transparent standards for the first time. It also brought a welcome increase in control and sophistication for publishers optimising their yield. In short, all great progress. However, there are still more fundamental challenges around header bidding, that we must address for it to keep on growing the market.

 Of course, header bidding was a big advance over its predecessor, the waterfall. As it turns out, allowing all revenue sources to compete on price is just the first chapter in this story. In actual fact, with the wealth of real-time data now available in the wrapper, many current header bidding integrations are starting to look like pulling out a rusty penknife at a gunfight.  

Header Bidding 2.0?

The next stage in our development is not just about looking indiscriminately at price, on a bid by bid basis. Instead, we need to apply a far deeper level of understanding to that process. Especially considering the crippling technical cost, duplication, and inaccuracy that currently afflict both sellers and buyers in this process. Long story short: it’s time to move towards header bidding 2.0.

 What might that look like? Consider a machine learning-driven approach that takes into account the user’s value relative to each specific buyer’s campaign. This approach would result in something far closer to true market value for the publisher because it weighs the relative worth of the user, both within and outside of that specific auction. In addition to factoring in variables for auction type or whether a DFP bid comes from outside of the main header bidding auction, the list of possible variables that determine the true value of the user is long – and is growing all of the time. Ultimately, we’re talking about finding multiple ways of becoming smarter with the data available in our own bid streams – being more selective in order to optimise the entire programmatic process.

From SPO and DPO to EPO

For all these reasons and more, header bidding needs to move on from considering just a handful of dimensions such as country, ad type, size, device etc – towards true optimisation, based on multiple, real-time factors. That means user-level floor prices, and optimisation based around specific campaign goals and KPIs. Most of the current crop of header bidding integrations don’t account for the true user value to the buyer from the publisher end. Unless you understand whether a bidder is operating in a hyper-local, retargeting or contextual campaign, you can’t maximise value for either publisher or brand.

What we’re talking about involves building an understanding of both the supply and demand paths, and mapping one to the other – if you like, it’s EPO or entire path optimisation. By optimising yield for the seller and the buyer simultaneously, this creates a true virtuous circle. Truly an opportunity to be grasped in 2019.

How SSPs and Publishers Can Break the Walled Gardens

An enormous gap divides our industry. On one side are the likes of Google and Facebook, the so-called walled gardens. On the other side is everyone else. For publishers, Facebook Instant Articles is a poisoned chalice. It forces them to surrender their audience data and compete with Facebook for traffic. Meanwhile, Instant Articles lines the pockets of the social media giant and helps it develop even greater targeting abilities.

The walled gardens derive their power from their goldmines of data. They use the data as they see fit, giving advertisers access to a mere fraction of its potential. Unlike traditional publishers who think in terms of ad units, Facebook calculates everything based on audience. This shift to audience-based advertising has left many publishers behind. No longer can they forecast, set prices, or build successful business models. No longer are they selling what advertisers want to buy. This must change.

Fragmentation Is A Problem

The market has failed to keep the needs of publishers and advertisers in sync because our industry is so fragmented. The lack of cohesion has allowed the dominant players to amass an unfair advantage. Google and Facebook have an intimidating head start in the ad-tech market. But it’s not too late for data-driven publishers to win back their independence.

SSPs have a full set of ammo at their disposal — monetization, transparency, and data control.

To boost advertising revenues and push back against the Facebook-Google duopoly, publishers have resorted to building media alliances. But this is not a long-term solution. Publishers need to compete with each other. They must focus on building and selling high-quality audiences. They need enough raw inventory to keep themselves afloat in hard times.

Yield optimization based on ad placements is on its way out. By switching to audience-based optimization, the sell side can command higher fill rates and eCPMS, while advertisers can get more value from every dollar they spend programmatically. The consumer, meanwhile, enjoys a more relevant and personalized experience.

Paradigm Shift Needed

Our industry needs a paradigm shift. Advertisers are spending their money more intelligently than ever. They know what they want and exactly how much they’re willing to pay for it. They want audiences, and that’s what Facebook and Google give them. Yet most players in the ecosystem are not selling this way. Instead, they offer distractions: placements, formats, devices. Advertisers don’t want these things. And they certainly won’t pay top dollar for them.