"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Wayne Blodwell, founder and CEO at The Programmatic Advisory.
So far this year, header bidding has been adopted at scale by many of the world’s largest publishers. But it hasn’t been without challenges and has significantly impacted the way buyers trade media as trading leverage is reduced.
At the same time, the middleman tech tax is under siege. The differentiators in the early days of ad exchanges – unique supply, unique demand and forecasting capability and commercials – have changed over time, and the models have come under scrutiny. We will continue to see the middleman tech tax squeezed to a point where value is truly realized versus cost.
Meanwhile, programmatic has reached significant scale while brand safety has become front-page news. Advertisers are learning that their budgets have been flowing to fraudsters and the wrong types of content creators.
All of these developments bring with them lots of considerations for advertisers, who need to take greater control of where their money is going.
Auditing exactly how advertisers are purchasing programmatic inventory is a classic first step to help advertisers get a grip on what they are doing today. They need to determine which sites they are buying from and with which buying mechanisms, such as direct, private marketplace (PMP) or guaranteed. Which ad exchanges are taking the greatest share of budget? And what third parties are in place to manage fraud?
Many advertisers believe this is solely the responsibility of their agency or third-party buyer, but I think that is the wrong attitude. Supply selection can be such a significant differentiator for campaign performance across a range of KPIs, and yet it often barely considered.
Further, where an advertiser uses a third party for programmatic buying, they may not be able to get the level of granularity they need. Is the agency trading desk really willing to hand over domain-level reports with total spend and performance volumes when they have commercial deals in place with a number of publishers on the list? It’s worth approaching this sensibly and constructively.
Accessing The Right Inventory
Once advertisers have a greater understanding of the specifics of their current setups, they should start forcing their buyers to prioritize conversations directly with publishers, with a focus on the highest-performing publishers.
Advertisers need to determine which publishers are aggressively progressing header bidding and the impact of that on campaigns.
Should an advertiser set up a preferred deal with the publisher at a fixed rate rather than a PMP? If so, what’s the ideal win rate? Hint: Advertisers need to be in as many auctions as possible and adjust their bids accordingly, often at a domain level.
Does the publisher have tons of relevant data that could be overlaid on top of a PMP deal? And should an advertiser use a PMP with an ad tech tax that is lower than in an open auction? There are differing tech taxes for each publisher based on the buying mechanic and the exchange. It isn’t about finding the cheapest route to the inventory as that’s impossible to do in real time; it’s about finding the most optimal way to buy the inventory.
Build Relationships With Publishers
Publishers really do want to work as closely with buyers as possible because the worst-case scenario for publishers is that a buyer turns them off because they’re not working. This, for me, is the single biggest barrier for header bidding: finding a truly realized buy and sell price so that the advertiser doesn’t turn publishers off.
Lots of the time the relationships with publishers are handled by a third party, such as a media agency. Very few advertisers commit to owning publisher relationships and contracts, but those that do see many benefits.
Advertisers should reach out to their best publishers and build relationships from a strategic perspective and also potentially from a commercial perspective, with an eye toward negotiating pricing for a few placements (there aren’t many cases where pre-agreed CPM rates are important in programmatic). We’re seeing this happen already with the likes of Google, Facebook and Amazon, but this could also happen with other key publishers.
Build Relationships With Third-Party Verification Companies
Recent reports show that fraud is a very real problem, and if advertisers are to take greater control of their own supply purchasing, they need to ensure they are buying ads seen by humans against great content. Selecting a third-party verification company to work with to protect the brand with existing technology is important.
Ultimately, advertisers should become more accountable for the inventory they buy within programmatic. They should find a champion internally to lead the conversations with existing buying partners, whether that is a managed service, agency or other. After that, they should determine if it’s worth getting further into the detail and owning the relationships.
Understanding the dynamics of supply and the details are only going to increase in importance and can generate better performance.