“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 Manny Puentes, founder and CEO at Rebel AI.
Every time we shop, we make the decision to purchase either a brand item or its generic equivalent. We assume generic laundry detergent might work just as well, but we buy Tide because we trust the brand to be consistent and work a certain way. That’s why companies spend billions of dollars creating brands, not just creating products.
When it comes to programmatic publisher inventory, we need to start making the same value assessment toward supply sources, especially when it comes to premium publisher alliances such as TrustX and News Corp.’s recently launched NewsIQ.
The CPM Challenge
These publisher consortiums argue that their inventory should be worth more because it comes from trusted, premium sources. This may be true, but the technology behind most programmatic bidders still values cheaper scale over quality. That means that most demand-side platforms (DSPs) are conditioned to buy the hypothetical $4 wapo.com inventory from a generic supply-side platform (SSP) and not the $5 wapo.com inventory from TrustX, despite its guarantees for transparent human and viewable traffic.
If publishers don’t see high enough yield from these alliances, they won’t put as much of their inventory on these exchanges, and the strength in numbers that these consortiums offer will quickly collapse. Publishers have already anonymously said they need to experience higher CPMs for it to be worth offering more inventory through these exchanges, even if they believe in the idea overall.
For these initiatives to truly work, the buy side has to take the initiative to value the brand behind the supply. The ANA’s encouragement for its members to buy through TrustX is a good start, but the real change will have to come at the bidder level.
Not All Supply Sources Are Created Equal
Because of the way the advertising ecosystem is set up, one DSP might see the same inventory or audience from, for instance, AdEx, TrustX and another SSP.
While TrustX’s supply might have a higher CPM due to its direct publisher relationships or viewability guarantees, bidders aren’t conditioned for this scenario. Their buying algorithms prioritize the lowest price along with conversion metrics. But if quality is truly going to be a priority for the buy side, bidders need to consider changing their buying algorithm to weight not just necessarily performance, but other business metrics such as the brand of the supply source and its commitment to fraud reduction.
The generic SSP often is able to set CPMs lower because it sources its inventory from many different resellers, which may include illegitimate sources and spoofed domains. This isn’t to say there isn’t real inventory available from these generic SSPs, but the real inventory can be bundled with the spoofed inventory, as the recent Hyphbot scheme revealed.
A premium publisher alliance, however, sources its supply directly from the publishers. This feature alone should be weighted higher by bidders, as they reduce their likelihood of purchasing fraudulent domains.
Press For Change
As consumers, we spend more for brands all the time, because we know we are buying consistency and quality.
If the advertising ecosystem truly is turning the ship to value quality over quantity, buyers also need to appropriately reward the brand quality that premium publishers and publisher consortiums bring to the table. Higher CPMs will, in turn, attract more premium publisher inventory to these consortiums. This will consolidate supply channels and make them safer places to buy programmatically while also bringing the scale needed to make these initiatives successful for the industry as a whole.
Follow Manny Puentes (@epuentes), Rebel AI (@Rebel_AI_) and AdExchanger (@adexchanger) on Twitter.
