Buyers Are Dragging Their Heels On Seller-Defined Audiences Over A Lack Of Transparency

Many publishers are betting big on seller-defined audiences (SDA) as a centerpiece of their post-third-party-cookie monetization plans.

Seller-defined audiences is a technical spec that was released by the IAB Tech Lab earlier this year to help publishers monetize their first-party data on the open web.

Problem is, although publishers are eager to test the performance of SDAs, there’s still very little demand from the buy side.

AdExchanger spoke with ad agencies and buy-side tech platforms to get their side of the story.

So, what’s the holdup? It’s mostly a perceived lack of transparency into the process behind how publishers build SDAs which is creating a classic chicken-and-egg scenario.

DSP adoption

It’s not that buyers aren’t interested in testing seller-defined audiences, said Luke Lambert, chief activation officer at Omnicom Media Group-owned media agency OMD.

But it’s hard to run tests when integrating the SDA “has certainly not been a priority” for demand-side platforms, he said.

The lack of adoption by DSPs creates concerns among advertisers about scalability, said Ed McElvain, director of digital platforms and data-driven media buying at ad agency Mediahub.

For example, The Trade Desk, one of the biggest DSPs behind Google and Amazon, declined to offer any comment about seller-defined audiences for this story.

MediaMath is one of the few DSPs currently transacting on SDA. It offers SDA as a targeting signal in its platform through an SSP integration with Index Exchange, said Jared Lansky, SVP of partnerships at MediaMath.

MediaMath’s reasons for integrating the spec are simple: It’s trying to prepare for cookieless and mobile-ID-less environments by actively testing as many alternative solutions as it can, Lansky said. “SDA isn’t the only option, but it’s going to be a viable one for the future,” he said

But, in general, DSPs cite a lack of demand from brands and agencies as their main reason for not prioritizing SDAs, and although the sell side is keen to test the spec, adoption among publishers hasn’t scaled up quickly enough for some DSPs to take notice.

“We haven’t had many advertisers or agencies ask about seller-defined audiences,” said Simon Wong, EVP of Sabio, an ad tech company that offers a managed service DSP for CTV and mobile. “I need publishers to show me they have SDAs available. Both sides haven’t reached a level where I need to prioritize this.”

So, the sell side says the demand isn’t there, the buy side says there isn’t enough inventory available and the platforms that facilitate transactions between the two sides says neither side is interested enough.

Cookies or clarity?

Many on the sell side believe that as long as third-party cookies are still in play, buyers won’t spend meaningfully on alternatives like SDA that currently lack the familiarity and scalability of third-party-cookie-based targeting.

The IAB Tech Lab agrees. Since cookies are still the status quo and advertisers are guided by commercial incentives, there is no “stick” compelling agencies and DSPs to adopt the SDA spec, said Benjamin Dick, the IAB Tech Lab’s senior director of product.

But concerns about scalability are separate from concerns about transparency into how SDAs are built, Lambert said. “The IAB Tech Lab is conflating economies of scale with what buyers want – better transparency, better access [and] more of a guarantee on what I’m spending my money on,” he said.

In other words, the scale problem will take care of itself – but only if buyers can get more clarity into how publishers build SDAs.

“The taxonomy is consistent from the IAB, but we need to ensure there is consistency and trustworthiness in the way publishers are bucketing their audiences based on that taxonomy,” McElvain said.

MediaMath’s Lansky agreed that the IAB’s taxonomy for SDAs is consistent, but it’s still too early to judge how effectively that taxonomy is applied on the publisher end, he said.

The IAB Tech Lab has adapted its data nutrition labels – which show what data signals were used to create an audience, how they were used and how they were sourced – for seller-defined audiences. But more publisher participation in that initiative would give the buy side better transparency into the sell side’s audience-bucketing process, McElvain said.

Being able to see the ingredients that went into making a seller-defined audience, however, isn’t the same as really understanding the thought process behind how publishers devise their SDAs, Lambert said.

A Snickers bar also has an ingredients list and a nutrition label, but good luck making your own, he said.

In a way, though, what happens behind the scenes is almost moot – if the performance is there.

Performance will ultimately speak for itself, said James Brooks, CEO of GlassView, which runs a private marketplace for social and video ads.

“Performance will shake out the true category providers versus those who are lumping in unrelated inventory,” Brooks said.

Say a publisher tends to group network categories together that don’t fit, like lumping the financial vertical in with audiences that don’t command the same high premium.

“Their performance is going to suffer considerably,” Brooks said, “and you’re not going to see many dollars flow that way.”

Control shift

One of the reasons publishers are so gung-ho about SDAs is because it’s part of a shift in the balance of power from the buy side to the sell side as the ad tech industry moves towards first-party-data-based targeting.

But if sellers are defining their own audiences, there will always be an underlying current of skepticism on the buy side, said Michael Piner, EVP of advanced media at Mediahub.

And a lack of control on the buy side also makes it harder for brands to differentiate with their targeting, he said.

“When it comes to defining audiences, advertisers want customization so they can gain an edge against the competition,” Piner said. “Seller-defined audiences take that off the shelf because all your competitors can potentially use the same audiences.”

Solutions that allow advertisers to mix their own first-party data with third-party data to create unique audiences, DMP-style, could end up attracting more demand than seller-defined audiences, according to Piner.

DSPs also have their own datasets and data partners, and reorienting around publisher first-party data will require either more time or a major inciting event, said Wong from Sabio.

Buyers may also have concerns about how similar SDAs are to the old ways of doing things.

“It makes sense that the first iteration of seller-defined audiences would be audience segmentation,” Brooks said. “But SDA does feel a little bit Web 1.0. Like a DMP, it relies on a third party to identify segments that publishers are not necessarily decisioning on at the ad serving level.”

And, although SDAs do make sense for brand awareness campaigns, the value for more performance-focused campaigns is less obvious. SDAs will likely have to interface with PII and other DMPs to facilitate attribution, Brooks said.

“As you move down funnel or middle funnel and you’re looking at what’s driving qualified leads down to conversions,” Brooks said, “you’re going to have to pair the segmentation data with email addresses and second-party offline data.”

Making the case

So, what will it take to accelerate industry uptake of seller-defined audiences?

SSP curation of SDA signals across publisher inventory could be a promising way to speed up testing and buy-side adoption, Lansky said.

“We can shortcut the learning process through packaging and [partnerships,] and I see this happening through the SSPs as they start to aggregate various publishers and their respective audiences,” he said. “SSPs have an understanding of what [advertisers] are looking for, and they can be prescriptive with recommendations and packaging inventory up into deals.”

But it’s important to note that it’s still early days for SDA, which has been in market for less than a year, Lansky said. And, as such, more work needs to be done to highlight the value of SDA and how it fits in the mix of solutions for brands and agencies, he said.

In short, there are many open questions about SDAs and, if publishers want them to take off, it’s up to them to make the case for wider adoption.

“Publishers need to empower their sales teams to get in front of advertisers and agencies and really push them on testing,” McElvain said.

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