Supply-side platforms (SSPs) such as OpenX, Rubicon Project and PubMatic are under heavy pressure to increase value for publishers who pay a premium to use their technologies.
“The fact that SSPs are positioned on the sell side after much of the transaction value has been extracted by other intermediaries puts more pressure on their margins than buy-side players’ experience,” said Andrew Frank, analyst at Gartner.
It’s in this environment that OpenX recently began pitching its updated SSP, which it says allows publishers to maximize their ad rates by combining real-time bidding (RTB) and ad network demand into a single, real-time auction.
Describing the new SSP as a “culmination of an acquisition plus two years of development work” following the company’s 2012 purchase of LiftDNA, Jason Fairchild, chief revenue officer of OpenX, said the goal was to allow the platform to “adhere to a marketplace model such that there is pricing pressure and full visibility across all demand channels.”
The concept of a single auction for multiple demand sources isn’t new – PubMatic’s Unified Auction, launched in 2010, combined demand from ad networks, RTB and direct sales to automatically sell and serve ads to the highest bidder. Google’s “dynamic allocation” is a similar concept, although it only works within Google’s ecosystem with DoubleClick for Publishers and Google Ad Exchange.
“By pushing out a lot of the decision-making off of the server, in principle you can get more scale. You can get closer to the user context which gives you some advantages, (such as) incorporating viewability into the decision-making process … you might also have more information available at the browser level,” Frank said.
Scalability is important to large publishers, and OpenX touts Yellow Pages, TV Guide and the New York Observer as users of the new platform.
In choosing a vendor, “any (ad tech vendors) that have interesting features but don’t have scalability behind them fall of the list,” said David Lebow, vice president of digital markets at Yellow Pages. “I look at scalability as an advantage and a lack of scalability as risk. When you look at the size of a network – an 80 million-user network like YP has – you have to look at scalability as a positive.”
The trade-offs are possible latency issues involved in trying to conduct an auction on each user’s browser, rather than a single server, Frank said, as well as the fact that a collection of browsers are more diverse than a single server and may be more difficult to control.
The question of whether a server-level or browser-level auction will significantly alter the end goal – higher ad rates for publishers – remains to be seen, Frank said. However, in an environment where a SSP vendor might be taking a 15% to 30% cut of a publisher’s net ad revenue for the promise of higher ad rates, even marginal changes can give one vendor the edge.