With some of the biggest AdTech shows fast approaching (Exchange Wire #ATSL17, Dmexco & Programmatic IO), now is a good time to compile a quick guide to the key events and areas currently shaping programmatic advertising.
Much has been written about consolidation in the DSP world recently and whether or not it is viable in 2017 to operate both sell and buy side functions collectively. Despite what you might have read elsewhere, it’s likely we will see more DSPs, not fewer, in the months and years to come. That said, these DSPs will not be vanilla bidders — they will be rich in first-party data and have priority access to inventory, either via their own O&O, or have preferential deals in place with third m-party publishers based on the strength of their demand.
Existing independent DSPs in play will either be backed by private equity companies who already have vested interests in AdTech, or they will be taken out by MarTech looking to get into activation, global publishers looking to better control and scale their off-deck monetisation, or telcos looking to get into the data-loaded bidder game.
It is possible to play on both sides of the fence. However, only the biggest will be able to do so — those who can offer first-party data and a GDPR-compliant screen-agnostic ID to manage areas such as attribution will continue to be able to operate both functions without being challenged. Everybody else will have to pick a side and invest accordingly. The days of point solutions that specialise in video, desktop or mobile are slowly coming to an end. Buyers expect their bidders to be screen-agnostic, and these vendors will have to recalibrate their bidders accordingly.
An article recently published by Lara O’Reilly mentions that buyers on the Google DSP DBM will be given the option to buy only from SSPs that will offer a full refund for any fraudulent traffic bought. Although it is not the first DSP to offer fraud-free guarantees, it is arguably the biggest — so announcements like these help to shape the market’s tone.
These kinds of practices by vendors on the buy side have resulted in many, if not all, SSPs adopting or exploring the recent Ads.txt initiative from the IAB Tech Lab that enables buyers to establish if the SSP that is passing a publisher’s URL in bid requests is actually authorised to sell that domain. Many have applauded the concept of Ads.txt and ComScore publishers are starting to adopt at speed, to help them take back control from the fraudsters who have been spoofing their domains in Exchanges and SSPs for far too long.
Notable recent DSP deals to be aware of:
- Sizmek acquired Rocket Fuel for a reported $145m;
- Tremor sells its DSP to Taptica for $50m;
- Turn acquired by SingTel for $310m.
OK, so who are the tier-one independent DSPs still in play? Adform, MediaMath, DataXu and AppNexus (yes, AppNexus is more than just activation).
Where to begin? Take everything we understood about the sell side 12/24 months ago and press reset! Header bidding has changed the game beyond recognition. It has taken the leading SSPs and made them look average. It has taken the weakest of SSPs and made them look fantastic. It has commoditised access to inventory and, some say, effectively migrated the sell side’s narrative and value proposition from being a yield-management partner to a feet-on-the-street publisher reseller.
What does this all mean? Basically, the sequential publisher waterfall of yesteryear is no more, and publishers are letting all demand sources (including direct in some cases) compete via the practice of header bidding. This means an SSP’s value proposition is no longer about great account management, QBRs or NASA-grade yield-management UIs. Now it is all about demand — who has the most, and at the best rates.
Who are the main SSPs, and what are they offering from a client-side HB perspective?
- The Rubicon Project Offers a header tag that is compatible with most wrappers. Pulled away from launching a wrapper to favour the open-source approach from vendors such as Prebid.js.
- Index Exchange Offers both a header tag that is compatible with most wrappers and its own proprietary wrapper.
- OpenX Offfers both a header tag that is compatible with many wrappers and its own proprietary wrapper.
- AppNexus Offers a header tag that is compatible with many wrappers and its own enterprise-grade proprietary wrapper.
- PubMatic Offers both a header tag that is compatible with many wrappers and its own proprietary wrapper.
(It’s important to note that many of these vendors offer a server-to-server solution also.)
This sounds complex. If you can no longer use an SSP’s position in a publisher’s waterfall to determine who you should be pointing your demand at, how do you select an SSP? Especially if they all have access to the same supply via their header tags?
Enter the concept of supply path optimisation (SPO). SPO is a practice that agencies and DSPs are undertaking to streamline the number of SSPs they are bidding across, to both reduce costs and improve overall performance.
It’s not only SPO putting SSPs under pressure, but new entrants to the sell side also. Step forward TrustX, coordinated by Digital Content Next and built by the renowned engineering team at IPONWEB. Recently endorsed by the ANA, a number of premium publishers are already testing the transparent TrustX marketplace.
What about video & mobile?
Header bidding is still early in mobile. The reason for this is that a lot of traffic is still originating from apps with no header. However, the logic of a unified auction can still be applied and many SSP vendors are rolling out their SDK or tag-based in-app header bidding solutions for publishers to test and implement.
From a video perspective, SpotX — which RTL recently announced it was taking full ownership of — has been very vocal about its capabilities around video header bidding (differs from desktop due to video players etc.), as has leading SSP Index Exchange. One could argue that video is the perfect storm for header bidding — limited quality supply and maximum demand, the ideal conditions for a unified auction.
OK, but what will you be expected to know if somebody pulls you into a header bidding conversation in the hallowed halls of dmexco?
- The industry is currently debating the pros and cons of running header bidding either client- or server-side. (A lot boils down to latency versus audience match rates.)
- Google offers its own version of header bidding, referred to as EBDA (Exchange Bidding in Dynamic Allocation), which is available to DFP customers.
- Facebook recently entered header bidding by launching a header tag that enables publishers to capture FAN demand via header bidding on their mobile traffic.
- Criteo entered header bidding by offering publishers its header tag (Direct Bidder) that effectively delivers Criteo’s unique demand into the publisher’s header auction, at a first rather than cleared second price.
- Amazon has launched a server-to-server header bidding offering for publishers that delivers unique demand and the ability to manage other S2S demand partners for the publisher.
If you want to dig deeper into the details of what SSPs are evaluating and what senior AdTech bigwigs will be talking about, research the debate around first versus second price in the programmatic auction process.
Second price was relevant in the old days of the waterfall, but for buyers to increase win rates and for publishers to increase their yields, the first price model should be the default standard in a world of header tags and wrappers (in my opinion anyway).
The General Data Protection Regulation (GDPR) Act that comes into effect May 2018 has many in AdTech scratching their heads. Many suggest it could bring an end to third-party data (how and where is consent collected etc.), and accelerate the adoption of second-party data marketplaces.
At a time when CMOs are asking for a cleaner and more transparent supply chain, GDPR could be the catalyst required to bring both context and audience together in programmatic buying — rather than context arguably taking a back seat to audience.
Either way, those that own a direct relationship with consumers will be in a much stronger position than those that don’t — and for once, premium publishers will be on the front foot when it comes to the programmatic monetisation of their audiences and content.
Expect to read a lot more about GDPR in the coming months as the AdTech industry figures out what it means to either collect holistic (one process of consumer outreach rather than one for every vendor) or individual vendor consent with consumers for every cookie or device ID that flows through the OpenRTB pipes we have spent the last ten years laying.
Viewability and Brand Safety
The debate around what is deemed viewable continues to build momentum. The IAB, MRC, clients and agencies all have their own interpretations. The debate will only intensify when we move onto mobile standards (these are yet to be set and we continue to use desktop standards as a proxy).
Things to know?
- Moat was sold to Oracle for reported $800m+;
- PE Firm Providence Equity bought a share of Double Verify, giving it a reported value of $300m+;
- Integral Ad Science remains independent (the question is, for how long).
Telcos in AdTech
Telcos have what everybody in AdTech wants: accurate, privacy-compliant, scaled first-party data.
Teclos increasingly want what many AdTech and publishing companies have: programmatic sell- and buy-side tools and content-creation functions with the ability to distribute at scale. Diversification of core telco revenues can be considered as a main driver for their M&A in the advertising and publishing sectors.
Recent high-profile telco moves into AdTech and publishing include:
- Verizon into AOL/Yahoo to form Oath;
- Telenor into TapAd (cross-device company);
- Altice into Teads (outstream video vendor);
- Singtel into DSP TURN;
- AT&T reported to be buying Time Warner.
That said, not all telcos want to own AdTech or publishing assets, and they are increasingly turning to companies to help them extract their data in a privacy-compliant way for the activation of targeted advertising. These companies include, but are not limited to:
- Smartpipe – Raised $18.75m Series A thus far;
- ZeoTap – Raised $20m (post round B raise).
What is happening in the DMP space?
As CMOs have become more fluent in the art of data activation, and agencies in the practices of data-driven programmatic buying, DMPs have become very cool and a must-have for many brands.
Current debating points when it comes to DMPs are as follows:
- Should DMPs also be in the media buying business?
- What are DMPs doing to stay relevant for a world without cookies?
- Do DMPs plan to build or buy device graph features/functions?
- For platforms that process and model a lot of first-, second-, and third-party data, how will they be affected by the pending GDPR?
Notable DMP M&A activity recently
- Adobe bought leading video DSP TubeMogul for $540m, according to reports;
- Oracle bought leading verification vendor Moat and cross-screen player Crosswise;
- Salesforce bought DMP Krux for $700m.
- Leading DMP lotame remains independent (for how long, again, is the question).
ID Consortiums and Cross-Device Players
We always read about publisher consortiums (in fact, another German alliance was announced just today on Digiday), but increasingly we are starting to read about ID consortiums also.
Why are ID consortiums important?
For a start, GDPR may make it very difficult for a number of probabilistic methods to be applied to digital ID management.
What’s more, walled gardens are using their own proprietary cross-screen deterministic token- and people-based ID, which in many cases only works within their O&O environments.
CMOs and agencies in the future will not be requesting a cleaner supply chain, but a universal ID (or ID clearing house) that will enable them to manage reach, frequency and attribution across all of the partners they buy from. Audiences are transient — no single publisher, search engine or social platform can claim to own any audience exclusively.
Who are the main players looking to address universal IDs — be it probabilistic or deterministic?
- The DigiTrust This technology solution creates an anonymous user token, which is propagated by and between its members in lieu of billions of proprietary pixels and trackers on web pages. Many leading AdTech companies are already working with the DigiTrust team.
- AppNexus Launched to power a people-based ID mechanism in May, it has the backing of leading AdTech vendors including Index Exchange, LiveRamp, OpenX, Live Intent & Rocket Fuel.
Consortiums aside, when it comes to ID management, there remain a number of scaled independent cross-device companies in play working with clients directly as well as agencies, publishers, DSPs & MarTech vendors. These include Adbrain, Screen6 & Drawbridge — all worth speaking to in Germany if you want to get a better understanding of the ID landscape that is unfolding by the hour at the moment.
For now, blockchain is simply too slow to support the speed at which the OpenRTB infrastructure currently works. When supporting the crypto-currency Bitcoin, blockchain can handle roughly ten transactions per second — nowhere near the volumes needed to support programmatic trading, which trades higher volumes than most stock exchanges.
For more information, read the Q&A on AdExchanger with Boris Mouzykantskii from IponWeb — often referred to as the smartest man in AdTech. He concurs: blockhain could be a game changer in AdTech, but we are not there yet!
However, there are exchanges that are starting to explore the concepts of futures in digital advertising, and these are being built with blockchain in mind. Check out the smart NYIAX team based in NYC.
If somebody starts to talk to you about their AI-powered DSP in the coming months, take a quick glance at their name badge. Unless it states they work for Deepmind or Boston Dynamics, make your excuses and leave.