How We’re Fixing Frustrating Deal ID

by Andrew Casale, VP Strategy

When I first wrote about deal ID more than two years ago, it was a simple idea with an uncertain future that just starting to gain traction.

Deal ID has since risen in visibility, implementation and ubiquitous adoption. It’s become a method major agencies and publishers are expected to know. Heck, there have been entire conference panels built on the topic.

Deal ID combines the efficiency and scale of the exchange with negotiated criteria that inform and guide direct buys by bringing the human element into the fold.
The problem with deal ID is that everyone hates its cumbersome nature. But there is help on the way in the form of a concerted effort amongst both buy- and sell-side technology platforms to address its faults.

The protocol has introduced friction that no one wants to experience in the programmatic marketplace. Programmatic is supposed to bring automation and ease to ad buys, but the process of executing a deal ID is at times even more arduous than the old IO. As it stands, the publisher creates a deal ID, a unique number, and passes it manually to the buyer via a spreadsheet or email. Then the buyer manually inserts the number into their DSP to execute the buy.

Assuming nothing goes wrong in the act of setting up a deal ID – and things often do go wrong – the real problems start. I think many publishers can relate to the all-too-common scenario of multiple phone calls and emails to get a Deal ID set up, only to see $10 in daily bid activity against it. Certainly this does not characterize all deals. Some are actually quite worth both parties’ time but the trouble today is that it is very difficult to ascertain ahead of time whether the results will justify the effort. Neither the buy side nor the supply side is happy with today’s status quo.

From the buy side, the problem is that with deal ID alone, there is no audience discovery. Both parties work to set up a deal ID and get it working on a technical level, but in some cases it never has a chance to create value because their brand’s audience isn’t even on the publisher site with whom the buyer has just set up the deal. Buyers use DSPs to map out specific audiences. Then they reach out to publishers to set up the deals they think they want. But in some cases, the audience target is narrow and the platform bids at a price that doesn’t make good sense for either the buy or sell side. Deal IDs leave too much up to chance. Sometimes they make a perfect match. But more often than not, it’s a mess.
Both sides end up running into problems because the process is so manual. Humans are prone to entering numbers incorrectly. Net new deal buyers have the highest error rate – up to 50%. Those errors ultimately stigmatize deal IDs. Even when the deals bring meaningful revenue, there’s a lot of apprehension and discomfort around just how much can go wrong. In spite of all that, interest in deal ID remains high because it allows for segmenting inventory and data, and trading with select buyers.
Many in the industry are simply resigned to the messy nature of deal IDs. They think we’re stuck with it if they want that added control over their buys. Fortunately, exchanges and DSPs are actively collaborating together on working out a solution that will change everything.

We’re approaching an ideal scenario, one in which the manual process of setting up a deal ID will evolve into an automated system in which the deal can be triggered with the push of a button. No more trading deal IDs between publishers and buyers. That solves one pain point, but the bigger pain point that is also being worked out is deal discovery.
Deal discovery goes beyond identifying which publishers are available for bidding in private exchanges. It facilitates audience overlay among those publishers in advance. The buyer selects his or her brand’s ideal audience targets and then runs a discovery report to identify publishers and packages with a high audience overlap for the brand’s targets. This shows buyers the names of the publishers, which they want, and goes beyond identifying interest in the brand’s core industry and into the specific criteria they need. What’s better, with deal discovery, the chump change deals that everyone wants to avoid show up at the bottom of the list, and the system works in the same environment the buyer already knows: the DSP.

The major DSPs are on the road to building out deal discovery. It’s going to make the current deal ID system seem like a bad dream. The players who can make the change understand the pressure to get it right. We believe they will. Deal IDs are vitally important but are also a hassle. We won’t be stuck with their baggage for long.

Do Upfronts Make Sense in the Programmatic Age? Not So Much.

by Will Doherty, Senior Director Business Development

Upfronts are upon us. And once again it’s clear just how far digital has come when compared to TV. Where brand dollars are concerned, digital is clambering for its rightful place at the table.

Historically, brands have loved the TV upfronts. They showcase content for brands, and allow them to buy commercial time to reach the content’s target. They’re easy, and ratings allowed buyers to validate whether or not those buys were successful. Lately, digital has tried to capture this magic. It’s a seamless way to adapt those traditional, large media buys from a familiar landscape — TV — to a newer landscape — digital. What’s not to love?

Well, there are a few things. For one, media consumption is continually fragmenting. Upfronts rely on appointment viewing, where the audience is guaranteed to be engaged at just the right time. But those guarantees are fading. Take Breaking Bad, arguably the greatest drama of the last decade. But it was a cultural juggernaut that took years to find its audience. Ten years ago it would have been dead on arrival. Even the ratings for its series finale would have relegated it to road kill status. Simply put, today’s media culture doesn’t have the monolithic touchstones it used to — which is great for consumer choice, but challenging for brands.

As well, in a digital environment, particularly in programmatic buying and selling, we have data and insights that TV never had. Programmatic allows brands to tap into rich audience data and leverage it to find consumers across all publishers and content providers. This creates exponentially more data for brands to consider — but programmatic allows for this data to be collected and actioned against in real time. TV is linear. Digital is anything but. For digital, upfronts roll in with flash and spectacle without any consideration of crucial factors like real-time audience behavior, device-specific user experience, and proper measurement of effectiveness.

See the disconnect?

Upfronts worked just fine during the era when media channels could program for their target audiences, who tuned in at once and at scale. But that model isn’t the reality in the age of DVRs, on-demand content and portable media. The target consumer may engage with the same content on a smartphone during lunch break, or at 7 p.m. on a laptop, or at 10 p.m. on a tablet. The same advertising message won’t apply under all conditions.  “Must-see TV” as we know it is dead. Since you can no longer program for audiences as in days past the very point of upfronts is gone.

Traditional media companies themselves now need to find their place in an environment where they still create great content, but they no longer set the conditions for discovery and engagement. They’re competing less with each other, but with tech companies, whose data drives distribution and placement of advertising to the right audience, at the right time, under the right conditions. They’re competing with Amazon, Google and Netflix. These are companies that have massive amounts of user data and know how to leverage it. Content creation might be the easiest part to solve, with talent and production facilities spilling far beyond Hollywood. The challenge today is in processing and leveraging data, and programmatic offers crucial solutions.

Upfronts just don’t make sense in a programmatic environment. But the best thing about programmatic is that it isn’t an upfront. It allows for conditions subjective to audience behavior over time and user experience. Through programmatic, brand marketers and media buyers can test and implement messages for a variety of audiences without tied-in commitments. Programmatic is fueled by current data, which gives it a competitive edge in the fast-changing digital environment. The buys are not as easy as in TV, but they combine scale with valuable audience engagement. Continued testing, and understanding consumer data, will help brands reach and speak meaningfully to their target audiences.

Upfronts aren’t the way bridge TV and digital. But that’s okay. Digital has the eyeballs now, and it provides actionable data to reach them without a lot of guesswork beforehand. With programmatic, brands have a more data-rich arsenal than upfronts could offer. Programmatic will never be as easy as traditional TV buying, nor should it be. We should embrace the complexity and work to solve for it, instead of replicating a dying media model.

Walmart Exchange Seems Like Natural Next Step

by Will Doherty, Senior Director Business Development

Last week Walmart announced its own media buying exchange was in beta phase. The Walmart Exchange (WMX) shows the world’s largest retailer tightening its grip on its digital assets, developing a platform for targeting audiences and buying media for itself and the hundreds of companies supplying its stores.
While we haven’t seen exactly what form WMX will take or what it will effectively manage without help from outside tech vendors, taking such an important piece of digital strategy in-house is a good look for Walmart. This kind of a data play should be valuable to all involved, including publishers. Ultimately, WMX is a sensible development that takes advantage of existing programmatic infrastructure and advances it to the service of its partners at scale. Despite the hyperbole suggesting it’s an industry game changer, it is simply the natural evolution of an in-house marketing strategy for the world’s largest retailer.

WMX shows a brand using programmatic not only as an advertiser, but as a data player. Walmart is sitting on huge amounts of consumer data, which the company will be able to ply for correlations between ad exposure and online and in-store sales. The scale will help draw these insights quickly, aiding targeting and optimization, and allowing Walmart to understand which audiences are likely to respond to which messages. Programmatic gives brands agility in integrating their data into more comprehensive marketing programs, which is what Walmart is doing with WMX and its overall efforts to revamp marketing strategy. Because of its exceptional footprint in the market, Walmart has the data to become an active player, and it’s in its interest to develop software to make that data serve the company and its suppliers.

Indeed, for a company like Walmart, this is a natural step forward. Some have suggested that WMX turns Walmart into a media agency, which feels misguided. WMX is a digital take on what the company has been doing for years with sales circulars and coupons. If Walmart is pushing a promotion on Tide, for example, it’s leveraging its marketing muscle over its own customer base to push Tide out its own stores. This didn’t make Walmart an agency and it doesn’t make it one now. But it does show how the retailer is smartly adjusting to the changing landscape to maintain a competitive edge.

Publishers, though, will see new benefits from WMX. It allows publishers to interact directly with marketers across Walmart’s diverse range of offerings, which range from CPGs to high-consideration products. Working with a variety of marketers in one place allows publishers to develop inventory packages that work well for both the sell and buy side, deliverable via the existing programmatic framework

Publishers need to think about how they can tap into programs like this, aligning their engaged audiences with large retailers that want to reach those audiences — whether that be via WMX, a private marketplace, high-impact ad placements, or cross-channel efforts utilizing marketers’ own data sets. And publishers need to be proactive in working with advertisers to develop programs that have more value than just ad space. In Walmart’s case, the company has the scale to analyze in-store purchase data to understand how and when those ad placements work best.

Before brand marketers start hatching plans to launch their own trading desks, we need to remember why WMX is good for Walmart — that’s Walmart’s size. Very few companies are in a position to do the same and expect meaningful results. But regardless, it will be worthwhile for everyone to watch how WMX plays out, as one more way in which programmatic can be leveraged for a company’s unique needs.

Exchange Fraud Prevention Should Be Simple: Sellers, State Your Name

by Andrew Casale, VP Strategy

In spite of a flourishing programmatic marketplace, with all the benefits it provides buyers for targeting key audiences with the figurative push of a button, there’s one pervasive, very expensive problem: fraud.

I’m talking about counterfeit websites and bogus traffic that lurks within open exchanges. It has given rise to an entire cottage industry for its prevention and sent a few folks packing – GroupM just announced it would exit the open exchange at the end of the year (although it appears to have pulled back somewhat on that harsh stance).

The brass ring on this unregulated, risky ride is a solution within the pipes themselves that hampers fraud without throwing up more barriers, technologically or monetarily, for either buyers or sellers. And because we haven’t heard of such an obvious solution as of yet, the industry is dragging its heels on a very important – and, in the long run, much more costly – problem.

We hear all the time that the only way to curb industrywide fraud is to “follow the money.” The problem is, we haven’t taken a single step toward actually following the money. Bad actors on the supply side are surviving and thriving, with few repercussions when they’re outed. People compare fraud detection to a game of Whac-A-Mole for good reason. Bad actors are aggressive and can be very difficult to track. And even when you root them out, it’s far too easy for these people to set up shop again, this time a little wiser and better at their craft.

In one case, you have a cookie-cutter website with high-traffic volume, nearly all of which comes from bots. Another theme is mislabeled impressions. Domain names can be spoofed easily – for example, a piracy site might fly under the radar with the domain of a reputable newspaper, bypassing the value of whitelisting. To solve for the first variety of fraud, we add sites to blacklists. For the second, we strike sites from whitelists. But in either case, if you find 100 of these sites and clamp down on them, 100 more will pop up tomorrow. Worse, legitimate sites may get blacklisted because of a high incidence of fraud, not because of their own impressions but because impressions bearing their name were spoofed, harming the reputation of the innocent.

The simple solution for fraud is an updated model whereby, in order for an impression to be placed for bid by an exchange, the exchange should be required to expose not just the domain name connected to it, but also the name that’s actually going to be on the seller’s paycheck. The introduction of this simple criterion would address and curtail fraud before, not after, the buy.

The industry has focused far too much energy on blacklisting or whitelisting domains, both of which can and are continuing to be easily gamed. Being that these are the strongest defenses for buying media across the open market, and both methods can be circumvented, fraud is effectively undermining the entire protocol. A far more efficient way to stop fraud is to blacklist suspicious sellers themselves. Think of the way these actors operate: The payee behind a faked nytimes.com impression can probably be traced to a faked forbes.com impression. The payee behind a bogus website with bot-ridden traffic can probably be linked to 100 other bogus websites. If you call out the payee, you call out the entire counterfeit network around them. That’s how we can actually start to follow the money – via a payee ID.

Unlike the Whac-A-Mole method of hacking away at bogus sites and audiences as they become known, identifying payee names within the exchanges will give bad actors pause and hamper their spread. It raises the barrier of entry to a far more inconvenient height for anyone that today is gaming the system with domains. It’s very easy to set up a domain. It’s also proving all too easy to spoof a domain. It’s much harder to accept payments under different names and gain access to exchanges under alternate identities. Compare the ad exchanges to the stock exchange: It’s very hard to counterfeit a stock. It’s too easy to counterfeit a domain.

The ad marketplace needs some other means of providing the same transparency. The bid request and response transaction between exchange and DSP is a binding deal. Doesn’t the buyer deserve to know where their money is going?
The barriers to adding payee ID to the information listed in the exchange are negligible. On a technical level from the exchange perspective, adding an addition criterion to the 30 we already submit to DSPs today is trivial. Sellers might object, citing confidentiality privilege. But in this case, they don’t hold the trump card: Certain buyers can just as easily refuse to make a buy from a seller that won’t reveal the name on the check.

For legitimate publishers, payee ID will only help them. Publishers only stand to lose by indirectly protecting the identity of bad actors. Dropping the veil of secrecy in the exchanges will create a new sense of trust from the buy side – and the benefits will be immense.

The current paradigm today in the open market is buyer beware. The domain may be youtube.com, but payment may not actually go to Google. This shouldn’t be buyers’ problem to figure out.
GroupM has given exchanges six months’ notice. Let’s do something before we run out of time.

Publisher Pricing Fail (in The Open RTB Market): Why Dynamic Pricing Hurts More Than it Helps

by Alex Gardner, VP Platform Solutions

What is your value to buyers in the open market? Hint, it’s not your floor CPM.

Most publishers aren’t in a position to confidently answer this question, and yet as more and more inventory is being accessed via real-time bidding (RTB) exchanges, the answer is becoming increasingly important. The digital ad market is still seeing double-digit growth, and more specifically, RTB is booming and projected to keep growing.

Clearly, it’s incumbent upon publishers to develop more intelligent pricing strategies to ensure their inventory’s price matches its worth.

Early on, characterizing RTB as a “race to the bottom” wasn’t just a clever jab — it reflected how publishers and their technology partners thought about inventory pricing in an emerging model.  Invariably, the conversation came to an oversimplified question: “What’s your floor?” – the lowest initial bid price that a publisher would accept. And it’s extremely rare now that a publisher will actually yield anywhere above that minimum acceptable rate.

As programmatic has evolved to afford publishers market data insights to match the buy side’s audience data insights, publishers can now set their value appropriately, not arbitrarily.

Although commonly applied as a solution to the publisher pricing challenge, dynamic price floors, soft floors, or otherwise automated pricing methods are not the answer. Despite the allure of a systemized tool designed to close the winning bid / clear price gap that most publisher are acutely aware of, it’s a flawed approach. Dynamic pricing promises short-term gains for maximizing publishers’ open market yield, but its true impact is often detrimental to a publisher’s bottom line. The fact is that buyers don’t like it.

Tracking an individual advertiser’s spending habits and automatically adjusting rates accordingly not only appears bias against bidders, it often backfires. According to Ruth Rafalovich, director of supply at Rocket Fuel, “Our system can detect a pattern of floor pricing that seems to follow an advertiser’s bid prices, and we can respond by reallocating the budget elsewhere.”

Furthermore, rather than using independent yardsticks (publisher data, 3rd party data, inventory and placement segmentation, exchange-wide platform benchmarks) to price media, the dynamic approach relies solely on using a buyer’s bid against them. If buyers price a publisher at a discount, which many often do, the publisher’s media goes out at a discount.

The good news is, publishers are in a position now to observe certain buyer behaviors and trends, and to set intelligent pricing strategies via applied insights derived from consensus market data, rather than an individual buyer’s bid history. Here’s how:

1. Audience type – Is the impression tied to a cookie with data? Comparing audiences with both cookies and data to audiences with neither, we see dramatic differences in bid activity.  The former typically yields three times the value of an unmatched user with no data.

2. Demand density – Find the sweet spots. If bid density is high on a particular segment of inventory or audience band, there’s a significant opportunity to price it appropriately.

3. Keep current – Efficient and timely access to market data will ensure that you’re in a position to respond and adjust to constantly evolving market dynamics. “Set it and forget it” doesn’t work.

Despite meaningful advances that further programmatic’s growth, the market still struggles with some inefficiencies. The good news is that publishers have tools available to help them avoid a pricing fail. Just as audience data is gold to the demand side, market data is gold to the sell side. Make sure you maximize your visibility in the fluid marketplace you operate: Know your value and win the market!

How Canada’s Programmatic Market Will Evolve to Match the U.S.

by Julia Casale-Amorim (CMO)

Programmatic ad buying is flourishing in Canada with estimates that real-time bidding (RTB) will experience 50% growth this year on the back of a near doubling of the domestic RTB market in 2013, according to global market intelligence firm IDC.

This increase in advertiser investment coupled with growing supply side involvement, including the introduction of new major Canadian sources of supply, will continue to propel the market forward.

Besides Canada’s slower move into the channel – it trails the U.S. by roughly 18 months – there are several unique characteristics of the Canadian advertising landscape that may explain some of the differences in how programmatic is taking shape here relative to the U.S.

Unlike the widely dispersed U.S. market, the digital media landscape in Canada is largely composed of a relatively small number of major media players. To date, these premium publishers have been reluctant to make their inventories available for auction, while those who have done so opting to funnel access through privately operated exchanges.

Not only is this a reflection of the direct selling preferences of major Canadian media companies, but Canada’s market has not yet achieved the density needed to elevate market eCPMs to premium direct levels. The conservative rise of RTB in Canada and delayed start is reflected in lower national bid density than we see in the U.S. – in Q4 2013, bid density (measured as the average number of bids per impression or BPI) in the U.S. was more than double what it was in Canada over the same period.* This at least in part contributed to elevated U.S. RTB CPMs, which averaged 15% higher in Q4 2013 than they did here. As more advertisers earmark budgets for programmatic and current advertisers expand tests into larger commitments, we expect to see bid density rise.

In contrast to the fragmented and more widely dispersed U.S. market, Canada is dominated by a considerably smaller number of major marketers, many of whom are environment conscious and well educated on the fraud that can plague open exchanges. It is no surprise then that these advertisers value the security that comes from directing buys at trusted national publisher brands, which may also help explain the market’s largely programmatic direct approach to selling.

Compared with the U.S., the majority of programmatic spending in Canada is controlled by a much smaller number of marketer brands (in Q4 2013 only 10 brands were responsible for nearly one-third of all programmatic spending*). Many of today’s active buyers were led to the channel by their agency partners and the direct response efficiencies that could be achieved through audience-based impression level buying.

Programmatic is still complex and smaller players without the support and guidance of an agency partner may not be equipped to test the waters in the market’s still developing stage, but this will likely change in time as ad technology venders evolve their platforms and expand their capabilities to cater to the needs of a broader advertiser segment.

Retail has been a major driver of programmatic spending in the U.S., outpacing the second largest sector, automotive, by nearly double throughout most of 2013*, yet in Canada retail lags behind. One explanation for this is that Canada is still developing e-commerce landscape. In the U.S., retail spending is heavily direct response focused relying on retargeting tactics to drive online sales. As Canada’s e-commerce market picks up steam, it is likely that similar spending patterns will emerge and contribute to overall RTB growth.

Through a private exchange, publishers can enhance the value of run-of-site inventory by packaging buys with rich data products and audience analytics not available through an open exchange. This is especially attractive here, given Canada’s relatively poor third-party data market. Data has been a significant contributor to the growth of RTB in the U.S., aiding marketers in their audience selection and bidding decisions, but to date access to rich third-party sources of Canadian audience data have been limited at best. As Canada’s data market matures – driven both by aggregators and investment into brand operated data management platforms – advertisers will be better able to identify and assign value to impressions, which is likely to result in a corresponding lift in RTB spend.

The last two years have made their mark on Canada’s still budding programmatic market. As more major Canadian publishers adopt a programmatic approach to selling, we expect to see continued growth. This, coupled with the channel’s ongoing evolution – fueled by things like wider support for richer ad formats, improved cross-platform buying capabilities, and operational simplification – will all cement the place of programmatic on buyers’ media plans. If bullish predictions for the channel’s growth materialize, we are on the cusp of a new and exciting time in our industry, with limitless potential ahead.

Source: Index Exchange platform data

What’s Behind The Rise in Self-Serve Programmatic?

by Andrew Casale (VP Strategy)

One of programmatic’s key promises has always been that it would disrupt the ad networks’ lock on inventory supply in the market. Through programmatic, advertisers gain the opportunity to take full control over a scaled buy, and to conduct it on their own terms and with their own data.

But to date, a disproportionate share of spending in the programmatic market has come from ad networks, regardless of the fact that the industry laid the groundwork years ago. It’s a reality that was highlighted at the recent OMMA RTB conference by Jay Seideman, Microsoft’s senior director of US targeting and exchange.

What happened to the disruptive promise of programmatic? I tasked one of our RTB marketplace analysts to find out. Checking Seideman’s observation against our exchange’s buyer-level data, what we found both validated his comments and revealed a surprising silver lining.

For every bid submitted to the exchange, we identified the bid’s seat and the seat owner – that is, the underlying entity that’s actually spending the money. Then we analyzed the top 200 seats, across all demand-side platforms and organized them into categories. It turns out managed services, which would include the networks, holds the largest market share of programmatic buying activity, at 47% as of the fourth quarter of 2013.

But here is where the numbers get more interesting. When we look at changes in programmatic market share since 2012, managed services’ share of the market has actually shrunk by 18%. On the flip side, trading desks are gaining market share, with a 22% increase in 2013, compared to 18% the year before. That should not surprise most people who follow the market.

But the real story is the rise in spending from seats owned directly by brand marketers. That share jumped dramatically in this period, from 3% in 2012 to 11% in 2013. Marketer-managed seats more than tripled the share of bids placed year-over-year. Here’s the full chart:

Seat Type Share of spend in Q4 2012 Share of spend in Q4 2013 YoY Change
Agency (non-trading desk)

14%

14%

Flat

Managed service / Network

57%

47%

-18%

Marketer

3%

11%

+267%

Other

5%

3%

-40%

Publisher audience extension

3%

3%

Flat

Trading Desk

18%

22%

+22%

 

In other words, the promise of programmatic is bearing fruit. Marketers are taking control over their buys and presumably tailoring them to the distinct needs of their brands, either directly through self-serve, or through consultation with their agency or agency trading desk.

The motor powering the rise of self-serve programmatic is a perfectly logical one. When a brand starts getting involved with a new way of doing business, such as programmatic buying, it’s going to want a partner to illuminate the ins and outs, a managed service in this case. Through the natural course of doing business, the brand will reach an impasse: It decides this business endeavor isn’t worth the investment and throws it out the door, or it instead chooses to take off the training wheels and make a serious go of it, either through an extended commitment to their current partner or with more custom solutions tailored to their needs.

Clearly, we’re looking at a tremendous vote of confidence in programmatic among brands. The overwhelming increase in brands taking the self-serve route demonstrates the value they’ve seen in programmatic and the commitment they’re willing to take with it.

This rise of self-serve is positive for everybody on both the buy and sell sides because it brings more parties into the ecosystem and facilitates a more balanced market in general.

There are, of course, a few cautions to consider. For brands, it’s important to consider whether the budget supports a self-serve approach, if the data is sufficient to make it worthwhile, or whether they have they have enough experience in programmatic to justify going at it alone.

For publishers, the investment on the buy side needs to mirror the supply side. These are especially sophisticated deals, which can be incredibly productive for the publisher, but only when paired with an equally advanced strategy. This means that as self-serve programmatic increases its market share, publishers need to invest in programmatic skill, whether developing that skill in-house or through their SSP or exchange partner.

Programmatic has arrived, and the demand among brands to take matters into their own hands proves it. Newer innovations in programmatic, such as Deal ID and preferred auctions, are aimed at giving marketers and agencies even more advantages in the exchange.

I expect the trend of marketers and agencies gaining more control of exchange inventory to accelerate this year, and even more marketer-managed seats in 2014.