1 December 2009 in ExchangeWire EMEA 0 Comments

The Fractious Relatonship Between Publishers And Agency Demand Side Platforms

MediaWeek published a story yesterday about the growing influence of Demand Side Platforms – and the concern it seems to be engendering in top-tier US publishers. Demand Side Platforms are afterall everywhere. Everyone seems to have one: agencies, search firms and ad nets. Even Yahoo has one – and that’s probably worth a post in itslef.

Publishers are now becoming a little more vocal about the way these DSPs are cherry picking ad impressions through the exchanges and reselling this inventory at higher prices to advertiser clients. Here Mike Shields articulates some of the deep reservations publishers have about DSPs:

If exchanges have some publishers worried, demand-side buying platforms are causing sites to be downright fearful. Often viewed as agencies’ versions of ad networks, these platforms are designed around the concept of real-time bidding. Either via exchanges or their own technology, companies such as Adnetik can automatically buy online media from publishers at the last second based on various preset parameters (target audience, performance history, etc).

Each company’s model is different, but some worry agencies will buy tons of cheap inventory upfront from publishers, and then resell it to individual clients at a marked up price. “They scare me more than networks,” said one publishing exec. As another seller explained it, agencies present their own demand-side platforms as coming from trusted partners—but they act just like ad nets looking for the cheapest possible inventory.

Not everyone in the publishing world is looking to pick a fight with agencies. Kyoo Kim, VP Sales, MSNBC.com, points the finger at Web publishers for not embracing technology fast enough over the past few years when the ad market was strong.

That said, though Kim would prefer to partner with the VivaKis of the world, he is deeply concerned about the prospect of them buying his inventory once, then leveraging that user data on other sites. Demand-side platforms, he said, “can see our audience across the Web and don’t have to come back to a publisher’s site again. That’s scary.”

This debate is encouraging. It simply means that publishers are starting to recognise that the landscape is changing and they will need to adopt new technologies and a more progressive ad trading strategy to compete and sustain revenue in the second channel. In a post for AdExchanger, Tom Shields, CEO of publisher optimisation specialists, Yieldex, suggests three things publishers can do to maximise the value of ad inventory:

1. Inventory value. Publishers need to get back from their exchanges the value of their inventory, on an impression-by-impression basis. Just getting high-level average CPMs by section or zone isn’t good enough, this masks the high-value impressions that may exist within those sections.

2. Third-party data. Your buyers are using data to understand the value of your inventory, you need to have the data to fight back. You should be setting floors on your inventory based these data segments, so buyers can’t just cherry-pick your inventory at an overall low value, and you can’t do this without the data.

3. An analytic system to maximize yield. You will need a system that can capture and analyze all this data – terabytes of it – and spit out a set of floor prices by inventory segment. In an ideal world, this system operates in real-time, re-setting floors based on the most recent data. I call this real-time selling – the antidote to real-time bidding.

Publishers must embrace these platforms and implement an exchange strategy if they are to maximise revenue from their ad inventory. Despite all the hostility towards exchanges and DSPs, I think we are beginning to see some publishers acknowledge the seismic shifts currently occuring in the display market. Next year is going to be interesting for both the buy and sell side.