‘The Ego-System vs the Eco-System’, By Gareth Holmes, UK Publisher Director, PubMatic

An EGO system has existed for some time within display advertising. I call it that because it’s a subjective process, not based on logic, but on whom a campaign has been sold to, or sold by. On ad operation teams, certain campaigns can receive a “first look”, a special treatment to improve results or get a higher volume of premium positions within a publisher’s stable of what’s available, and in online media those are the ones that count.

Somewhere in the evolution of the industry, agencies determined that hitting a user with an ad early in their session was more valuable to an advertiser than later in that same session, a strategy aptly named “first impression” or “first look”. This is a practice constructed by the industry to incur higher fees for early impressions, and publishers have been selling their inventory like this ever since. This “first look” approach is what we call the EGOsystem, and its time is over. It would be prudent industry-wide to look at how and why these impressions are bought the way they are.

In an ECOsystem, your entire inventory, regardless of campaign goal, is made available to the buyer and technology is able to assess the best price for a publisher. Rules and controls can be put in place by the publisher, such as price floors, to take control of their inventory. One of the great benefits of real-time selling is that a publisher can better evaluate each individual impression. Arguably, the effectiveness of an ad is the summation of the creative, the site and the length of time the ad is viewed.


How does a publisher operate in an ecosystem?

The more progressive publishers are typically the ones who are executing in an ecosystem, and many of these are PubMatic clients today: publishers who are embracing programmatic selling. The sales team directly sells takeovers, sponsorships and new ad units and programmatic trading is employed for standard IAB ad units. Their impressions are sold to the highest bidder, whether it’s through the direct sales channel or programmatic. They allow all available inventory to find its natural place in the inventory chain through programmatic selling. So, the key for publishers is to serve their direct sold campaigns and embrace holistic programmatic spending. In order to maximise every opportunity to trade effectively, publishers need to be trading programmatically as a complement, not a conflict, to direct agency spend, the very thing some are trying to protect.

To accurately price an impression, a publisher must quantify the user data for all impressions using a holistic platform. This will allow any publisher to price every impression across all platforms. Once each impression has a known value, the publisher can incorporate this price into either direct or programmatic selling. This will, in turn, empower the publisher to engage in Private Marketplaces driven by the very rules the publisher sets, based on impression and client value.

This is the basis of a sound programmatic trading strategy, this is also an ecosystem, not an egosystem — every impression existing is traded for its real value, not an inferred value based on its newness.

A publisher will now have several campaigns bidding for each impression — this is when the magic will happen. Every returned eCPM from each trade will be evaluated, and at the same time all of the data will be crunched: creative, financial, campaign and user information. This data decides which campaign is served and closes the circle on moving publishers from an egosystem to an ecosystem.