Is a sea-change coming for the world of publishing and programmatic? Alexander Lund thinks so. Here he outlines his vision for how a new path can be forged.
The tides are once again changing in the ad tech industry, and we can see a perfect storm brewing on the horizon. Although Google has pushed back its promised phaseout of third-party cookies, the Cookiepocalypse remains inevitable; with it will come not only a paradigm shift, but also the emergence of new solutions and opportunities for publishers and advertisers to engage more and build closer relationships.
Limitation to the Open Auction
In a land full of opportunities, I would like to focus on the limitation of programmatic open auctions in return for direct partnerships forged through a palette of well-structured deals that better link price, products, and quality between advertiser and publisher.
It’s a general orientation towards more control and transparency as a publisher – and for advertisers. It’s also an approach that has been enabled by the accumulation of technologies, knowledge, and expertise over recent years, which has helped all actors in the industry to reach a new level.
The programmatic open auction lowered the entry barrier for both buyers and sellers of digital ads and promised quick and easy access to supply as well as demand. It has indeed been valuable in formulating and following a “bottom-up” strategy and thereby enabling the growth of a stable performance baseline.
However, these benefits have been in exchange for less control and fewer insights into where ads were coming from and how they were delivered. The reliance on third parties to manage a good portion of advertisement operations has created a muddy picture of the ecosystem and an obscure supply chain.
The time seems ripe to take the next natural step and actively seek to enhance transparency, to take back control, to manage and improve cost structures, and to finally better utilise the uniqueness and quality of publishers.
Through control comes cost efficiency
Limiting the reliance on costly middlemen and moving towards higher margins on exclusive, high-demand inventory are imperative to publishers’ success. More important still is orchestrating the sales channels correctly in order to better organise and sell inventory.
The tools needed to develop a thorough order of deal types and sales channels are widely available, and can make the unique business understanding and partner network a strong integrated part of a publisher’s ad monetisation strategy.
“The open auction doesn’t necessarily become obsolete –it just takes a different iteration, more alike to its original form.”
It will require dedicated time and effort to identify unique selling points and structure them into the right mix of products – not to mention to price the whole portfolio accordingly. Luckily, most publishers sit on the heaps of data needed to get it right – it’s just a matter of sorting it out and strategising based on the options at hand.
In this context, the open auction doesn’t necessarily become obsolete –it just takes a different iteration, more alike to its original form. Every sales channel has its individual strengths, as each represents a different sales approach. And in conjunction, they should be arranged to generate maximum output separately, and coherently support a sales strategy where the direct partnerships keep evolving.
The open auction then becomes the lean introduction to some demand and supply — for both buyer and seller — and a way to upsell bottom-shelf inventory and utilise a quantitative sales approach.
In opposition to this will be various deals that bring higher value to the top-shelf quality media through exclusivity, and nurtured relationships between buyer and seller.
There’s room for different approaches as long as the sales strategy properly reflects the benefits and take into account that the one-size-fits-all approach in the open auction for the most part devalues the exceptional insights a publisher may possess in the market.
Uniqueness is the future
The limitation of open auction and orientation towards more sophisticated deal structures allow for greater uniqueness in the transactions of digital ads – a uniqueness that, first and foremost, builds on in-depth understanding of the media at hand and that, secondly, draws in the available first-party data, such as contextual and audience targeting.
We must embrace the increasing demand for first-party data which undoubtedly follows the diminishing use of third-party cookies and increasing focus on data privacy. Every stakeholder in the industry will be forced to confront the change and thereby receive the opportunity to play it right.
First-party data has a unique character along with special ad placements, creatives, and the mere nature of any media outlet. Therefore, in a similar way, first-party data should be made exclusive to those who want a close advertisement partnership and to be placed at the heart of the product offerings.
Various types and layers of first-party data will require different rankings as to how they should be valued and sold. First-party data will facilitate diverse demand through development in direct partnerships and exploration of new synergies. It will play a key role in disrupting the typical ways of selling via open auction that we have grown used to, and will probably take the centre stage when it comes to how digital media will be bundled moving forward.
In this phase of the evolution, the responsibility largely lies with the publishers. The publisher must be the first-mover and shape the ecosystem in order to regain control and quality. That being said, no success is going to be achieved without cooperation from advertisers. Therefore, it’s important we bring about a shared understanding of the best possible future in digital advertisement.