The race to the bottom begins

Overtime demand based buying has evidently become both performance and metric driven, meaning that the direct deals have been on a decline. It’s still surprising how many publishers are unaware at the markup on programmatic buying from DSPs/AdNetworks charged at CPCs/CPAs etc. As a result of this race to the bottom yield has evidently been dropping.

The SSPs then came in to help manage yield on behalf of the publishers as they had little control of the demand. Slowly moving towards singularity and utilizing the skills of SSPs across platforms.

It’s clear that the SSPs are slowly morphing into becoming private ad exchanges on behalf of their clients.

Overall the private exchanges offers the most protection to help manage this yield and the larger the bundles of media, the more attractive the exchange is for agencies and DSPs. You could argue that the private exchanges are becoming the direct sales force of the future for these publishers.

Future

You can slow the race down with private exchanges, but the growth will only come from increased control and innovation.

Private exchanges will offer a buffer to help protect diminishing yields on inventory. However the growth will evidently come from increased control and innovation.

Innovation

Largely innovation is the only savior for the race to the bottom.

Data, data, data

Largely 1st party data should become a prized asset and distributed at a cost to either increase yield on direct ad buyers or elsewhere. Think about the DMP model, but with substantial metadata e.g. WeatherChannel supplying the weather forecast in the bid request to buyers.

Format

Only have to see the buzzwords about native to know this is going to be huge. Those publishers that effectively create the best formats for their private exchanges will win.

Consumer

Extreme focus on the consumer is key to increasing the value of the content being sold. An example of this would be focusing solely on latency analysis of ads to make sure there is no delay for consumers. In addition understanding where their data/or your data is going after the ad buy.

SSPs of the future = private exchanges

The SSPs of the future will become private exchanges. A larger benefit of having a private exchange is around the controls that you can place on such a level that they become the “new SSP”. Managing yield automatically, not new, but just with more controls in real-time.

Private Exchange Logs

The aggregation of these private exchange logs will be key to new companies that will assess the value overall. You should never accept any aggregate data from a technology powering an exchange. Increasingly publishers will ask for this raw data in a stream for analysis. Just one of many use cases is the increase in bots etc. Additionally companies that analyze these ad-request logs will continue to grow to evidently spot patterns in the data to help effectively manage yield.

Programmatic yield management

Min management (cpm thresholds) will become programmatic based on demand for the smarter publishers that plug directly in the exchange logs. Programmatically determining when to raise CPMs based on specific events or signals will be key to increasing yields in the race to the bottom.

Control

Large publishers cut their direct sales team.

Evidently this allows for more programmatic buys, which is where the buying should and will come from. Publishers will continue to be concerned about the race to the bottom and private exchanges will offer a short-term solution to raise the price of their inventory. Large media companies will package their inventory through these exchanges.

Each publisher/buyer should be extremely strategic aware of ad inflation

Purely on the supply side understanding the process of the bid request through to buy is extremely important. Specifically publishers should be asking and getting the bid volatility from any company providing the exchange platform.

Concerned about privacy and data leaks

The lack of understanding from publishers about the exposure of bid requests on their private exchanges should be understood. Knowing the raw bid request sent out to buyers is extremely important both for yield management and the protection of user data.

Risk for niches

The risk in the rise of these private exchanges is around the niche inventory, which will continue to get devalued as the growth of these private exchanges increases. Successful DSPs will tap the niche inventory at extremely low CPMs, niche inventory will fight for attention with these private exchanges.