Programmatic bidding should be efficient and effective – especially RTB. But over time, the tools we use to execute and measure programmatic have become fragmented, and inefficiencies and waste seeped between the cracks.
This has led to many issues, such as the duplication of bid requests, meaning everyone is trying to sell everything to everyone else in pursuit of more revenue. Header bidding only exacerbated the issue, and tactics to monetize inventory, regardless of its value, became a self-fulfilling prophecy of duplication and oversupply. It all makes it hard to find premium traffic, which means lower revenue and more waste. Moreover, all the wasted time, effort and resources keeps the industry from truly squeezing out the potential of programmatic. Filtering out the dross is a huge step in the right direction – but it’s only the first step.
Low-value traffic spawns untenable low-effort solutions The pressures of DSPs to find and reach audiences should be the yin to an SSP’s yang. But there’s an imbalance at the heart of that relationship: the misperception that DSPs’ appetite for placement and reach should mean SSPs need to put every impression opportunity in front of them, regardless of quality. Multiply that over years of programmatic advertising and you get where we are now. Think about it like plaque in neural networks: a little bit doesn’t seem like a problem, but every little bit builds up over time. First, communication and efficiency deteriorate, then eventually the whole thing breaks down. Worse yet, most tools and innovations are created to help one side gain a competitive advantage, which feeds the idea that supply and demand will always represent competing interests.
The industry has found a quick fix for the issues above: hard (almost arbitrary) QPS limits. Tactics like first in, first out (sending only the “first” opportunities every second) and skipping every other query have become the go-to “fair” methods of controlling it all. But these aren’t solutions for supply-side challenges; they’re coping mechanisms.
The reality is supply and demand don’t have to have competing interests. Efforts to optimize the programmatic supply chain benefit all parties; they increase value, drive down cost, reduce inefficiencies, boost revenue and get us a little closer to that promise of programmatic.
What programmatic needs to refocus The solution to programmatic waste and the inefficiencies that come with it isn’t a quick or easy one, but we believe it’s attainable. In our view, the industry will have to look at the following approaches:
Machine learning. Much of ad tech is still remarkably manual, and human information-gathering can be slow and limited, making it a roadblock to industrywide change. Machine learning models can provide visibility into why transactions are being conducted, what’s being sought after and who’s looking to buy what kinds of inventory. That efficiency lays the groundwork for less wasted time, better ad sales and a deeper level of trust across the ad ecosystem.
Consolidation and a mutually beneficial take on innovation. Consider Volvo. They were big enough to know that an innovation like the three-point seatbelt wasn’t just good for Volvo, and it wasn’t just good for the auto industry; it was good for humans everywhere (which was, after a fashion, still good for the auto industry). Their decision not to patent the design was their way of letting the tide rise for all ships, cementing their innovations as a part of daily life for millions almost instantly. Ad tech needs the same: altruistic players big enough to compete with the monopolies and a level playing field where success is based on validity.
Trust in external partners. Perspective and experience are incredibly valuable, but nobody inside a single company can see far beyond the walled gardens of its digital platforms. Rather than doing many things halfway, the industry needs engaged, focused and specialized partners with perspective and specific actionable insights.
The supply side will benefit when they work with partners to sort through the waste and stop the junk that pervades the auction process, which increases valid fill rates, makes good actors stand out and turns down the noise of bad actors. With less noise, the demand side can clearly identify audiences they’re actually looking for, which improves campaign KPIs and reduces infrastructure costs.
The promise of programmatic is characterized by an efficient and open market, each player making the most of its own abilities, better relationships, more valuable deals and better reach. Isn’t that why you got into this whole programmatic deal in the first place?
This article was originally published on AdExchanger
Written by Eran Udassin