Unlock The Full Efficiency of Programmatic

Today’s column is written by Jourdain-Alexander Casale as published by Ad Exchanger http://adexchanger.com/the-sell-sider/publishers-must-move-beyond-ad-servers-to-unlock-the-full-efficiency-of-programmatic/

For more than 15 years, ad servers have been the go-to standard for publishers booking, trafficking and serving direct advertising campaigns. The ad server is coded directly on the page of publisher sites, placing it in a pivotal role for the facilitation of all ad delivery.

Today the ad server is also used to activate programmatic demand for publishers. To do so, publishers can either use an exchange that is built into their ad server or an external supply-side platform (SSP) or exchange activated by a “first tier” tag, which, on failure to deliver demand, defaults to a fallback tag in a waterfall. Most publishers use a combination of approaches, leading to a serialized set of decisions where one static tag either accepts or passes on the opportunity, instead of every exchange competing at the same time in a parallel low-latency auction.

Programmatic was supposed to level the playing field and produce greater transparency and efficiency, but the current system has somewhat veered off course. The playing field cannot be level if impressions are treated as a “hot potato” passing from one SSP’s tag to another.

Additionally, impressions that make their way to programmatic are a subset of the total available supply at any given moment. Direct campaigns often deliver before call-outs to programmatic, preventing buyers from knowing the true availability and scope of opportunity publishers potentially represent to their buys. Not surprisingly, this has created inefficiencies in a market that should be hyperefficient.

Savvy platforms, on both the buy and sell sides, have been angling to fill these gaps by positioning themselves at the same level as the ad server by placing JavaScript code directly onto publisher pages. This moves from a construct where availability is ascertained through a manual trafficking process that can be upset by orders in the system, to one where every exchange sees every available impression. Where it gets really interesting: This process does not disrupt or replace the publisher ad server, but complements it. An order that may never have seen the light of day now has a chance to compete alongside a static IO-driven buy.

The ad server in effect continues to be the central “order book” of record, but technology allows real-time parallelization of decisions in and outside of the ad server. A publisher’s supply can now be made available to multiple platforms instead of restricted to the ad server, as has historically been the case. The question that now remains: What is the best practice?

To contrast, consider how financial exchanges work. The financial industry doesn’t rely on a single exchange or marketplace to provide optimal pricing data. If stockholders want to sell their shares, they generally go to their retail brokerage. The brokerage checks all exchanges simultaneously to determine liquidity nationally before giving stockholders a quote for the best price. The New York Stock Exchange and NASDAQ both offer brokerages a national price feed to comply with US Securities and Exchange Commission regulations. These regulations protect investors by requiring brokers provide the most competitive fill across pools of liquidity.

Essentially this is how financial exchanges maximize value, and it should serve as a potential North Star for the digital advertising ecosystem. Currently, ad exchanges have different fee structures, levels of transparency and varying degrees of service offerings that guide publishers to maximize yield. There are no standards for how an exchange should operate. In this environment, pitting all venues of liquidity against each other in parallel is a sure fire way to assure maximum value is placed on any given impression.

We are therefore quickly evolving toward a model where yield decisions are not static, but dynamic. The buyer’s view of availability is never constrained. And the true promise of programmatic – an efficient, level playing field – can be brought to bear.

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