The industry's rebellion against the complexity of the programmatic supply chain

By AdNews | 22 July 2020

The advertising industry is beginning to “rebel” against the complexity of the programmatic supply chain.

Speaking in A Marketer’s Guide to Programmatic, PubMatic director of ad solutions APAC Natasha de Mallet Hawes says as more advertising flows through the programmatic ecosystem, there has been greater demand for transparency and efficiency.

“In the past I would say that it's been quite difficult to control exactly where your ads are going when it comes to programmatic,” de Mallet Hawes says.

“One of the things that people have been scared of when it comes to programmatic is being able to really understand exactly where they're placing their ads.”

Over the last few years though, she says media buyers have been working to ensure every dollar of a client’s ad spend is made as impactful as possible.

The programmatic ecosystem has come under fire for its complexity, with its “opaque” nature currently the subject of an investigation by the Australian Competition and Consumer Commission (ACCC).

“If you think about all the parties that are involved within the actual programmatic ecosystem, it can get quite convoluted and confusing,” de Mallet Hawes says.

Now the industry is working to solve these issues with industry bodies like IAB Tech Lab who have been developing standards such as sellers.json and OpenRTB SupplyChain object.

So how does the supply chain work?
The supply chain starts with an advertiser who generally works with an agency or goes direct to a buy-side platform, also known as a demand-side platform (DSP).

“They are the message and technology layer that buys views in order to buy advertising through programmatically,” de Mallet Hawes says.

“Those DSPs or demand-side platforms are connected to an SSP (supply-side platform) such as PubMatic, and what we do is work with publishers to surface their inventory through to demand pipes.”

In its simplest form, an advertiser uses that DSP to buy, and the publisher uses the SSP to push their inventory through.

Today there are a number of other layers that can be added on to that supply chain.

“If you actually start looking into the even more layers, there are measurement providers and certification vendors to make sure that things like brand safety is adhered to, that there are certain keywords they might want to target, there's data players,” de Mallet Hawes says.

Each of these players, whether it be a DSP, SSP, data player, brand safety vendors, measurement vendors or another party, have a fee or a “a clip of a ticket” between the advertiser and publisher.

These fees have also come under scrutiny, following the landmark study by UK advertising industry body ISBA which stated that only 51% of digital ad spend was making it to the publisher.

Cara Walsh, director and consultant at Cobble Hill Consulting, says marketers should be looking to eliminate as many parties as possible.

Instead, she recommends working with bigger players who can offer more value through their experience and platform.

“The larger the DSP, the better the learnings, and the smarter the machine learnings are going to be,” Walsh says.

“So the more media that DSP is buying and engaging with, the smarter it's going to be in helping your campaigns.”

To help marketers pick the right vendor, she says the LUMA Partners Display slide is a helpful way to get to know each party.

Transparency for effectiveness
Understanding the supply chain is key for brands looking to maximise the effectiveness of their spend.

While Walsh says marketers should be culling the number of parties in the supply chain, Dentsu Aegis Network ANZ chief data and technology officer Patrick Darcy says the choice should boil down to the value return each vendor supplies for a campaign.

“If the value return to the client business isn't greater than the cost in that supply chain, then we wouldn't do it,” Darcy says.

“But in many, many cases it is, and that's why programmatic has been so successful and technologies within it have been so successful, because when you get it right, you are often delivering far greater value back to clients and their businesses than the cost in the middle.

“I think we've just got to make sure that we're remembering they do play an important role.”

Supply path optimisation (SPO) is one way marketers can achieve maximum effectiveness through the supply chain.

SPOs are a broad array of algorithmic and manual tactics used by DSPs to streamline how they work with SSPs.

SPO became popular due to the rise of header bidding, as it led to a duplicative view of publisher inventory and resulted in more complicated auction dynamics and increased queries per second for DSPs.

De Mallet Hawes says this is something PubMatic and other parties have been working on with advertisers and agencies to ensure transparency.

“What players like PubMatic are doing are ensuring that we are as transparent as possible with our fees and opening to sharing what they look like through things like log level data and reporting,” she says.

“A lot of DSPs are very transparent with their fees as well, as are measurement vendors, et cetera.

“What we've seen advertisers really wanting to do is uncover each one of these fees to really understand exactly where their dollar is going and how much of that one dollar that they're spending on one end is getting through to the publisher.”

A Marketer's Guide to Programmatic is presented by PubMatic and powered by Redback Connect.

Missed the webinar? Watch it on-demand HERE.

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