Moving Forward - Building a Sustainable Yield Model in the Era of Header Bidding (part 3 of 3)

Over the last few weeks I’ve talked about the long-term impact of header bidding proliferation and containers on the digital advertising industry and pointed out how rushed adoption of these new technologies can make publishers more vulnerable. If the current paradigm persists, where publishers continue to deploy a multitude of duplicative header bidders and sub-par container solutions, the programmatic ad ecosystem will rapidly verge into unsustainable territory.

So, what’s the answer for those seeking return to a sustainable high yield model? Is there an approach that solves for the unintended consequences brought on by the proliferation of header bidding technology? There is, but the solution requires a far more proactive approach from publishers.

For programmatic marketplaces to remain healthy and sustainable, the market must rationalize around transparent, non-redundant, safe (legitimate and high quality) pools of inventory for buyers. This will only happen if publishers take a proactive and selective approach to choosing their sell-side container and header bidder partners based on a clear set of criteria:

• Use fewer header bidders, and be selective about the partners you choose.

To limit supply redundancy for major header bidders, publishers must limit the number of “broad-based” exchanges to two or three, plus a selection of unique demand sources, like Criteo. Building deep relationships with a smaller number of sell side partners instead of adding 20 transactional header bidder vendors will be sustainable for buyers, and therefore help publishers continue to experience the yield benefits of header bidding.

It’s worth reiterating that if publishers don’t proactively choose their partners, buyers will choose which platforms to spend against, and the economic lure of finding the “cheapest path to inventory” (a.k.a. “supply path optimization”) will result in them picking the lowest tech sell-side platforms as partners, and that translates into low ad quality and low yield.

• Understand the underlying conflicts of interest for container companies, and only work with partners you trust.

Most, if not all, container providers are economically conflicted, meaning they offer a container solution--usually for free or for a nominal fee (SaaS or rev share)--and also participate in that container as a demand source.

Common examples of how container company’s conflicts of interest manifest include calling their own demand first within the container; not working or providing information to optimize third party header bidders within the container (e.g. match rates, timeout window optimization, line item and floor price optimization, daily reporting of each participant's participation rate, timeout rate, win rate, etc.); and finally, not proactively adding new header bidders at a publisher's request. 

Where container companies don’t proactively and effectively add and/or optimize new demand partners at the request of publishers it's usually because adding new demand dilutes their own revenue from within the container, and that is not in their economic interest. So make your container company demonstrate how they are managing the onboarding and optimization of demand partners within the container. Demand equal treatment for all partners and look for “delays” in onboarding.

If your container company delays the onboarding of other demand partners, either fire them, or keep them honest by making them deactivate their own demand until they can go live with the third party demand that has been mandated by you.

• Demand transparency from all partners.

Sell side partners, whether SSPs or exchanges, should offer end-to-end, certified/verified connections between the buyer and seller with absolutely no tolerance for arbitrage or fraudulent resellers. Require 100% transparency because it is vitally important in order to protect your brand and further support buyer confidence in your inventory.

Your sell side tech partner must be able to help you understand where and how your inventory is being sold. Are resellers arbing your inventory? Are all sellers of your inventory authorized? How many times is an impression resold? Require you partners to help you answer these questions, and if they can’t, you have the wrong partner.

Beyond transparency of the supply chain, demand economic transparency. Fee transparency for all participants, including DSPs, exchanges and other participants, will keep everyone honest.

• Maintain a zero tolerance policy against fraud.

Zero fraud, zero counterfeit. Your partner must be able to represent your inventory with zero tolerance for fraud or counterfeiting, with “no fraud” guarantees to buyers. This means they must have made large investments in their technology and people to ensure quality -- at OpenX we have more than 25 people on our marketplace quality team dedicated to protecting publishers and buyers. They must also be able to help you identify unauthorized resellers or where counterfeit inventory is being sold.

• “Trust but verify” partners using the scientific method.

Publishers must make data-led decisions. Embracing A/B testing methodologies will help uncover any shady business practices and ensure publishers are using the optimal setup for maximizing yield. A/B testing can be applied to assessing container performance as well as understanding the impact adding new demand sources has on yield.

Containers are supposed to aggregate and pass through all header bidder bids into the ad server. Perform an A/B test to see how any given demand partner performs within the container and outside of it (direct on page), assuming all variables are held constant (e.g. timeout windows, etc.) performance should be the same. A second approach is to test performance using a different container. Demand partners within the container should perform about the same from container to container. If one demand partner performs worse in container A vs. container B, alarm bells should go off.

• Most importantly, don’t outsource the management of your programmatic business.

With programmatic accounting for 50% or more of most publisher’s overall revenue, the only responsible approach to managing that revenue is to understand and control the levers and drivers of your programmatic business instead of placing it in the hands of another company. Remember that while container companies promise to help ease the load of managing several programmatic partners, they all have a conflict of interest.

All of this is not to say that containers are bad for publishers or that they shouldn’t be used. They perform a valuable function. But keep in mind that containers are meant to be tools that empower publishers with control, not an outsourced programmatic revenue management service. Don’t let a container company swim outside of that lane by managing demand relationships, or obfuscating your view of the full demand landscape within the container. 

Dig into the data, just like with every other vital revenue stream, and understand the revenue levers at a granular level. Know how demand partners are integrated. Manage the day-to-day relationship of those demand partners first hand. And ultimately, take control and run your programmatic business in the way the best benefits you.