“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Ian Davidson, senior director of platform demand at OpenX.
If we want the best-case scenario for programmatic media buying, we can't hesitate addressing the challenges inherent to the ecosystem.
One of the key challenges: waste.
Waste works against value. It works against conversions. And if we want to eliminate it, we have to ask ourselves some tough questions.
Now, we might address fraud or viewability, but another significant way of thinking about waste in programmatic is to approach the parts of the process that our industry has traditionally feared changing.
Let's talk about conversion data. We aren't doing enough with it.
And because we aren't using it as well as we could, we're consequently not doing enough about waste. It's time to take a bold step forward.
Buyers And Exchanges
Some exchanges invest significant resources in eliminating fraud from programmatic.
They build sophisticated algorithms and filtering techniques to prevent buyers from unintentionally accruing robotic traffic, and to ensure only quality users are available to buyers. Proactive exchanges also hold publishers to a higher standard by requiring minimums when it comes to viewability rates, seeking to reduce ad clutter and trying to increase brand safety.
Yet, exchanges still hear from buyers that certain segments of inventory just don't perform very well.
Addressing this, especially if we mean to cut waste, means that exchanges must find new techniques with which to identify and eliminate underperforming traffic. An ambitious step that could create tangible, waste-cutting, conversion-driving benefits: sharing conversion data with exchanges in a trusted and controlled manner.
Programmatic-media buyers view their conversion data as a pure signal of inventory value and keep this information close to their vests. Competition dictates that rarely, if ever, does one buyer tell another which publishers, exchanges and users provide the most value.
But, at the same time, buyers seldom have the volume or a big enough share of the advertising market to capture a comprehensive picture of what inventory really drives conversions. And that's a problem.
Yes, it might be clear to some buyers when a large publisher drives conversions. Buy enough media and you'll pick up on certain data about what's happening, in that way. But when considering the broad spectrum of publishers in an exchange, such as premium, mid-sized or local, buyers aren't looking at the volume of conversion data necessary to determine the true value of those pieces of inventory. They remain in the dark about what those players represent. And that, all too often, means expending resources on inventory that won't convert.
So, on the one hand you have buyers' fears about sharing, and on the other hand, you have the desire for a system that can provide greater returns. The key to resolving this Catch-22 is aggregation. Get all buyers' data together in a given exchange and you open a pathway to improving small and mid-size inventory opportunities.
This is where exchanges come in. Here's the model:
- Buyers contribute their conversion data to the exchange, which aggregates the shared information from all its buyers.
- The exchange secures and protects the conversion data, so that this raw information – where the conversions are taking place and how much they're worth – is never revealed to participating buyers. These exchanges do not buy from their own inventory.
- The exchange then provides all buyers that shared data with a newly culled ecosystem in which performance metrics leap forward because the buyers no longer risk unknowingly targeting inventory that represent low conversion rates.
- Only the strong performing publishers remain viable in the exchange. Conversions should increase under these conditions, while waste should shrink.
Collective Action, Collective Results
In a sense, the idea of sharing conversion data is not unlike that of sharing of bid data, which buyers already do with exchanges. But with shared conversion data, exchange operators become better able to assess inventory.
And it's also fair to suggest that the resulting increase in conversions would attract more brands to the programmatic marketplace, meaning more data, access to high-quality users and revenue.
If we make this move, collectively, the promise is that we stand to reap great results – also collectively.
Our industry can be bold and courageous. This kind of sharing is an ambitious step. But it's also a way forward, taking us from the wasteful repetition of accepting less effective inventory and into a more powerful experience: exchanges and buyers in a new collaboration, leveraging programmatic for the future.