With Changing Auction Mechanics, More Agencies Go Direct To Publisher

ssp-storyThe ability to buy directly from a publisher, both programmatically and through direct integrations, is transforming agency media-buying practices.

Premium inventory is going programmatic thanks to private marketplaces (PMPs) and programmatic guaranteed deals. Meanwhile, header technology has reinvented the way buyers connect with some media sellers.

These converging trends have empowered more agencies to go direct to publishers, placing new pressure on providers of supply-side technology to demonstrate their value to both their publisher customers and agency buyers.

“Buyers are demanding more and better quality access to media, so they’re becoming much more creative in deal structures” than just using traditional real-time bidding, said Greg Williams, head of media and publisher teams at MediaMath.  “Publishers are saying, ‘If the budgets are large enough and I can monetize accordingly, I would definitely be interested.’”

Private Deals Gain Velocity  

Over the past few years, agencies have funneled more and more spend into private marketplaces, driven by a desire for more quality inventory that drives results for their clients. Those deals use the SSP to gain access to a publisher’s inventory, but programmatic guaranteed can offer the chance to connect using the ad server.

Slow to get off the ground, programmatic guaranteed has recently become a more common way to buy; Google made it available to all advertisers through its DoubleClick platform in January. In 2015, eMarketer predicted that more than half of all US programmatic buys would be executed through direct deals, reaching $8 billion.

In a programmatic guaranteed deal using open RTB protocol, the DSP responds to a bid request by sending a deal ID. That deal ID matches a line item on the publisher’s ad server with specific campaign attributes and indicates priority delivery.

In this scenario, the ad server effectively replaces the SSP as the decision-maker by connecting the buyer to the seller’s premium inventory. 

Programmatic guaranteed can also be executed through an API that hooks into the publisher’s ad server to purchase inventory directly (some refer to this as automated guaranteed). This integration benefits both parties by automating the billing process and making it more transparent.

“The programmatic paradigm is dramatically different from traditional workflow [because] money goes from platform to platform before it hits the publisher’s wallet,” said Andrew Casale, CEO of Index Exchange, which executes these API integrations. “The agency is saying, ‘We’re going to do what we’ve always done: sign a deal and pay you directly.’”

Buying directly via a programmatic API works well for the agency, whose clients increasingly want fee transparency.

“From a tech fee standpoint, it’s significantly cheaper than an RTB chain,” said Jon Mansell, VP of marketplace innovation at IPG’s Magna Global. “It’s almost like an ad-serving fee.”

Publishers see higher yield, because programmatic guaranteed transacted through an API reduces the so-called "ad tech tax" paid to vendors along the way.

MediaMath sees its clients engaging in these integrations more frequently, Williams said.

“One of the bigger trends is taking the classic world of direct buys and working with publishers and their intermediaries to bring those into a programmatic channel,” Williams said. “You have more efficiency, better performance and, frankly, better transparency.”

Header Bidding

Some DSPs and buy-side technology companies, at the behest of agencies and marketers, are building direct integrations in the header. Criteo was the first to do so, years ago, and TubeMogul has built one also. Other DSPs, such as DataXu and The Trade Desk, continue to integrate with the header through SSP partners.

MediaMath has hinted at working with content distribution network Akamai to integrate a header-type tag into the payload, or the message transmitted to the DSP excluding any headers or metadata.

But, Williams added, “We remain focused on the buy side as it becomes a much more powerful tool for accessing inventory throughout the entire waterfall of the publisher side.”

Vincent Bareges, VP of publisher development at Amnet, Dentsu Aegis’ programmatic trading desk, said Amnet is considering such integrations as they become easier to execute. Amnet currently leverages header bidding through preferred platforms including Index Exchange, MediaMath and others.

As these integrations become more common, where does that leave the SSP?

“Header buying raises the question of how SSPs are going to keep bringing value to the buy side in a meaningful way,” Bareges said.

Some, such as Casale, argue the header trend renders SSPs irrelevant.

The traditional SSP, he said, “used to be the gateway to the programmatic market. It died when the header was born. [Header] access can be multi-participant so the SSP’s positional advantage is no more.”

By contrast, IPG's Mansell sees an ongoing opportunity for publisher-facing ad tech companies.  “Header bidding … makes the SSP even more valuable. The SSP isn’t being phased out. It’s just getting much, much better.”

What does that mean? “You’re going to see more holistic usage of the SSP, and it will be reminiscent of the ad server,” Mansell said. “They’ll start to blend together.”

Long Live The SSP

Another thing working in SSPs' favor: Buyers aren’t yet embracing ad server integrations at scale.

Bareges said those integrations are not a replacement for programmatic buys. For those deals, he said, "We’re still going through the platform and the SSPs.”

And the open exchange/SSP environment is still crucially important to buyers. The rise in header integrations doesn't obviate the use of open exchanges, partly because of configuration costs and partly because publishers won’t tolerate more than three to five tags in the header wrapper because of latency issues.

“You might be spending 80% of your time talking to 20% of publishers,” Bareges said. “The 20% of the time you spend on the other 80% of partners is where the SSP is important.”

“We’re not in any way looking to replace one approach with another,” he added.

Even Casale, a booster of the header, agrees.

“[Direct integrations] don’t have an implication on the open market, which is still thriving and serving an important role adjacent to all of this,” he said.

The open exchange can also help buyers determine when to set up PMPs or direct deals. By spraying an audience segment on the open exchange, buyers can see which publishers are sending in the most bid requests to find affinities with their audience, Mansell said.

“You need RTB to tell you when to do programmatic guaranteed,” he said. “Automating the IO only makes sense with a specific audience segment.”

Whatever the SSP ultimately becomes, those that can’t keep up with emerging trends will eventually lose the race.

“There are better SSPs and worse SSPs,” Mansell said. “Some will get cut out of the picture, no question. We are going to see massive consolidation.”

UPDATE: Amnet is not directly integrating with publishers through its DSP partners, but rather testing and considering it as an option.

 

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