Last week's PROGRAMMATIC I/O delivered many interesting discussions, and one of them revolved around transparency in bidding on an exchange.
What if you had sufficient transparency on every impression's auction, such that all buy-side participants bidding in an auction (even bidding "lurkers" or non-bidders) were revealed? Who would care about this data and why?
Hold on tight!
Hypothetical use case
A user (more specifically, a web browser) visits a popular shoe site and views a pair of shoes. They decide not to buy and move on to a local news site's home page, where a 728x90 display ad across the top of the page is hooked up to an auction in a display advertising exchange such as Right Media, AppNexus or DoubleClick AdExchange.
A retargeting firm hired by the shoe company bids on that placement, and so do a number of other retargeting companies, since the user has visited shoe sites for the past couple of weeks. The bids arrive varied for many reasons:
- Different price points of shoes - higher-priced shoes mean higher Cost Per Actions (CPAs).
- Recency of a user's visit - this week's visitors could be more valuable than last week's.
- Some marketers' first-party data suggest that the user has a history of buying shoes, so the marketers' demand-side platform may be better informed to bid higher or lower.
- The user visited car sites too - hey, there are car company retargeters bidding!
- Some bidders lack sophistication and do not bid dynamically, depending on the user cookie.
- Some bids never make the auction due to price floors set by sellers.
- And on and on…
On the other hand, in a fully transparent auction where everyone knows who is behind every bid (not just the DSP but the actual advertiser), presumably if you're the marketer you're giving yourself up too. There's a cost. Why would you do it?
This type of fully transparent auction would need to be incentivized somehow, assuming that the business intelligence outweighs the strategy you give up through bidding data. Is that possible?
Publishers get control
And that's where the publisher could come in. Maybe it's not about BI for the marketer at all. Could a publisher use this new buy-side auction data too, such that it receives better CPMs in an auction where the buy side is fully transparent? This could incent the publisher to deliver better inventory (dependencies include placement, recency in the user session, daypart, etc.).
Just like in the direct buys world, the ad exchange auction reveals potential relationships, leads that could turn the publisher ad trader into a lead generator for the direct sales team.
The continuing challenge in the ad exchange auction is to lure more so-called "premium" inventory. Providing transparency may be one step, but the intelligence layer on top, bringing leads to the publisher, could seal it. Perhaps this is what creates the programmatic "direct" or forward market sales of the future, too. The publisher says, "Let me see who's bidding and I'll give you the good stuff, including my guaranteed inventory." The marketer might like that.