Who Wins And Loses As Brands Flee The Long Tail?

Marketers taking a conservative approach to brand safety are pulling back from buying the long tail to minimize their exposure to fraudulent, non-viewable and brand-unsafe inventory.

As premium publishers develop strong programmatic capabilities, brands are transacting with them directly rather than on the open exchange. EMarketer predicts that nearly 80% of programmatic dollars will be transacted through private marketplaces and direct deals by 2019.

“Brands want to use platforms to have direct, one-to-one commercial relationships with publishers,” said Will Doherty, VP of business development at Index Exchange. “They no longer have to be disintermediated.”

Top publishers will benefit from the shift in brand dollars toward known, well-lit environments. Despite being at the center of many brand-safety scandals, Google and Facebook could also be further advantaged as they build brand-safe ways to transact with marketers, said Kenneth Brinkmann, EVP of marketing and business development at Amnet.

But by pulling away from long-tail inventory, brands may miss high-quality audiences as media consumption continues to fragment.

“Consumer media patterns keep changing,” said Ming Wu, chief revenue officer at MightyHive.  “They’re not all accumulating to major publications.”

Blind spots

One year after the YouTube brand-safety debacle, brand marketers are more vigilant about where their ads show up. While brands aren’t fleeing programmatic altogether, many are testing ways to better reach their audiences while avoiding long tail-inventory, Brinkmann said.

“We have discussions about whether clients can turn away completely from long-tail inventory,” he said. “There’s been a lot of testing on that, and we’ve seen different results.”

For brands with big budgets, cutting back on long-tail inventory makes is difficult to scale. Others miss the high-quality media consumption occurring beyond the comScore 100, such as when consumers research, book travel or shop, Wu said. “Valuable consumers are all over the place,” he said. “The media is pretty simple – you're probably doing one or two things – but it’s fragmented.”

And consumers are more passionate about the content they read on smaller blogs and websites, where they’re looking for something specific or feel like that’s where their tribe congregates, he added.

“A lot of these [top] sites just become generic,” he said. “A site that used to have edge gets really big and becomes all things to all people.”

But long-tail inventory isn’t the best place to build awareness, favorability or brand preference, Doherty said. And while attention is more fragmented than ever, brands likely can still find the people they’re looking for in premium environments.

“Brands realize that automation was putting them in environments that were not applicable for what they were trying to do,” he said. “An ad run on the long tail, whether it’s the right audience match or not, doesn’t necessarily amplify their message.”

As premium publishers offer more ways to automate direct buys, it’s both easier and cheaper for brands to concentrate their spend around professional, well-lit content, Doherty added.

“It allows them to have more flexible commercial relationships with those publishers,” he said.

Premium perks

As brands push for higher-quality inventory, publishers and platforms with programmatic capabilities are making direct transactions cheaper, easier and more automated.

“The cost to transact programmatically continues to decrease,” Doherty said. “As investment grows, publishers are reaping the benefits.”

But since publishers rely on platforms like Facebook and Google for distribution, the duopoly could command even more ad spend as marketers look for other areas to put those dollars that would have flowed to the long tail.

“You have leftover money that has to be distributed to the top,” Wu said. “That’s Facebook, Google and top publishers.”

Google especially has an advantage because it dominates the industry’s ad tech pipes. Platforms like Amazon and Oath, which control infrastructure, can also create tools that make brands feel more comfortable transacting on the long tail, Brinkmann said.

Still, components of these platforms could be at risk. Google’s AdSense and Facebook’s Audience Network aggregate long-tail inventory. And while YouTube is a premium environment, it was issues with its own long-tail inventory that ignited brand-safety concerns in the first place.

“You can never create an environment that’s 100% brand-safe because you can’t deliver scale, and it’s going to be an extremely boring experience for the end user,” Brinkmann said.

These platforms, however, are powerful enough that any shift in brand spending likely won’t affect their dominance, Doherty said.

Ad tech will survive

While a boycott of the long tail isn’t great for ad tech, the programmatic ecosystem is getting enough budget from direct response and performance advertisers to stay viable, Wu said.

“Direct-response advertisers are going to be OK with going further down the long tail because they need that performance,” he said.

Some vendors, however, do stand to lose. Resellers, long-tail vendors, arbitragers and fraudsters will suffer. Verification vendors and contextual data sellers could also lose business as brands cut the long tail and no longer need their services, Wu said.

“I don't think they’re going to die, but they’ll see a marginal decrease if this continues,” he said.

As marketers move toward direct and guaranteed buys, exchanges as a category will consolidate, Doherty said.

“We’re a commodity business now, but it makes a healthier publisher ecosystem,” he said. “If our category continued to extract the margins of years past, there wouldn’t be publishers for us to work with much longer.”

Industrywide efforts, such as the Trustworthy Accountability Group and Ads.txt, are helping advertisers retain the value of the long tail without eschewing it all together, Brinkmann said. And if the flight to quality becomes too intense, Wu said, it could increase CPMs in the head so high that brands, amid heavy budget cuts, boomerang back to the cheaper long tail.

Doherty disagreed.

“Brands aren’t leaving the long tail because of price,” he said. “They’re leaving it because it's not effective. You’re getting something in the upper funnel that you can’t get in the long tail.”

Agencies will adapt … again  

As brands navigate their way toward the safest buying strategies, agencies are again forced to reevaluate their tools and investments.

Agencies have been able to charge a lot of money for programmatic and the data and services surrounding it, Wu said. Programmatic guaranteed and direct buys are more expensive to set up and maintain, and agencies don’t get to renegotiate their fees when clients ask for them.

Agencies also thrive on fragmentation, but removing clients from the long tail to direct buys makes the supply chain simpler, he added.

“Policing the long tail, ensuring quality, applying safeguards and overlays, making sure it’s viewable with not as much fraud – that’s all stuff agencies do,” he said. “If you take that away, that’s less value that they bring to the table for a client.”

To keep clients buying programmatically, agencies are building and investing supply-path optimization tools and strategies to help clients better navigate it, Brinkmann said.

“It’s a matter of customization and realizing that off-the-shelf tactics in programmatic aren’t going to carry you very far,” he said.

 

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