For The Large Publisher, Yield Optimization Is Over - It's Time For The Supply-Side Platform

DSP and SSPFeedback has been increasingly consistent within the large publisher community for the past few months.

(Note: I'm not saying "premium publishers." You can be premium and be small/targeted!)

For large publishers looking to optimize display ad yield on their website, it's no longer good enough for a yield optimization company to simply offer better CPMs through what publishers see as work-flow savings. As several, large publishers have told me, they think they can manage their ad network stack better "in-house" than through a traditional yield optimization service.

And, another common theme is around optimizer inventory: "Please, God, no more belly fat or teeth whitening ads. Improving yield should not make my site look like a late-night, direct-response TV ad." Point well-taken, large publisher. And, certainly this is an important challenge for the yield optimizers. But, this may also be a function of the current state of available online ad inventory. As more brand dollars come online (gulp - they better!), and as targeting and optimization tech improves on the buy side, publishers will get better ads - assuming they have compelling content that attracts the consumers advertisers care about.

Evolution Of The Optimizers

There's still a huge benefit from current yield optimization models for small and medium-sized publishers who don't have the bandwidth and resources to manage their ad networks. But someday, a liquid, open exchange would seem to make these services obsolete, too. When liquidity matched with the advertiser's ability to understand the value of single impressions will allow publishers to get the best prices running just the tags of the exchange, what's a yield optimization company to do? There are several options.

First... they could become an exchange, but they're going to have to provide a value-add (insights, analytics, pretty graphics, for example) to compete with the larger exchanges. Razor thin margins will be the norm. This also means they need to become publisher and advertiser agnostic.

Or... yield optimizers could start managing the hugely complex divide between spot and futures markets that has yet to be cracked - or created for that matter. But, that a ways down the road. (I think.)

Or...

There's an increasingly acute need for technology that not only takes over the role of an in-house ad ops team member, but can drill further into the data generated by ad impressions, preferably in real-time, and provide actionable insights and better CPMs for the large publisher. The new model doesn't need to pick only the highest performing network - it needs to pick or illuminate the highest performing display ad, tactic, demographic, etc. The corollary to this new model is also the current envy of large publishers: the demand-side platform or DSP. Yes, I've heard the negativity about being threatened by DSPs. Please. Large publishers just want their own game console!

Large Publishers Need A Supply-Side Platform

It's time for another acronym - the SSP, the supply-side platform! Sweet.

Publishers need (and many already want) to think like buyers where data drives decisions through the use of optimizing technology. Is real-time bidding (RTB) a part of this future? Sure. And, it's one feature among many.

Right now, the demand-side platform is mapping users across multiple supply sources, tracking behavior and buying display advertising efficiently. What if the publisher was able to see this information as well? Is there a need or use? Hell yes.

Let's not talk about "leveling the playing field" which to me suggests taking away the ability to efficiently buy from the demand-side. This is about raising the "game" of the supply side and making the whole, digital advertising system function better (demand or supply-sider) and, ultimately, provide more relevant advertising to the end user. The supply-side needs to be enabled to better understand their user leading to optimization of their own content, product or ad delivery strategies - which all leads to better yield.

As Jerry Maguire might say, "Show Me The SSP!"

By John Ebbert

14 Comments

  1. I usually try to make thoughtful comments but this time I nothing useful or interesting to add other than you are 100% correct.

    And I love the game console analogy.

    Reply
  2. Are there any companies presently working on supply-side platforms? Interesting concept. The sell-side issues need to be addressed - something which Jonathan and Fred Wilso have alluded to in recent posts. Just remeber where all these ad impressions come from in the first place. This brave new exchange ecosystem can't all be about the buy-side.

    Reply
    • re: "Are there any companies presently working on supply-side platforms?" Good question. If there aren't now, there will be!

      Reply
  3. John,

    Great post.. in fact, other than the acronym for SSP, Supply Side Platform, I agree with most of it. By the way, my personal opinion is that "SSP" is ok for optimizers, but it should be Sell Side Platform, not Supply Side Platform. The supply is relative only to demand partners and, at least for PubMatic, we're most concerned about helping publishers manage and increase the value of their ad inventory.

    I find this post incredibly timely, and I'm sure in 2010 you'll see some fundamental changes in the major value props of optimizers - you most definitely will from PubMatic. And it's not uncommon for publishers to first assume they can build a better system in house before they understand the complexity of the technology, but it's also fair for them to want A LOT more help from the optimizers. We intend to deliver it.

    Stay Tuned!

    Eric Klotz
    PubMatic

    Reply
  4. Nice post, John. Full agreement from the team here at Metamarkets.

    Metamarkets is hard at work on the supply-side. We are a real-time supply-side electronic media price discovery and predictive analytics platform. Since November we've been in alpha with five data contributors, including two of the world's largest real-time exchange platforms, delivering dynamic pricing data, proprietary price and volume aggregations, and comprehensive analytic media market views to sell/supply-side media principals. Metamarkets is currently aggregating 51 billion monthly transactions across 200 countries and all ad formats, delivering price discovery and dynamic market benchmarks to what has been a very opaque market.

    At the end of the day, as with the equity, commodity and all other electronic markets, the critical element that drives good inventory decisioning and that will ultimately enable market liquidity and maturation is a neutral and reliable market data service to aggregate, generate and syndicate the price data signal. The market(s) for electronic media, despite all the financial markets rhetoric being applied, is hardly a market. Indeed, every transaction seemingly forms its own market, and thus there are effectively billions and billions of markets out there. Metamarkets is aggregating terabytes of data in order to provision the electronic media market's first neutral, scalable, reliable family of price, volume and performance data signals. Our price discovery data product is in alpha with our pilot data contributors and will be available in early 2Q10 to all supply-side principals, be they publishers, exchanges or pub-side optimizers.

    --
    David Soloff : Metamarkets
    350 Townsend #270 : SF 94107
    415-235-9560

    Reply
  5. John - great post! I think you've captured many of the salient points evolving in the market (and needing to evolve... but not there yet) and the ad technology stack.

    Right now both on the demand and the supply side there is a lot of value to be added by companies who can help buyers and sellers manage their participation in the many limited public and quasi-private markets.

    The development of exchanges as opposed to markets is something I found some useful historical context on recently: http://zeronomy.com/wall-street/the-difference-between-a-market-and-an-exchange

    Reply
  6. Matt Greitzer

    John,

    Great piece, I totally agree. Don't you think the yield optimization firms and/or ad networks with decent tech assets will get into this space (migrate service to technology)?

    Reply
    • Thanks, Matt. Yes, absolutely.

      I think many will get in this space - for yield optimizers, they really have to. It would especially interesting to see that some of 2009's DSPs devise separate product lines that would serve both buy and sell. It's a good story for the publisher client (oh these guys know the demand side, so they can definitely help us with yield) and a good story for the DSP/ad network from a valuation/M&A perspective (acquisitive SaaS companies will like, for example.).

      Reply
  7. Great post, John, you have done an excellent job capturing and crystallizing the idea of an SSP as a counterpart to the DSP. This is timely, too, as many large publishers emerge from the short-term mentality of 2009 and begin to look more long-term at their businesses.

    Yieldex and others are working hard to make the SSP vision a reality, and give publishers the tools they need to raise their game.

    Reply
  8. Jason Knapp

    YieldEx (analysis)
    AdMeld, Rubicon, Pubmatic (optimization and sell side RTB)

    Reply
  9. We've been managing our ad nets in house for 3 years.

    This has allowed us to increase CPMs & yeild while controlling the creatives.

    Problem with most optimizers is that their systems are often inflexible, and require the publisher to give up to much control. I see moves being made in 2010. Can't wait!

    Reply
  10. John, thanks for the thoughtful post. You’re dead on, and your message reinforces the reality that the legacy ad server, upon which so many publishers are still largely dependent, has in fact left them underserved. To date, publishers haven’t had the visibility and control over their inventory to effectively monetize - and this reality limits the profit opportunity for their businesses in a new era driven by data, audience and the rapid proliferation of third party sales channels, among other challenges.

    We've shown that through innovation (pioneering in the areas of ad network optimization, non-guaranteed inventory optimization, publisher brand protection, ad inventory certification and audience packaging/targeting, among others), publishers can be better served. We know there's a huge opportunity beyond yield management optimization. One of the reasons why we’ve raised $42 million in both venture and strategic funding is to continue to innovate, and provide the technology and platform that will build publishers’ business now and into the future.

    To that point, and based on two years of publisher input, industry feedback and market vision we released REVV for publishers™, the industry’s first robust sell side platform (built on technology that drives not only yield management, but also channel management, data intelligence, and brand protection) to address these exact needs. REVV, released in October, gives “power to the publisher,” providing complete control and visibility in most effectively managing – and profiting from - all sales channels. The release of REVV was the first step in the right direction and we’ve got a ways to go (both as a company and as an industry), but we’re excited to continue to develop and provide the platform that meets all the needs of publishers in today's evolved digital media enviroment.

    Reply
  11. mediageeks has been allowing publishers to do this since 2007 and now allows sites to license the platform (and even the ad cdn) using their own team. Large sites not taking ownership of the technology and processes that optimize their supply are leaving money on the table. Existing yield optimizers will become further commoditized this year and is why very few are sustainable business models.

    Reply

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