February 2022 saw The Trade Desk announce the launch of OpenPath: a new tool which connects advertisers directly to premium publishers. Hot on the heels of this announcement, both Pubmatic and Magnite announced that they had struck major SPO deals with GroupM. The running theme connecting all three of these announcements is that buyers are starting to view supply access as a source of competitive advantage and differentiation.
At the same time, it’s no secret that publishers can sometimes get the short end of the stick when it comes to advertising revenues flowing through the digital supply chain. A recent study by Adalytics found that the average take rate for intermediaries is around 35%. It also reported that for some publishers, up to 98% of advertiser revenue goes to technology intermediaries with the publisher pocketing a mere 2% (!) of the ad spend.
While this extreme might be an outlier in the research, it echoes some of the findings of the 2020 ISBA and PwC study which reported that publishers receive 51% of the ad spend on average, with 15% of that being unaccounted for. Both studies highlight the opacity of programmatic trading for much of the ecosystem.
If publishers are the secret weapon media buyers need to get a competitive edge, then why aren’t they benefiting more? What can publishers do to take advantage of their unique access to consumers to glean more from the supply value chain?
Supply side optimization
Initiatives like those of GroupM and The Trade Desk highlight a general trend in programmatic focused on closing the gap between advertisers and publishers. This reveals how important it is to buyers to gain preferential access to premium inventory and audiences. It also shows the continued evolution of supply path optimization (SPO), getting closer to supply to drive greater buying efficiencies for advertisers. It’s a call echoed by the 4A’s advice to its members to reduce the complexity of programmatic trading.
Publishers can help direct the SPO narrative by partnering with key demand side partners to assist with their initiatives. Traditionally, SPO strategies are limited by the data and tools accessible to agencies. This information is typically provided by the demand side partners and, as a result, the buy-side driven initiatives look to drive down cost, reduce hops in the supply chain, boost transparency, or gain preferential access. However, with the abundance of data and supply intelligence available on the sell-side, publishers are uniquely positioned to fill gaps in the data landscape for agencies, all while improving their own (publisher) yield and increasing the percentage of working media flowing to content creators.
Media owners can share the insights they have about fees, optimal clearing prices, header density, and loss rates to supplement the data that media buyers are already receiving from their demand side platforms. This can help agencies evaluate and test new supply paths to optimize advertiser performance as well as build new predictive models for funnel analysis, price optimization, and conversion intelligence. Publishers can provide media buyers with the intelligence they need to maximize the returns on their ad spend while maximizing yield for themselves.
Innovate commercial models
Getting closer to demand is just the first step. Smart publishers need to seize upon media buyers’ increased interest in gaining closer relationships with media owners to innovate new commercial arrangements with their buy-side partners. New arrangements can be developed to align with the interests of both parties including swapping first-look inventory access, post-auction discounts, data sharing agreements, measurement support, and reporting intelligence for larger spend commitments.
While activating these types of arrangements, it’s important to not disrupt entrenched buyer workflows and processes. To do so, it is essential that publishers choose a technology partner that has the capability and flexibility to integrate these new processes into the current workflow. Without integrating the new commercial models and/or packages into the current workflow – supplying inventory packages through deal IDs that can be transacted using the media buyer’s choice of DSP – there’s a risk that the extra work and time needed to implement the changes would outweigh the benefits for buyers.
Offer niche service to fill the gaps
Looking a bit further afield, publishers can also assist the buy-side by supporting initiatives that have been traditionally provided by vendors that use third-party cookies. These insight-gathering activities that are covered by third parties include surveys, market research, and brand uplift studies.
As the industry shifts away from third-party cookies, brands and agencies will need to find new and innovative ways to assess the impact of their campaigns and publishers can step up to provide that support. These services are expected to be in demand as full cross-site tracking will become more difficult with the deprecation of the third party cookie in 2023. As a result, panels and proxies will be necessary to assess campaign impact, and publishers are uniquely positioned to provide these services.
Publishers can even deepen relationships with key trading partners by becoming testing partners and providing media buyers with solutions for A/B testing of alternative IDs or creative executions. These services can help fill the gaps in a brand strategy while also solidifying the publisher / agency relationship. Moreover, it can also enable publishers to understand which identity solutions are essential for their audiences and advertisers.
An open position
The foundations of the programmatic ecosystem are shifting. The changes announced by the browser providers and the increased focus on user privacy by governments around the world have shifted the balance of influence in the digital marketplace.
Publishers are primed to take advantage of this tectonic shift and reclaim a position of privilege in the programmatic transaction because of their innate connection to users. There’s no question that buying clout still pulls many of the strings. However, with the need for new approaches to measurement, attribution, and addressability, now might be the perfect time for media traders to work more closely for a better future – with better outcomes for both sides and a better experience for the users.