Why does there exist such a chasm between the buy-side and sell-side of the digital media industry? Despite all the personal work interactions, conference events, career longevity and deep relationships, media professionals seem to hone their skills on one side or the other with little thought of changeover. This has resulted in a communication and understanding gap that is likely holding back the opportunity to create stronger industry growth through unlocking greater media innovation, efficiency and better consumer content experiences.

The pace of change in our industry continues to accelerate. Those with the greatest perspective – of commercial business models, underlying technologies, regulatory environments and consumer impact  – are best prepared to succeed.  There needs to be more collaboration and shared insights across the buy-side and sell-side for the sake of our industry’s future.

Our industry today is driven by the buy-side. That is where the money is and suppliers have largely succumbed to being price-takers driven by third-party data-targeting tools within the DSP environment. However, we may now be starting to see the beginning of a shift in the buyer-seller equilibrium. Since advertisers soon will no longer be able to obtain the same level of access to third-party audience data given tightening regulations and changes within the broader adtech ecosystem, buyers will need to make a more direct connection with their direct suppliers – be it a publisher, retailer, or other. Sellers who understand buyers’ objectives the most will be best positioned to gain from the new value equation.

As this value recallibration plays out over the next 18 months, we offer the following three insights from the buy-side that will benefit publishers. The buy-side may control the budgets, but the sell-side is responsible for maintaining the integrity and viability of the audience and is the keeper of the audience data. There is much for successful sell-siders to learn from the buy-side.

1. Best audience = scale +fidelity

Buy side insight

On the buy-side, the desire for control has led to a mentality of “anything that can be bought programmatically should be bought programmatically.” As programmatic execution continues to grow, audience targeting plays an important role. Advertisers utilize a menu of relevant audiences for their campaigns. They isolate each segment on distinct ad serving placements when they want to see performance at a granular level.

Generally, audiences will span first-party, second-party and third-party segments. Advertisers prioritize the use of first party site visitor data segments followed by strong-performing second party segments that are native to the DSPs they utilize. Third party audience segments are approached with a heavy sense of skepticism. Advertisers quickly point to the unrealistically large size of 3P audiences and the consistent lack of details/transparency into the composition of said audiences. Sometimes, to reduce uncertainty pre-campaign, advertisers will index their 1P audience against a library of 3P audiences to identify those most likely to be performant.

Publisher benefit

All parties are skeptical of third-party data, and second-party data is typically isolated to DSPs. This leaves first-party data as the data of preference. Needless to say, this is an area where publishers, as the conduit to users, are the best source. The critical path to adoption is for publishers to offer that in a scalable way that can also achieve the marketer’s performance goals. Large publishers with authenticated users need not worry about the buyers’ concerns over scalable first-party audiences.

However, the vast majority of publishers need to address these concerns. For this group, the best bet is to take advantage of the new technologies available; identity providers, first-party audience lookalike modelling, user widgets/tools. Once those are in place, obtain a direct line of contact to your buyers and discuss your scaling methodology with them. When that is established, you have taken the first step in creating a future-proofed partnership with your buyer that will have revenue benefits. Of course, the next step will be retaining their business, which will require them hitting their KPI’s.

2. Best performance metrics = flexible, custom KPIs

Buy side insight

Buyers tend to perform a balancing act across a range of KPIs (sometimes uncorrelated) within a single campaign while contending with a rapidly changing measurement environment. These KPIs range from Media Quality (viewability, fraud, brand safety) to Ad Engagement (hovers, clicks, interactions) to Cost Per Action (Site Visit, Lead, Customer Acquisition).

Most advertisers want to build a singular 360-view of their customers. But how can a publisher consistently provide the right data to a buyer given the plethora of KPI’s and the fact that they’re not the ones running the media? The answer is having the right combination of technology and services.

Publisher benefit

Having a standalone, new age DMP with all its bells and whistles might allow the pipes to be connected for the sell side to the buyer, but the work doesn’t stop there. The seller needs to inherently understand the advertiser’s KPI’s, their specific needs for their data segments, and have a closed loop funnel on communication and reporting to feedback campaign performance and objectives.

This way, the data that’s shared, be it in cohorts, segments or other, can be amended, tightened, loosened over time as the advertiser feeds back information. Once this combination of technology and service is in place, the seller can transition from being a vendor that supplies inventory to a consultative partner – and reap the rewards of a trusted long term relationship.

3. Best value = direct + efficient transactions

Buy side insight

One buy-side trend in recent years is supply path optimization, expedited partially by the rise of header bidding. Buyers typically run on a list of approved publishers only, and often on a list of approved exchanges thereby optimizing the supply path to address issues like fraud, brand safety, bidding on duplicative placements and performance.

This is often done without direct contact with the publishers and typically by pulling a report within the DSP to find the highest quality path. However, this lack of communication can result in a loss of value on both sides, as often high-quality publishers are blocked. Buyers should give them a chance to work directly with them to create an inventory package that works for them given their KPI’s and brand safety requirements.

Publisher benefit

Getting onto a buyer’s target list of sites can be challenging, particularly because the buyer isn’t going to reach out and tell you when they’ve blocked you. Publishers that are transparent will benefit here: Be open about the way you sell your inventory and the brand safety measurements you can provide.

Remember that good publishers can get added to “avoid lists” based on their performance on the open exchange. If you’re a publisher that sells most of your quality inventory via deal IDs, it’s no surprise that your open exchange inventory doesn’t meet the standards of the buyer. Collaborating directly with buyers makes it easier for publishers to package- inventory (without losing the uniqueness of each publication). This can be done via an open conversation or a technology portal (SSP, DMP), but ideally a combination of both.

The new buy-side / sell-side equilibrium

From a holistic perspective, the buy-side is looking for something pretty straightforward – scale, performance and efficient access. The sell-side needs to highlight the power of the assets they bring to the table and how they meet these needs.

The underlying symbiotic nature of the advertising ecosystem means that the buy-side requires a healthy sell-side with robust audiences. They are incentivized to make sure publishers can succeed. As both sides work together even more transparently, revenue uplift will go hand in hand with removing the roadblocks and complexities that anchor our industry’s growth potential.   

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.