Evolution For Programmatic: Time To Cut Waste

With programmatic gaining massive traction, industry participants are justifiably taking a hard look at whether it is delivering on its significant promise. Recent commentary has attempted to call into question the very efficiency of the process.

Admittedly, there are issues, and while we can fix them, we have to first agree that it's time, and that we're willing to act.

One issue in particular is critical: waste. In this context, that means the impressions marketers pay for that will never accomplish their objectives. When we eliminate waste, we allow marketers to focus on exciting aspects of programmatic media buying such as sequential storytelling and cross-screen campaign strategies. And eliminating waste allows publishers who produce the best content and attract valuable and engaged audiences to see an increase in CPMs.

The industry must focus on three particular elements to help solve this problem:

•   Ensure that the messages delivered by marketers reach humans. No page views via non-human traffic.

•   Make certain that every ad has the opportunity to be viewed, and that it's presented in a clean advertising environment.

•   Begin to more appropriately measure performance and assign value so that buyers optimize based on the correct metrics.

With these points in mind, let's examine some further best practices — and less-than-best practices, too. The goal is for programmatic to achieve even greater returns for everyone.

Cut the Waste: Implementing Better Practices for Programmatic

If we want to eliminate waste, we have to ask ourselves some tough questions. What are the responsibilities of different programmatic participants? What steps can we take to create a deeply rewarding experience for all parties involved?

The following steps are critical to that effort and require action from exchanges, advertisers and publishers:

•   Traffic quality deserves fresh examination. User behavior patterns can help tell us whether inventory is coming from a non-human source. Exchanges must be able to identify and block suspicious traffic in real time before it’s ever exposed to buyers. Let’s consider two very similar sites, both of which publish business-news articles. In our analysis, we find that 25% of the users of the sites overlap. If we posit that 25% is the highest level of user overlap commonly seen among similar sites, then we should be skeptical of clusters of unrelated sites with similar or higher percentages. Sites with unexpectedly high levels of user overlap are likely sourcing — buying — traffic from the same second- and third-tier networks, and that traffic is probably not real.  Exchanges owe it to their buyers to act promptly if they discover fraudulent traffic by immediately removing it.

•   Buyers can create an ecosystem evolution. Here's one way programmatic could better serve all buyers: Revisit conversion data as a sacred concept, and revise it to be something more like a common well. Shared conversion data is the ultimate waste-reducing signal and can be handled sensitively by a neutral platform. Those platforms should be the exchanges that never act as a buyer or leverage this data to benefit any particular buyer. With not just click-through, but conversion data, exchanges could then further identify and eliminate waste, resulting in better performance. It’s fair to suggest that the resulting increase in conversions would also attract more brands to the programmatic marketplace, meaning more data, more access to high-quality users, and more revenue.

•   Publishers should create better environments for advertisers. Dumping ad units at the bottom of pages or creating slideshows packed with 20 different ads does not lead to satisfactory performance for marketers — it simply increases scale for publishers. Publishers must assume accountability for all the ads they carry, whether they directly answer to buyers or they measure yield via an exchange. In a world where buyers are increasingly sophisticated, publishers that don't take these steps will almost certainly suffer.

•   The current attribution system needs reworking. If we agree that an ad needs to be viewed for a consumer to react to it, then why shouldn't attribution be based upon whether the ad is actually viewed? Currently, last-view attribution allows buried ad units to be considered valuable, even if the consumer just happens to go to the advertiser's website without ever seeing the inventory in question. Enough of the last-ad-served game. With the emergence of viewable technology, we have the opportunity to change how we track conversions. Marketers should only attribute value to inventory that actually contributes to the conversion.

Bottom line, the most important thing we can do to grow the programmatic space is to deliver better performance to marketers. The first step is to eliminate waste. We believe that idea to be axiomatic. We believe that every player in the business ought to adopt this philosophy.

If the goal is increased value, higher rates of conversion, and an ecosystem that thrives and moves forward, then waste is akin to a goalkeeper. No one gets past a goalkeeper by playing defense. It's time to stop questioning the overall value of programmatic, it's time to step up our game, and it's high time to put all of our forward-leaning efforts toward cutting programmatic waste.

Tags: programmatic, rtb
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4 comments about "Evolution For Programmatic: Time To Cut Waste ".
  1. Ted Mcconnell from Ted McConnell Consulting , July 1, 2014 at 1:46 p.m.
    Love this. Some questions though. What about over frequency. We used to routinely see huge waste (like 40% of impressions) due to over frequency ... only controllable of course by getting entire campaigns into a single decision point ... and to advertisers than should mean "partner" not "vendor". Also, who is motivated to reduce waste other than the advertiser? And who can convince advertisers that they should pay more (they should!) for higher quality inventory? So, its not just the media supply that is complicit, its advertisers' (and agencies') focus on cpm over quality.
  2. Sandy Hayden from TDG , July 1, 2014 at 5:34 p.m.
    Insightful and concise piece
  3. Ian Davidson from OpenX , July 2, 2014 at 12:39 a.m.
    Thanks for the questions Ted. If the impressions exposed to a potential customer are actually seen and are being served to real humans I feel the most important challenges will have been solved, but proper frequency capping should always be considered. Consolidating your media buying is certainly an efficient way to control frequency but there are also benefits to a multi-platform or multi-vendor approach. I actually feel that premium publishers should be just as interested in eliminating waste as advertisers as it will help them get a more representative share of the marketing budgets out there than they currently get due to the amount of waste occurring. I think fixing some of the current attribution problem will help advertisers focus on the right signals and not just low cpms.
  4. Al DiGuido from Optimus Publishing , July 2, 2014 at 9:51 a.m.
    Ian...this reads ( with all due respect) like a list of reasons why marketers should shy away from programmatic. My sense is that programmatic is the lazy media person's answer to target marketing. The assumption here is that thru some "special sauce" and technology...targeted reach and engagement is being generated by machine learning. IF it were only that easy. Much of the "waste" you are focusing on...is "paid waste"...ie..progammatic exchanges aren't in the business of reducing the number of impressions that they sell marketers...they make HUGE money on display buys that in large part ARE wasteful. WHY would they want to cut back on the reach and impressions they are selling...to remove waste..? It's not in the interest of their P&L's. Marketers FIRST and then their agencies need to wake up and understand that impressions that don't engage their users are a waste of their budget. Sadly many marketers have been convinced that "programmatic" is a panacea for target marketing. It isn't. The art of advertising is much more than mass reach...Publishers need to step up and regain control over this discussion with brand marketers before we see ALL inventory commoditized.