Report: Nearly 17% Of Exchange Ads 'High Risk'

During the second quarter of the year, the highest-risk inventory was served via ad exchanges. That's according to a report to be released Wednesday by AdSafe Media, a company that markets proof-of-performance and content safety solutions.

A full 16.9% of inventory served by ad exchanges was high risk for advertising, while 6.3% of inventory served via ad networks was high risk, and 3.8% directly via publishers was considered high-risk.

What's more, inventory transparency is the lowest on ad exchanges, which served 64.4% IAB Category I inventory -- with full transparency regarding referring URL -- while ad networks served 82.6%, and publishers directly served 97.4%.

Publishers, the study found, tend to follow geotargeting requirements more than any other buying channel. The study revealed that 1.9% of publisher inventory fell outside of geotargeting requirements, while 3.9% of ad exchange inventory and 4.3% of ad network inventory fell outside of geotargeting requirements.

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During the second quarter of the year, nearly half -- 49% -- of traffic was served via ad exchanges, real-time-bidding platforms, and demand-side platforms -- an upward trend from last quarter's 47% share. Meanwhile, 33% of traffic was served via ad networks, and 18% was served directly via publishers, according to the report.

The slight uptick reflects the industry's continuing shift toward the buying of "audiences" versus "sites," according to AdSafe Media.

As advertisers and agencies continue to adopt the use of these buying channels as a means to increase the efficiency of media spend, it expects to see the share of traffic flowing through non-direct channels increase in the third quarter and beyond.

Yet inventory transparency continues to be a significant issue with traffic served from ad exchanges due to a number of contributing factors, primarily the re-brokering of inventory and the use of iFrames.

"Daisy chaining," or the re-brokering of inventory between sales platforms, is often a necessary practice for ad exchanges to provide adequate liquidity of inventory, according to AdSafe.

However, concerns over the lack of information regarding the exact page-level location of the URL are limiting some agencies and advertisers from buying through ad exchanges.

Also, as ad exchanges continue to aggregate inventory from "long tail" publishers like blogs, social media and other non-premium publishers, AdSafe expects to see an increase in the prevalence of inventory that is high risk for advertisers.

A key reason that display continues to lag behind paid-search advertising is that major marketers are concerned by the increasing lack of "transparency" among ad networks and third-party aggregators of online display advertising. That's according to a report released in April by the Winterberry Group and commissioned by AdSafe.

The study found that some of the key issues related to display ad transparency include "message misalignment" (advertising message appears out of context from surrounding Web page content) and outright "dangerous" placements (ads appearing on pages that defy good "taste, respect and basic courtesy").

3 comments about "Report: Nearly 17% Of Exchange Ads 'High Risk'".
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  1. Ramsey Mcgrory from Yahoo!, August 11, 2010 at 2 p.m.

    This article has a number of inaccuracies that fan the flames of distrust and misperception, and we could do a lot better treatment of the issues. Here are just a few comments based on meeting with many buyers, sellers and ad verification companies in the market....

    a. Start up product shortcomings - Start ups are not incented to communicate solution short comings and buyers should do more due diligence to understand how buttoned up the solutions are. For example, all ad verf companies use commercially available IP mapping to 'validate' geotargeting. IP mapping is not accurate so the audit isn't accurate. Also, the infrastructure of a number of ad verification companies can't handle the number of requests, so ad verification companies actually slow the page load and/or delay the loading of the creative, which impacts user experience and engagement. It also impacts billing if the publisher has agreed to accept agency billing. Many publishers won't agree to it so the sample of this report may not reflect where most inventory is coming from.

    b. Inconsistent classification - content classification is not standardized in the industry so there are significant variations on what's acceptable. This results in a lot of 'false positives' and friction b/w buyers and sellers.

    c. Marketplace dynamics - In conversations, advertisers understand that publisher inventory available via an exchange is blinded to not create channel conflict with pubs direct salesforce, however a lot of articles point at this lack of URL transparency and imply sellers are trying to hide malicious behavior.

    Ad verification in several forms are valuable and I am advocating for the parties to come together through groups such as the IAB/AAAA to move past inflammatory statements and implications and get down to fixing the real issues.

    Ramsey McGrory

  2. Shanthini Sarkar from LivePerson, August 13, 2010 at 10:13 a.m.

    Well said Ramsey. I’m in total agreement with all the points you’ve outlined. As an industry we would do better to focus on solving for both the needs of the advertiser as well as the publisher. Channel conflict is a very real problem for publishers and exchanges need to give them the control to decide if their URLs can be disclosed or not. At the same time, the advertiser has every right to determine what works for their brand/campaign and exchanges need to give them the control to make that decision. If the advertiser requires URL level transparency, then their campaigns should only be run on impressions where that can be provided. If they want to run on larger sites where the url cannot be disclosed, then exchanges should provide other means of giving the advertiser control of defining where their campaigns run (like the ability to define the context of the pages or block pages that have certain words/terms that are not appropriate for their brand). There’s no one size fits all solution here – what works for one advertiser might not work for another and same thing goes for the publishers. Ultimately it’s about providing the tools and the control to both the buyers and the sellers so that they can make the decision of what’s right for their business.

    Shanthi Sarkar

  3. Andrew Fischer from Choozle, August 26, 2010 at 4:25 p.m.

    Working with networks and exchanges can absolutely increase risk to advertisers due to transparency and inventory risk. Carefully constructed and managed intermediaries, however, provide sustainable value to both advertisers and premium publishers. For advertisers, they provide the ability to reach specific audiences through a transparent brand-safe platform (with minimal "risky" inventory if any). For publishers, the right networks will continue to provide incremental revenue with no sales channel conflict. But this requires a trusted partner that abides to a transparent sales model and executes it with integrity. At the RGM Alliance, we provide value to our partners by selling inventory in content and audience channels (Travel, Lifestyle, Fashion/Beauty, etc), thus avoiding the conflict of representing their inventory directly. The result is a quality advertising product that mitigates the risk inherent in most networks and all exchanges.

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