Commentary

How Publishers Can Handle Inefficiencies in Online Video Advertising

The growth of programmatic video advertising has created opportunities for both technology companies and arbitrars. Many companies are delivering technology that helps address key challenges faced by publishers and advertisers, while some are creating additional friction and inefficiency.

Understanding the basic process of how a publisher “calls” an advertiser illuminates the complexity of the entire video system, highlighting a few simple strategies that can improve performance for publishers -- and for the marketplace overall.

Challenge #1: Nested Auctions and Downstream Bidding

Aside from direct-sold inventory from top premium publishers, publishers rely on multiple video platforms and partners to maximize the value for their inventory and drive revenue. Many publishers use a supply-side platform (SSP) to increase access to buyers and manage advertising partnerships. While RTB addresses some inefficiencies, publishers still rely on systems that use a waterfall approach prioritizing partners based on pricing as well as business priority. Let’s consider how this process unfolds and where any breakdown begins.

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The publisher’s video player calls the first demand partner in the waterfall. The partner responds, but instead of delivering an ad creative, the demand partner creates another auction with additional partners further downstream. Those downstream partners may auction that impression yet again. It’s like trying to sell a product by walking into a room filled with bidders. Someone bids on the product, but instead of actually buying it, they just walk into the next room and put the item up for auction. How many rooms do you have to enter before someone actually buys your product?

TIP: Understand what’s happening downstream and measure performance based on eCPM. As a publisher, how are you evaluating the performances of different demand partners? You should evaluate and optimize partner priority and allocation based on eCPM. This is the gold standard, since it blends fill rate and CPM. Single digit fill rates with higher CPMs can outperform higher fill rates with lower CPMs. Additionally, asking your SSP provider or demand partners about their video buyers may provide clues about current performance.

Challenge #2: “Timers”-- A Publisher’s Friend and Enemy

Thoughtful publishers care about revenue performance, but they also care about latency and load times. If the whole ad call process takes too long,  the publisher loses the opportunity to deliver an ad -- and, more importantly, degrades the quality of user experience. To address this, well-intentioned technology providers have introduced timers. For example, an ad server or SSP may have a timer that gives five seconds to the first demand partner before moving to the next partner in the waterfall. The trouble is there are additional timers downstream and the original system may run out of time milliseconds before the downstream advertiser returns the creative. The buyer thinks they have the full clock, but precious time has been clipped as a result of having too many intermediate partners.

TIP:Understand your timers. Does your current system have timers?  How are they currently set? Different publishers will have different tolerances for extending or reducing timer values. Testing different timer lengths can maximize results while preserving user experience.

Challenge #3: Compounding Errors and Complexities

There are several possible reasons why an advertiser may not deliver an ad to the publisher's placement, including:

1.     The demand partner responds that there isn’t an ad available and the system moves to the next partner.

2.     The process takes too long and the timer expires, losing the opportunity for an ad and going straight to content.

3.     Some other communication error occurs between systems, resulting in a failure. This is common among both RTB and non-programmatic platforms.

Theoretically, multiple partners and nested auctions create bidding competition that should increase fill rates, and timers are designed to preserve the user experience and salvage failed ad calls. The reality is, as the number of systems, auctions and partners increase, so does the probability for errors, timeouts and system failures. These systems are still fragile and the sheer volume of transactions results in communication errors and breakdowns between disparate systems. Even RTB partners that don’t tolerate nested auctions, will fail to serve ads even when they have an ad available. It’s no wonder that video publishers still struggle with low fill rates!

TIP: Consider using a broadcast method rather than a strict waterfall. Does your ad server/SSP use a strict waterfall or a broadcast approach? “Broadcast” or parallel approach sends the call to all partners at the same time. This helps mitigate some risks if a partner doesn’t respond. If multiple partners respond, then publishers must still rely on a waterfall approach based on partner performance. However, eliminating partners that don’t respond can reduce potential errors and improve fill rates. Additionally, some systems may be able to identify whether lost opportunities were a result of a failed ad call or negative response from an advertiser.

A Challenge and Opportunity for Publishers

Programmatic video advertising holds tremendous promise for both publishers and advertisers, but the market is far from maturity. Current inefficiency caused by nested auctions, ignored timers and system errors represent lost opportunities for the demand and supply side. However, video publishers that understand and leverage technology to optimize and maximize their connections with advertisers will realize success as the market evolves and matures.

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