The Mechanics of Automated Guaranteed & Private Marketplace Guaranteed

Eric Mischel, Senior Director of Product Management

By Eric Mischel, Vice President of Product Management – Business Apps, PubMatic

There are two main issues driving advertisers and publishers to adopt automated guaranteed (AG) and private marketplace guaranteed (PMP-G) solutions today: first, the desire to improve return on ad spend (ROAS) using data-driven decision-making; and second, the desire to improve margins by increasing efficiency. From a technical perspective, AG and  PMP-G serve as the foundation for many of the programmatic direct products that are being introduced into the market in 2017.

Automating the process of pushing deals over from a publisher’s direct sales team into its ad server has been going on for nearly ten years. But now, this process is shifting from internal publisher workflow tools (remember DART Sales Manager and Solbright, anyone?) to workflows that give buyers more of a self-service automated direct sales model.

This is similar to the disruption we’ve witnessed in the finance industry introduced by tools like E*TRADE that allow individuals to open accounts and day trade for themselves. No longer do we need to call up a stockbroker to discuss what we want to do. We don’t need to wait to have the broker enter our order and send it to a wire-clerk on the trading floor who then had to use hand signals to communicate to the stock broker actually responsible for executing the order in the actual market being made by the stock specialist at a particular spot at a trading post—and no longer do we have to wait for that entire process to repeat itself in reverse to receive confirmation. All of this now happens in milliseconds.

For years publishers and advertisers transacted on what publishers described as their “remnant inventory” via open RTB (the open exchange, standardized via the OpenRTB protocol) and private marketplaces with deal ID-based transactions enabled by SSPs, DSPs and ad exchanges. Now, we’ve embarked upon the next wave of ad tech, with premium direct sold and guaranteed ad inventory being transacted in a much more automated fashion. Yes, believe it or not, I’m talking about the same directly sold inventory that today is still being bought and sold via insertion orders (IOs) that are—somewhat unbelievably—still sent via email as an Excel attachment.

Agencies are beginning to consolidate internally: they’re bringing together their previously separate agency trading desks with their in-house programmatic teams and the team responsible for executing media plans via traditional IOs. Of course, this consolidation means that big brand budgets will be brought under one group. This group—just like every other disruption we’ve seen—will reduce inefficiencies and rely heavily on data to continue to improve ROAS while also improving efficiency and thus margins.

Two Paths Converge

Over the past few years, we’ve seen programmatic transactions begin moving up the food chain from open RTB, primarily representing publishers’ unsold remnant inventory, to private marketplace (PMP) deals including PMP preferred (PMP-P) and PMP-G.

While these variations give both buyers and sellers greater control in terms of fixed prices, they fail to provide buyers with transparency in terms of priority within the publisher’s ad server. This visibility is key, and represents the last piece of the puzzle. Once solved, big brand budgets will move and move fast.

While there has been interest in PMP and PMP preferred, the majority of interest from buyers in using these channels appears to be focused on the efficiency gains of combining always-on deal IDs with scale.

PMP-G Primer

PMP-G works well when there is an existing relationship between the publisher and advertiser. While these deals are still transacted using the OpenRTB protocol, the auction takes place between just one buyer and one seller. Both sides agree to a fixed CPM, the length of the deal, the minimum spend and typically the number of additional impressions the publisher will send to the DSP to decide on.

Though the buyer has only rough knowledge of the publisher’s composite audience, PMP-G allows them to leverage DSP algorithms to determine which impressions they want to buy and which they want to pass back. Here it’s important to remember that the pacing towards the guarantee of the total spend and purchased impressions becomes a buyer’s DSP’s responsibility, while the publishers are responsible for showing the agreed to amount of impressions.

Automated Guaranteed

Depending how fast agency holding companies shift the bulk of their budgets to OpenRTB transactions, we can gain additional efficiency with automated guaranteed. Automated guaranteed, essentially the automation of the workflow associated with direct deals, allows buyers to request and negotiate with publishers for their previously directly-sold inventory.

Rather than emailing a publisher’s salesperson and having them re-enter all of the information into the ad sales tool that connects to the publisher’s ad server, buyers can start the buying process themselves through an automated guaranteed order, which integrates directly into the publisher ad server. 

What About The Data?

By layering audience data on top of a PMP-G or AG order, efficiency increases and wasted money and impressions decrease. This overlap will then allow us both to forecast and match the site visitors that will be part of either the PMP-G or AG order and deliver only to those visitors that match.

What About The Steak?

What’s so great about audience matching with PMP-G or AG and a more efficient workflow? This is a question I hear frequently. The answer? Today, we can pre-arrange better access via header bidding and secure commitments from publishers for priority as part of our Preferred Access program, which brings larger agency budget commitments to the publisher in exchange for preferred access to premium inventory. As a result, we’re providing value to both sides of the market; buyers are assured that they are getting priority access to publisher inventory, purchase the inventory they want, and reach only the customers they want to reach—thus improving their efficiency/margin and increasing the ROAS. Publishers, on the other hand, get a guaranteed budget commitment and are only filling the requested audience match.

The Future is Bright

After years of promises, 2017 will finally see the fulfillment of the promise of programmatic advertising. Pulling brand dollars traditionally reserved for direct sales over to PMP-G and automated guaranteed with audience data will allow advertisers to target the right message to the right person at the right time with even greater ease. These tools will also allow for the development of robust solutions that further merge the gap between the direct buy and programmatic efficiency, such as the Biddable IO. PubMatic’s investment in developing these tools will give publishers the ability to lock in guaranteed revenue for their valuable inventory and also provide advertisers with a much higher degree of transparency into what they are buying, how it is being prioritized and who their message is being shown to.

For more information on PubMatic’s programmatic direct products, contact your account manager, email info@pubmatic.com or follow @PubMatic on Twitter.

The Fraudulent War Rages On

Eric Mischel, Senior Director of Product Management

Eric Mischel, Senior Director of Product Management

Fraud continues to be one of the greatest concerns in the digital advertising space. Despite the progress that has been made, our industry evolves at a rapid pace, which led to the emergence of new deceptive practices. As a result, buyers still have quality concerns around due to the presence of botnets, pixel stuffing, domain spoofing, and ad stacking – let alone the complex issues of spurious content.

Over the past year, buyers, DSPs, and some exchange platforms called for the industry to start policing itself. In fact, as recently as December of 2015 a study from the Interactive Advertising Bureau (IAB) found that advertising fraud cost advertisers $8.2 billion per year—with $4.2 billion lost to “nonhuman traffic,” $1.1 billion lost to “malvertising-related activities” and the remaining $2.4 billion lost due to “infringed content.”[1] It’s no surprise then that the buy-side of the industry was up at arms over these issues.

As tools became available from companies like Integral Ad Science (IAS), ForensIQ, White Ops, MOAT and various others, SSPs and publishers began scanning their inventory and removing the majority of suspicious and malicious impression requests.

These efforts provided industry-wide benefits. As inventory is scanned and turns out to be quality rather than fraud, buyers’ trust in the publishers in question inevitably increases. This trust in turn results in demand partners increasing their willingness to buy a publisher’s inventory, as they can be more secure in how their campaigns are targeted and delivered.

Despite initial pushback from publishers due to the increased cost and the complexity of scanning and qualifying their inventory, we are seeing more publishers begin to comply with buyers’ demands as proof that advertiser spend will shift away from questionable inventory to verified inventory continues to stack up.

Fraud and Quality: Not One-Way Streets

While the sell-side of the industry made large strides in verifying the quality of their inventory in response to requests from the demand side of the industry, these actions have been rather one-sided to date. Malware, spoofed landing pages, unidentified creative attributes and various other nefarious things continue to flow forth from the buy-side.

Malware and other fraudulent activity is a danger to all parties within digital advertising, with cascading effects. Not only can a user’s device become infected via malware, for example, they also are likely to install an ad blocker, or to avoid a publisher’s site entirely as a result of other fraudulent activities. This causes a reduction in inventory volume, which can in turn reduce not only a publisher’s revenue, but also their trust in programmatic and potentially lead them to move back towards ‘safer’ direct sales models.

The issues compound as SSPs and exchanges are forced to build out additional tools to throttle back DSPs in an effort to maintain quality on their platforms based on aggregated advertiser data. Unscrupulous advertisers are running campaigns that knowingly disrupt the user experience or spoof landing pages in an attempt to fool publisher-implemented block lists. In the end, quality advertisers can get caught in the slurry, losing access to high-value inventory because of the actions of other, nefarious buyers that happen to be utilizing the same platforms.

At the same time, while the OpenRTB standard the majority of buyers use allows creative attributes to be passed to SSPs, they are almost universally not being passed. The OpenRTB standard also allows for SSPs to provide creative restrictions to DSPs and buyers, but this information is passed it’s often ignored. As a result, SSPs were forced to develop their own solutions in order to protect their publishers from creative formats that are likely to interfere with the way in which publishers intend their content to be consumed (one of the greatest sins publishers can commit in the eyes of consumers, who have little to no tolerance for interruptions to their user experience).

At PubMatic, we not only developed our own solutions, but also partnered with outside companies to handle Abhorrent Advertiser Activity, and we’re not alone in doing so. We, and other platforms, employ teams of people dedicated to finding and stopping ‘bad ads’. But these are just Band-Aids that treat the symptoms of the problem rather than addressing the real causes. While we can pre-scan demand to ensure compliance, we must both identify and classify before we can perform any comparison. Until we treat the source of these issues, we will remain in a reactive state.

A Long-Term Solution is Needed—and Does Exist

Just as SSPs and publishers implemented tools and established processes to police inventory, DSPs and buyers must do the same and help to eliminate questionable advertising. While the tools to achieve this exist today, we need to ensure that our technologies, processes and policies allow us to take advantage of them. Self-serve platforms must implement a layer of creative approval. Buyers and advertisers must register their creative attributes, for all creatives, as well as the actual landing page, and the advertiser name needs to be passed in all bid responses. These three reasonable actions, all of which are supported by the existing OpenRTB protocol, are all that is required to show good faith in the eyes of the publisher community.

An open, fair and transparent market requires that both sides see exactly what is being bought and sold. Publishers and SSPs have done their part, and now we ask the same from the demand side.

We urge those companies on the buy-side of our industry to take steps towards advertiser transparency under the banner of publisher confidence. Programmatic buying, in all its forms, is at risk whenever malware or an explicitly forbidden creative is served. While no solution will be 100% effective, any effort from the demand side to address the root of the problem will have positive effects. The inclusion of creative attributes and correct, transparent, landing page URLs will both reduce brand control violations and provide additional targeting data to buyers to help their own spending decisions.

At PubMatic, we continue to improve both our internal processes as well as our products and solutions, while also partnering with the best industry solutions for identifying and counteracting malware and other fraudulent activity. We continue to strive to provide the highest quality demand while abiding by our publishers’ creative restrictions. In this ever-evolving world of digital advertising we will remain vigilant. We ask that you do the same.

To find out more about PubMatic’s Ad Inventory and Quality tools, part of the company’s revenue management platform, SEVEN, contact your PubMatic Account Manager or email info@pubmatic.com.

[1] https://techcrunch.com/2016/01/06/the-8-2-billion-adtech-fraud-problem-that-everyone-is-ignoring/