As we look back at a decade of programmatic advertising, it has been and continues to be an inspiring time to be in digital advertising.
Even though, the last 12-18 months or so, we’ve witnessed the industry struggling with several long-standing issues around sustainability, it’s inspiring because by addressing those issues together, we’ll pave the way for future growth in our industry.
Moving to a more mature, sustainable industry
A decade in ad tech is a long time. It’s long enough for us to have seen the soaring expectations of the bright shiny programmatic future, and the lows of disillusionment in an industry still fraught with remnant-era and fraudulent practices.
These are all natural ups and downs of any tech product lifecycle, and now we’re witnessing the start of a move towards a stable, mature industry.
Many big players in our industry, on supply-side, demand-side, and even government, have started recognizing this – from the U.S. government confronting Twitter and Facebook about fake news and responsibilities, to Proctor & Gamble’s challenge to the entire digital ecosystem, to GroupM’s hard line on viewability, to the Guardian’s lawsuit against a major programmatic player.
The message is clear; things need to change, and they need to change fast.
And many players have started implementing measures that move the industry to a more sustainable future, including opening black boxes, demanding viewability metrics, building MRC accredited reporting, fighting fraud, policing inventory and revising processes and regulations.
Within this chaotic domain of outcry, accusations, proposals and solutions, we see trust and transparency as the two biggest drivers of true sustainability in programmatic advertising.
When transparency equals revenue
One trend that will contribute to a more sustainable industry is the realization that transparent business practices can have a serious and positive impact on the bottom line. Two interesting examples of the idea that transparency does equal revenue are the implementation of Ads.txt and the adoption of the first-price auction.
In the case of Ads.txt, we see buyers and sellers taking a clear position on who they will continue trading with. The link between transparency and revenue couldn’t be clearer: content providers who refuse to implement fraud-busting mechanisms will be doing so at their own cost. If we can assume that the current marketplace is still riddled with fraudulent inventory, then serious anti-fraud, viewability and data disclosure programmes will eliminate a significant part of the total market, pushing dollars towards the remaining clean, responsible inventory owners.
Another example that shows a direct link between transparency and revenue is the adoption of the first-price auction. In a first-price auction, the bid price from an advertiser is, like a classic IO buy, fixed. This increases advertiser’s chances of winning the impression (especially in header bidding environments) while the clearing of the impression through technical partners leaves far less room for blurry business models. That’s because in the end, both advertiser and publisher will know the bid price, so they can easily isolate and monitor fees from facilitating partners.
When advertisers can get more impressions for a more predictable and transparent price, that will make programmatic a more attractive buying mechanism, meaning publishers embracing first-price auctions will enjoy new and or larger budgets.
In both examples, we see that when buy and sell-side can rely on a safe zone of trading, volumes of spend in that safe zone will go up.
The future is now
The forces of increased transparency and consolidation are working together to bring about the end of the kinds of remnant-era practices that started over a decade ago. Their impact will ultimately give rise to sustainable practices that support great programmatic performance within a safe trading zone. Once that’s in place, advertisers will get the confidence to move larger volumes and budgets through programmatic trading. But access to those budgets will not be for the many. If you’re in our industry, you will have to worry about sustainable business now or you’ll be out of business soon.