Let’s be direct: Why supply and demand needs to move closer for programmatic

Pierce Cook-Anderson is country manager, northern Europe at Smart AdServer.

Bringing transparency to the programmatic supply chain has been on the digital advertising agenda for some time, but the ad budget constraints of 2020 combined with ISBA’s revelations around the ‘unknown delta’ have propelled it to the top of the industry’s wish list. As 2021 continues, there is widespread determination to resolve transparency issues once and for all; to move programmatic advertising out of the shadows, shine a light on inefficient and outdated practices, and enable more direct deal management.

Programmatic buying is already shifting in this direction, with ad spend on private marketplace (PMPs) overtaking spend on open exchanges as advertisers seek more visibility and control over their budget allocation and where their ads appear. While there isn’t a one-size-fits-all approach, and the open market still has its place for some advertisers to drive scale, many are finding direct deals via PMPs – or Programmatic Guaranteed – offer the fast, efficient, and transparent deal management they’re looking for. Here are three of the key trends that will push programmatic transparency forward over the coming months.

Post-cookie data access

The programmatic ecosystem was built on a third-party cookie infrastructure, which enabled a flow of data for ad targeting and measurement. But the depreciation of third-party cookies, which has been in motion for some time, is scheduled to be complete by the end of 2021 and will severely limit access to data in the open market.

By shifting to more direct buying models, advertisers can overcome this issue and gain access to publishers’ valuable first and second-party data – including audience and contextual data. Already more effective than third-party cookies for both targeted advertising and personalisation, incorporating publisher data will also enable advertisers to more effectively analyse campaign performance and feed the resulting insight back into campaign optimisation. The demise of the third-party cookie is a positive development, which will lead to an inherently direct world.

Value path optimisation

Buyers and sellers are on a shared mission to reduce programmatic complexity and increase mutual gains. While the terms they use may be different — supply-path optimisation (SPO) and demand-path optimisation (DPO) — the ultimate goal is essentially the same: creating simpler value paths involving fewer third parties or ‘middle-players’.

Perhaps unsurprisingly, the methods they apply to achieve this also have many similarities. For buyers, SPO enables them to limit the number of supply-side platforms (SSPs) and

exchanges they work with, specifically cutting out resellers and non-direct connections that don’t add real value. This practice can help them to negotiate better deals with each SSP, gain more control over their media buys, and protect brand safety. Diageo is just one of many advertisers to begin the process of consolidating its programmatic spend through a handful of trusted vendors in recent months.

Meanwhile, adopting DPO to limit SSP numbers is giving publishers clearer visibility into SSP relationships and a better understanding of how their inventory is being bought. This improved understanding means they have deeper insight into demand that can be included in curated deals to maximise revenues. Both of these practices are allowing advertisers and publishers to work more closely together, to hold one another accountable, and to do pioneering work within a trusted and transparent environment.

Vertical supply chain integration

With both advertisers and publishers looking to create more direct relationships and reduce the number of intermediaries in the supply chain, vertical integration will inevitably be a key trend for 2021. Tech platforms will look to diversify their offerings and move into areas that benefit both buyers and sellers, making deal creation simple and transparent. They will facilitate direct, secure, and fully-accountable buying routes and will deliver financial and operational efficiency for all.

As antitrust investigations increase frustrations with the dominant digital platforms, these vertically-integrated solutions will – and must – provide advertisers with a viable, valuable, and genuinely independent alternative business model. Accountability will be key to maintain trust for buyers and sellers, while interoperability remains essential to ensure neutrality that enables smooth technical integration between players. Underscoring all of that, independence will offer assurance of control. For instance, vendors will allow publishers to create their own private gardens where they can protect valuable first-party data, take charge of their inventory, and boost revenues through more direct buyer relationships and a reduction in overall costs. Through 2021, securing vendor success in the programmatic ecosystem will mean embracing market rationalisation by bringing value to both the buy and the sell sides in a way that is efficient and transparent, and reduces dependence on the major walled gardens.

Bringing true transparency to the programmatic ecosystem must be a top priority for 2021, and moving publishers and advertisers closer to form more direct relationships will help the industry achieve that goal. Value path optimisation, the need for consented data access in a post-cookie world, and vertical integration to serve the interests of both the buy and the sell sides will all contribute to programmatic transparency over the coming months, pushing the industry towards a direct-first ecosystem built on trust and accountability.

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