First party data is very valuable to buyers because it can yield a high return on ad spend (ROAS). Often, buyers might gain access to unique second party data or, through trial and error, they might find a few third party audiences that work for them. Recently, the EU saw the size of most data sets plummet in the wake of GDPR, adding to the difficulty of finding good data. You can find more information on audience targeting data in previous posts on types of targeting data and evaluating data quality.
No matter what type of data a buyer might use, if they find an audience that delivers great performance, they would naturally want to maximize the scale of campaigns targeting that segment. Typical strategies include increasing the maximum bid, widening frequency caps or creating look-alikes; however, each of these strategies backfires in terms of a lower ROAS.
We would like to propose a new approach: maximizing scale for campaigns that target your most valuable audiences while maintaining efficiency. The key is where targeting is applied.
The prevailing opinion is that targeting should be done on the buy-side (DSP). Why target audiences on the exchange side when DSPs have all the data? This makes sense on the surface; however, if you dig deeper, there is a flaw in this established paradigm.
First, DSPs do not have all the data. OpenX and some other exchanges, through their direct relationships with publishers, can procure deals targeting unique premium publishers’ audiences.
Secondly, an even bigger issue is that most buyers are unaware of DSP throttling, which affects 99 out of 103 DSPs we know of. Except for the largest players, most DSPs cannot afford to receive all the bid requests that come through exchanges. The average exchange sends tens of thousands of bid requests a second and it costs DSPs about a penny CPM to process each bid request. To cut costs, DSPs enable throttling by putting a query-per-second (QPS) cap on the number of bid requests that they can receive from each exchange. QPS is a blunt tool with high collateral damage. Because the exchanges don’t know which of the user IDs belong to the buyers’ desired audiences, throttling eliminates both the “in-target” and “out-of-target” user IDs at roughly the same proportion. As a result, the number of “in-target” requests sent to DSPs is significantly cut, causing the scale of audience-targeted campaigns to suffer dramatically.
So, as a buyer, should I go with the handful of large DSPs that can afford not to throttle? Not necessarily. Larger DSPs have more competition in their internal auctions, so they are less likely to send your bids to exchanges, even if the inventory is valuable for you.
When the pipe is narrow, only the most valuable matter should be sent through the pipe. The recently introduced OpenX Exchange-Side Audience Targeting feature does just that.
This capability allows buyers to push their audience to OpenX and then run PMP* deals or Targeted Exchange** deals targeting these audiences. The bid requests with the audience-targeted deals are then sent to DSPs at highest priority through the throttled pipe. As a result, the buyer’s access to the most desired audiences is maximized.
*A Targeted Exchange Deal is a global deal that shows on all OpenX inventory and competes at the same priority as the open exchange.
**A PMP Deal runs on select premium publishers and requires each publisher’s approval. However, it has an added advantage of competing ahead of the open auction, thus further maximizing the buyer’s chances of winning impressions targeting to the most desired audiences.
*If your DMP or DSP is not yet integrated, please notify your OpenX account manager and we will prioritize the integration.
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