Over the last year seismic shifts have transformed the digital advertising landscape, most notably is an increasing number of technology providers pursuing vertical integration (i.e. the Verizon-AOL-Millennial deal). Across the board, companies that emerged to the forefront of the tech scene with a primary focus on one particular client base are eagerly building out solutions that satisfy the needs of everyone. These investments, whether through thoughtful acquisitions or in-house innovations, may present themselves as novel business opportunities, however some extensions may not always be in the best interest of a company’s current partners.
Narrowing the focus to ad tech, the same trend has come into view. Many companies primarily focused on either advertisers and marketers or publishers and content creators are quickly assembling various technologies to create end-to-end solutions that meet the needs of everyone in advertising as a way to grow their bottom line. That said, there is much to be said for publisher solutions that stay the course with a laser focus on creating technologies that help publishers grow strong businesses, while simultaneously delivering value to buyers.
Collaboration before Competition
Players that remain focused on supply serve as an indirect partner – not a competitor – to the demand side participants, whether they are DSPs, agencies or even advertisers. An ad tech company that works both sides of the fence must constantly juggle and navigate among competing interests.
By aligning with agencies or brands rather than offering services or technologies specific to their interests, pure-play publisher solutions can devote the resources needed to accelerate offerings for publishers, for example supporting new buying models, in turn facilitating increasingly positive programmatic results for marketers. When a company participates on both the buy and sell side they are diluting their ability to best serve their clients and partners.
From a transparency perspective, it’s important to point out that by working with a pure-play publisher solution, advertisers can be confident their partner is acting in their best interest, unlike when working with a vertically integrated company juggling the competitive interests of buyers and sellers in an attempt to grow their own revenue. A supply-focused company is paid directly by publisher partners, which effectively eliminates the double dipping that can occur on the buy and sell side of the same transaction.
A commitment to the supply side demonstrates trust and credibility to premium publishers. Through these trusted relationships, quality publisher solutions often get ‘first look’ or ‘privileged insights’ into publishers’ most valuable inventory, and this proximity to the publishers’ most valued impressions directly benefits demand partners. Of course, the key theme here is quality. Exchanges with strict quality standards drive the most value to publishers and advertisers alike.
Consider ‘The Market for Lemons’ economic theory, which describes a market where sellers offer either cars of high value or cars of low quality referred to as “lemons.” The theory suggests that if low-quality inventory exists in a marketplace, the result is an environment that functions poorly for both buyers and sellers. Poorly policed programmatic ad exchanges are no different. A marketplace rampant with low quality inventory means a reduced volume of transactions, higher prices for lower quality inventory, and far less opportunities for high-quality sellers to secure fair market value for their premium ad space.
Thus, it is critical that supply side platforms maintain stringent guidelines around which publishers are allowed to participate in their exchanges. Doing so protects the integrity of a publisher’s inventory and also ensures that buyers who choose to participate in the exchange have access to a high-quality and fraud free marketplace.
Building a Cooperative Marketplace
For those players that intend to remain a publisher solution, it doesn’t mean they are precluded from building direct relationships with agencies. These sorts of direct relationships should operate solely as a vehicle to educate advertisers and agency buyers and provide a forum to discuss how more dollars can be activated through partnerships with DSPs. By remaining focused on creating powerful and effective publisher solutions, the supply side can be elevated to the same level of sophistication and tech savvy as the buy side, creating a highly efficient exchange that provides optimal value for each side for every single transaction.
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