The Open Exchange Exodus
AdslotTue, October 29, 2019
The Open Exchange Exodus AdslotTue, October 29, 2019
Have open exchanges enjoyed their day in the sun? The exact numbers are elusive, but major media players on both the buying and selling side continue to move their business into the presumably safer landscapes of programmatic direct and private marketplaces (PMPs).
For a closer look at this trend, and how the growth of the PMPs will most likely impact the role of the open exchange, I asked Adslot GM Cary Dunst to share his insights on the shifting landscape.
Paul Talbot: When we talk about programmatic, there are typically more than a few transparency elephants in the room. Of all the different problems plaguing programmatic right now, which one should be the most solvable, but somehow continues to play havoc with campaigns?
Cary Dunst: Brand safety has been one of the biggest issues impacting programmatic and giving advertisers pause. No one wants their campaigns to appear alongside brand-damaging or threatening content. However, this problem has mostly plagued open exchanges, where inventory is aggregated from a variety of publishers and sources, many of which are long tail.
Fortunately, brands can largely avoid content that is explicitly objectionable or offensive by migrating out of open exchanges. We’re seeing that occur across the industry as programmatic is increasingly being used to transact more premium and trusted media.
Talbot: What’s happening that’s significant on the open exchanges right now?
Dunst: In terms of investment, while programmatic spend is only increasing, open market programmatic exchanges will continue to tighten. A recent study by MediaRadar showed that one-third of large advertisers cut their open exchange spend. This is being driven by concerns over transparency, with programmatic exchanges not always operating in a ‘well-lit’ way.
Marketers cite continued opacity around media sources and fees, as well as ongoing brand safety challenges. As a result, rather than spend on open exchanges, more marketers are shifting to private marketplaces (PMPs) and programmatic guaranteed (PG) deals.
That’s not to say that open exchanges are going away, of course. Rather, we are seeing segmentation in the way that advertisers do their buying. Open exchanges are going back into the rightful position of monetizing lower value, remnant and long tail inventory.
Meanwhile, upper-funnel activity is moving back to more premium executions and strategies now that the technology has caught up with the market.
Talbot: How well are programmatic guaranteed deals working?
Dunst: Several years ago, when PG as an approach and a technology was still nascent, adoption was obviously slower. But now, especially with transparency concerns top-of-mind, premium publishers are flocking to PG deals and embracing the technology because that’s where advertiser spend is going and growing.
Beyond that, though, there are a wide range of benefits for publishers.
For example, programmatic guaranteed helps publishers access more revenue by selling their brand-safe, guaranteed media through a direct connection, eliminating unnecessary and opaque DSP and exchange fees.
They can also keep more inventory premium by allowing trusted buyers to target 1st and 3rd party audiences across their guaranteed, premium inventory – at prices they negotiate.
Talbot: What significant changes loom ahead for programmatic that aren’t attracting much attention right now?
Dunst: Given current concerns, first-party data will become more important than ever to programmatic buyers, for several reasons.
First, marketers are increasingly concerned about consumer privacy as regulations like GDPR and CCPA install stringent rules over what can and cannot be collected without consumer consent. This also ties into the demand for transparency from marketers, who want to know that the data they’re using isn’t just privacy-compliant, but of a high quality.
Second, browsers like Google, Apple and Mozilla are cracking down on third-party cookies, creating new barriers to data collection and consumer targeting. As a result, first-party data, which isn’t always as scaled but which offers quality and visibility into its origin, will be critical for use in programmatic and automated-buying environments.
Talbot: Any other observations you’d like to share?
Dunst: PG platforms that help buyers scale publisher-direct IOs with their own 1st-party data are going to win in the marketplace, period.
Article originally posted on Forbes.com. Click here to read the original article.