How Media Buyers Are Downsizing Their Number of Ad-Tech Partners – Adweek

Approximately 80% of display ad spend is now powered by ad tech, according to eMarketer, with the phrase “programmatic” rising from a niche term used by digital marketers in the late 2000s to a mainstay of contemporary marketing parlance.

The initial sell is a no-brainer: using software and data to power ad targeting, thus increasing consumers’ propensity to purchase products and services post ad exposure—and in the process upending the classic Wanamaker adage of not knowing how or if ad spend is working.  

However, a historic problem has been its roots in black-box, opaque operations and revenue models that require more than a little explaining, with the sector’s history colored by finger-pointing, including legal disputes, both old and new.

Such complications have led to the popularization of the term “ad tech tax,” and with big-spending marketing teams increasingly coming under the scrutiny of their organizations’ procurement departments, they must shine a light on all black boxes.

Consequently, the term “supply-path optimization” has become common in recent years—another case of grandiose phraseology in ad tech—with the phrase basically meaning businesses auditing their supply chain to see precisely who is delivering value. All of this theoretically puts arbitrage players and fraudulent traffic vendors on notice.

In particular, the holding-group-owned, media-buying powerhouses of Madison Avenue have to pay attention to how their clients’ media budgets are distributed throughout the value chain of ad tech.

Such market forces prompted Havas to commence inspection, and consolidation, of its ad-tech partners, with the company downsizing the amount of inventory supply partners—in particular, supply-side platforms—from more than 40 to single digits, as part of a review process which began in 2018 but took effect early this year.

“I don’t want to say that it was an area that escaped scrutiny but it’s one that agencies haven’t historically been really leaning in, to understand the relationships beyond that DSP [a buy-side piece of ad tech called demand-side platforms],” said Andrew Goode, evp and head of programmatic at Havas.

“And when we started pulling the data, we saw that we were buying from over 40 exchanges … It’s just unnecessary, and the logic is that once you’re buying from that many exchanges you open yourself up to risk around brand safety.”

In addition, an examination of the distribution of client budgets revealed evidence of ad exchanges reselling media to one another, a practice that embodied the questionable practices that dogged the early stage of programmatic advertising.

“So, we formulated a code of conduct which is, at this stage, not legally binding, but it is something that we’re able to work with our partners to agree on,” said Goode, describing a process that began in earnest at CES earlier this year.

This code of conduct asked prospective trading partners to sign up to principles of “financial transparency,” including assurances over practices such as bid caching as well as conduct in second-price auctions.

“For example, we’d agree there would be no 4X hedging [on auction bids] and things that if bid shading was to occur, then we’d know what was going on,” explained Goode.

The process has resulted in a more efficient flow of money across the revenue chain with this more direct flow of money, meaning quality is winning out, resulting in a better equilibrium in the value chain. For instance, Havas’ resulting partnership with supply-side, video, ad-tech company SpotX saw ad spend with premium U.S. publishers increase 217% between the first week of February through to the last week of March this year, according to the pair.

Source: Adweek.com

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