Building a Brighter Future for our Industry
Emma Newman, Vice President, UK, PubMatic
To borrow from Charles Dickens, for our industry ‘it is the best of times, it is the worst of times’. We’re facing many challenges - be it GDPR, fraud, opaque business practices or fake news – which has led to a lack of trust in the industry, from brands and consumers.
Yet, as we come together for the AOP Awards to celebrate editorial, publishing, partnership and commercial excellence, there are many reason to be confident of the future. The growth of digital remains unfettered and programmatic buying has moved from being the exception to the norm. There are also a host of initiatives being implemented to rebuild trust, clean up perceived opaque practices, develop transparency and create a better industry. Just looking at what has happened in the last 12 months should fill us all with optimism.
It’s no surprise we have been faced so many challenges - any industry that has developed so quickly would. With the number of companies in ad tech ballooning from 500 to 4,000 in just a few years, is it a surprise there has been fragmentation, increased costs, complexity and a lack of transparency? As more players have entered the market, supply-chains have grown and these companies need to be rewarded for the service they provide. The result has been the disparity between an advertiser’s budget and what the publisher receives – the so called “ad tech tax’. With little transparency, it has been difficult to identify which players are adding value and which ones have been taking advantage of this lack opaqueness.
But change is afoot - and it’s happening fast.
The launch of the IAB’s ads.txt (Authorized Digital Sellers) initiative last year has helped buyers avoid spoofed inventory by identify and buying from only legitimate sellers of specific inventory, while maximising revenue and CPMs for legitimate publishers. After a slow start, we have seen rapid adoption, with Pixalate estimating 51% of its 5,000 websites worldwide had already implemented ads.txt. by February 2018. And the benefits are not one-sided. We are seeing it positively impact all players in the ecosystem, be they publishers, advertisers or ad tech vendors. This is attracting advertisers to move spend from the open market to programmatic direct deals.
We’ve also seen a major change in auction dynamics. Since the dawn of programmatic, ssecond price auctions have been the norm. Over the last eight months, first price auctions have rapidly become the de facto approach. While the jury may still be out about whether this is a better model in the long-term, the feeling is it delivers a simple, more transparent auction environment.
As programmatic grows, new pricing models are also emerging, such as Platform as a Service (PaaS). This approach provides the opportunity to license technology with a monthly fee structure, rather than the traditional revenue share model. Again, this is helping increase transparency and simplify technology procurement processes, providing greater visibility and predictability to publishers.
We’ve also increasingly seen businesses abolishing buy-side fees, something PubMatic announced in February. This provides greater visibility into pricing models so that buyers can have more confidence in the supply path and bid more efficiently. The greater the buyer confidence, the more money they will spend, which means more revenue for publishers.
All these changes – which have happened in less than a year – are delivering clarity, removing complexity and driving greater transparency, essential for re-establishing trust with advertisers. They are also necessary to realise programmatic’s full potential by unlocking brand dollars and persuading them to move into programmatic. Long term industry success will be achieved by advertisers having the confidence in an industry that is maturing, putting its house in order and developing true partnerships between advertisers, publishers and technology vendors. This should also contribute to the need for rebuilding trust in advertising with consumers.
The excellence recognised at the AOP Awards also helps grow confidence in the industry. Once again, PubMatic is pleased to be associated with the awards. We wish all the nominees the best and look forward to continuing working with publishers to deliver value, transparency and success going forward.