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AdExchanger: DSP’s to SSP’s: ‘Clean Up Or We Cut You Off’

Demand-side platforms (DSPs) are putting pressure on supply-side platforms (SSPs) to improve inventory quality and cut out the games that pad the second-price auction.

Ad tech insiders have told AdExchanger DSPs are being more aggressive in blocking supply sources until they clean up.

The pressure could force the ecosystem to grow up. While DSPs aren’t coordinating their actions, exchanges cut off from multiple buyers will suffer. Players with bad inventory and high fees will see buyer demand evaporate, creating a cleaner, more transparent marketplace.

Converging factors are prompting the cleanup: marketer pressure, header bidding and rising costs.

A few years after many marketers heard the word “bots” and “ad fraud” for the first time, they’re frustrated by the lack of brand safety controls in the marketplace – and particularly on YouTube – and applying pressure from the top down to know where they are placing their ads.

On the technology side, header bidding makes it easier for DSPs to reroute buys to other exchanges. In the past, cutting off an exchange could have meant losing access to a valued publisher, like ESPN or The New York Times. Today, buying platforms can find the same impression for sale elsewhere.

Plus, header bidding creates a financial incentive to decrease inventory sources. Header bidding increased costs to sift through inventory, as AdExchanger has reported. While rooting out ad fraud costs DSPs millions, curating inventory reduces costs.

“To the extent we can turn off the bad actors, it will keep our infrastructure costs under control,” said Shawn Riegsecker, CEO of Centro.

Header bidding also adds transparency to the marketplace.

DSPs can analyze each exchange’s fees and auction mechanics. If the same impression appears on multiple different exchanges for different prices, the buyers can start to tease out different games taking place and avoid partners with questionable practices.

“If I can buy the same impression from five different partners, I’m going to buy the impression from the partner that is providing the most transparency,” said Tim Sims, VP of inventory partnerships at The Trade Desk. “There is significant risk for supply partners who don’t provide the same level of transparency.”

When DSPs have stopped working with partners, they have told AdExchanger it’s for two main reasons: playing games in the auction and marketplace quality. Here’s how exchanges can game each area.

 

 

The Auction Games

In order to boost publisher yield (or add to their own pockets), many exchanges find ways to raise the clearing price in the second-price auction.

“There are a ton of games being played in the market that we know of, and more games they are playing that we don’t know of,” said Jacob Ross, chief product officer at MediaMath. “We will not tolerate them and our clients will not tolerate them.”

A technique that DSPs caught earlier this year involved an exchange sending out a single impression multiple times with the same user ID in order to boost prices.

These duplicated impressions increase revenue by gaming some of DSPs’ quirks. (Continued…)

Read More at AdExchanger

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