By Joseph Galarneau
At Mezzobit, we talk to online publishers and brand marketers all of the time about strategies to control Internet data and user tracking so they can maximize value from their valuable audience assets. Over the past month, I had the good fortune to speak to two groups that gave me additional insight on why this is so difficult for publishers, in particular.
In June, we did a bootcamp on data leakage for the Online Publishers Association (OPA) as part of their Legal and Legislative Day in Washington. And just this week in my annual lecture at the Yale Publishing Course for magazine executives from 13 countries, I expanded upon these themes to include a survey of the programmatic advertising and ad technology landscape. The OPA audience was comprised of large consumer publishers, while Yale was more diverse both in terms of publisher size as well as vertical (consumer, B2B, association, etc.)
But a few things stood out to me:
Larger publishers demand more transparency from data partners, but it’s like pulling teeth
Executives told us that they’re increasingly asking that ad- and marketing-technology vendors provide lists of all of the data they need to collect on their websites and all user-tracking activities. Instead, publishers receive contractual language with semantic vagaries and no lists; vendors say that it would be operationally impractical to enumerate these items. Even digital players with large market power get major pushback.
Coming from the technology vendor side of the table, I know that it’s perfectly possible and not terribly inconvenient to provide this information, but it does increase cost and risk somewhat. Nonetheless, it’s counterproductive for vendors not to embrace transparency. As IAB CEO Randall Rothenberg has repeatedly said, there is a crisis of trust in the industry and operational opacity only adds to the “you have something to hide” meme.
Programmatic is scary because it’s not well-understood
A number of studies project that by 2017, 80 cents of every digital display ad dollars will be routed through programmatic (either direct or RTB). The Association of National Advertisers released a study in March of brand marketers involved in placing ads to see who knew what about this growing channel. Only 25% actually used programmatic, while 41% said they didn’t understand it. I would characterize the 100+ publishing managers I spoke to similarly, with some executives from larger brands having a decent understand and those from smaller companies mostly unknowledgeable.
This isn’t surprising and many publishers are aggressively training in programmatic techniques to remedy this. But as programmatic has significant impacts on how audiences are exposed to the ad-tech ecosystem, there’s a near-term increased risk of data leakage and audience arbitrage if publishers go down the path without preparation. Also, this lack of knowledge has made some publishers fearful, causing them to delay programmatic initiatives that could have had positive revenue impacts.
No one knows what’s going on behind the scenes
While the broad strokes of programmatic mentioned above are becoming better understood by publishers, the “under the hood” aspects are not. As part of my presentations, I walked through a simplified RTB transaction step by step, explaining how the alphabet soup of SSPs, DSPs, and DMPs, as well as exchanges, trading desks, and ad servers are involved. Few attendees came to this session knowing this information, and I’ve even found this to be true (to a lesser degree) for ad ops and tech teams.
Sometimes you have to move backwards to go forwards, but publishers reluctant to do this
Having a solid programmatic strategy may require some retrenchment, discarding some strategies that are bringing in revenue but harming overall audience value. The new processes, both from a technology and an organizational perspective, that are smarter about using programmatic and properly valuing audiences will take time to mature.
And while no one’s celebrating low CPM sales, it does represent real revenue that publishers — particularly legacy print publishers — are loathe to lose. It’s like that scene from Braveheart where the Scots were urged by William Wallace to hold firm against the charging British army; it always takes institutional fortitude to make changes that result in short-term pain and long-term gain.
The programmatic arena is changing at breakneck pace, but I’m encouraged that the sellside is rising to the challenge and getting sharper about this every day. The key takeaway is that programmatic isn’t going away, and you can’t bury your head in the sand about it. There’s real revenue upside in smart use of these techniques, but it’s not a magic bullet. Safe and smart use of programmatic — and finding the proper fulcrum point between audience protection and sharing — will still take some time.