The open programmatic market is in a tough spot

By Seb Joseph

The open market of programmatic inventory, where prices are decided in real-time through an auction, is in a precarious spot. It’s been like this for a while, of course. Even so, that spot seems a lot tougher these days.

That’s down to a few things but they all ultimately come back to this: there’s a ballooning number of publisher-initiated programmatic auctions being pushed through a shrinking ad tech pipe. Publishers are running concurrent auctions for the same impression at the same time as ad tech vendors are trying to reduce the amount of auctions they have to listen to.

Clearly, this isn’t good for advertisers — they could unknowingly bid against themselves and subsequently drive up the price they pay as a result of this practice. But, on the flipside, it makes publishers a lot of money.

The longer this impasse continues the worse off the open market is. Think about it: auction duplication tends to be prevalent across a certain type of publisher. Hint: It’s not necessarily premium publishers. Sure, it’s something they do, but more often than not it’s the made-for-advertising sites — those that exist for the sole purpose of aggressively monetizing traffic so they don’t have to worry about the cost of acquiring it in the first place.

Simply put, the lowest quality supply is occupying a growing share of programmatic inventory on the market as a result of auction duplication.

And yet publishers aren’t exactly scrambling for fixes. That’s if the size of their ads.txt files — the document that lists all the programmatic partners they work with — is anything to go by.

In January 2020, the top 10,000 sites, apps and CTV apps based on ad spending from the clients of programmatic consultancy Jounce Media ran their programmatic auctions across 205 supply paths. By late 2022, they authorized 622 supply paths. It has essentially tripled over that time.

“There’s too much of the open market,” said Ryan Eusanio, managing director of digital activation at Omnicom Media Group. “It’s just not cost-efficient to listen to it all so everybody in the market is in some way kind of throttling how much of the open market they manage.”

This has been happening for a while now. The trickle of ad dollars out of the open market into private marketplaces is a testament to this.

But It’s a trickle not a tide for a reason: irrespective of how they’re dressed up, one-to-one private programmatic trading deals are a heavy lift even for the largest media agencies. Not to mention expensive.

The open auction, for all its faults, doesn’t have those same hangups. On the contrary, there are many advertisers that crave the apparent ease and relatively low cost of buying from the open market where the price ads are set in real time via an auction that any advertiser can participate in.

“The majority of buyers still simply buy open auctions,” said Rob Webster, global vp of strategy at digital marketing consultancy CvE. “Sadly many …read more

Source:: Digiday