Cleaning Up the Media Buying Supply Chain
January 25, 2019By Richard Bush
A quarter of all Americans are online "almost constantly," according to Pew Research Center. These days, the more we use the internet, the worse the content gets. Consumers have been trained to expect irrelevant content. Publishers know the ROI for clickbait far exceeds that of premium content. Meanwhile, advertisers navigate this race to the bottom with one hand holding their nose and the other wielding the shield of brand safety. Our ecosystem is a mess. Here's how we can begin to clean up the supply chain.
Recognize that advertisers are demanding a clean middle, but publishers will benefit most
We live in a programmatic world that leaves publishers in a precarious situation because survival is a matter of increasing sell-through rates for inventory with low CPMs. The good news is that advertisers are demanding better tools for trust, transparency, and efficiency.
One reason the demand side is pushing for change is that less than 40 cents of every media dollar spent becomes working media, according to TrustX. In other words, advertisers have a lot to gain from a cleaner supply chain. But the greater benefit goes to publishers because a cleaner, more efficient middle means a larger share of each media dollar is going to reach publishers. As that happens, publishers will find themselves in a position to increase direct partnership opportunities with their advertisers.
Understand that blockchain technology has an important role to play in "cleaning up the middle"
Like many solutions targeting the middle of the ad tech supply chain, blockchain technology can increase visibility and reduce fraud. But blockchain solutions also give publishers an important added benefit that, over time, will empower the sell side to better understand the value of their inventory.
By writing media contracts into blockchains, publishers can standardize terms and automate a number of functions that are currently considered custom, and therefore a better fit for manual execution. On an operations level, contracts written into blockchains will make publishers more efficient. But on a strategic level, blockchain technology makes publishers smarter. After all, automation brings increased data and learning at scale. The more media transactions publishers can write into blockchains, the greater their ability to forecast media and stage upfronts. Eventually, publishers will be able to create a market for their inventory that will empower advertisers to trade media positions without friction.
Challenge publishers to begin shifting the paradigm
While the demand side has the power to press for change, it's the supply side that must do the hard work of shifting the paradigm. The most obvious place to start is for publishers to adopt a single platform. But a single platform presents something of a chicken-or-the-egg problem because neither publishers nor advertisers know quite where to start.
A more workable approach is for publishers to think about shifting the maximum amount of dollars to a preferred supply path (or paths) that will fit their needs in the immediate. In practical terms, that means publishers must be realistic about their place in the digital media ecosystem. In the U.S., programmatic advertising will account for $48 billion of the display spend in 2018, according to the most recent eMarketer data. But not all display inventory is created equally.
In the rush to build programmatic capabilities over the previous five to seven years, publishers created a complex architecture for sales and delivery because they tried to be all things to all advertisers. This time around, publishers must have a laser-focus. The more a publisher spends on content creation, the more that publisher needs to shift focus back to their roots of direct deals. Simplifying sales and delivery architecture will be a challenge. However, the sooner publishers begin building toward a single platform, the sooner they'll put themselves in a position to leverage the opportunities of the new media supply chain.
Richard Bush is president of NYIAX and has more than 18 years experience in the advertising technology industry.
The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.