‘We go straight to the publisher’: Buyers beware of SSPs arbitraging inventory

A publishing executive, speaking under the condition of anonymity, recently told a story that has industrywide implications. Despite putting only 20,000 daily video impressions in the open market, this executive said, some advertising partners had purchased over 100,000 daily video impressions that they had believed belong to the publisher.

A few advertisers seeking cheap inventory fell for this trick on more than one occasion. They came to the publisher for some sort of solace after they realized that they had purchased garbage.

“If someone is dumb enough on the agency side to think they are getting our inventory on an open market without talking to us, then let them waste their fucking money,” the exec said. “It is buyer beware on the open market.”

As the publisher’s anecdote suggests, tech middlemen have been known to have a habit of misrepresenting themselves. Supply-side platforms (SSPs) do this through reselling inventory and misstating which publishers they represent. To get around this problem, publishers say they must be clear in their contracts how vendors utilize their inventory, and buyers suggest dealing directly with publishers and using blacklists.

For years, ad networks have used misleading descriptions and fudged to truth to buyers about the sites they have inventory access to. By engaging in arbitrage, the networks were able to repackage and resell inventory that they claimed belonged to publishers that they never had relationships with. As PubMatic CMO Jeffrey Hirsch put it, “This has been an industry issue for some time, dating back before the advent of SSPs.”

Although many publishers have left ad networks by the wayside, this issue still crops up in other tech integrations such as SSPs. Sources told Digiday that publishers looking to get higher CPMs on the open market disregarded where their inventory wound up, as long as it drove higher rates.

Publishers also incentivized reselling whenever they oversold their inventory. For example, if one publisher doesn’t have enough inventory to meet an order, it may buy inventory from another publisher and package the inventories together. This MacGyver-esque approach to cobbling together inventory can help publishers get through rough patches, but it can also be annoying and create opaqueness for other parties involved in the deal.

“SSPs who daisy-chain inventory are adding to the problem by creating superfluous ad tech tax while delivering little to no value,” said John Donahue, chief product officer of SSP provider Sonobi.

Sources emphasized that it is really difficult to discern which vendors are simply reselling inventory they purchased through other SSPs and which vendors are straight up lying about what they have. Research on this subject is scant, but it is confirmable that a lot of the reselling happens in the long tail of traffic.

Data from ad tracking firm Pathmatics shows that, on average, the top 50 publishers (in terms of ad impressions) work directly with five inventory partners (e.g., SSP, ad networks and exchanges) and indirectly with an additional three partners who represent at least 1 percent of their transactions. When the 1 percent threshold is eliminated, the number of indirect partners jumps from three to 40.

SSP-driven arbitrage is “pretty prevalent,” said David Lee, programmatic lead at ad agency The Richards Group. “We have talked a lot in the industry about holding our tech partners accountable for transparency. … We need to also hold publishing partners and their SSP partners just as accountable.”

Multiple publishers said they know this issue persists because whenever they go to buy their own inventory, they see it being represented by ad tech firms they have no association with. But the publishers acknowledged that buyers on the open market are unlikely to know which SSPs particular publishers use, so it isn’t as clear to the buy side that impressions have either been resold or are fraudulent.

To address issues like this, anti-fraud industry group TAG is debating whether it should create an authorized resellers list that would be available to its 165 members, most of whom pay an annual $10,000 membership fee. The potential list is being deliberated in committee, and if created, its data would come from publishers self-reporting which vendors they use, said TAG CEO Mike Zaneis.

Through packaging publishers’ inventory together, resellers can inadvertently pair publishers with advertisers they’d rather distance themselves from. Imagine a hypothetical situation where Playboy and Women’s Health inventory is spliced together but is presented to the buyer as if it were only Playboy inventory. A pharma company selling erectile dysfunction pills might purchase the inventory, thinking it will reach middle-aged men, only to have its ads shown on a women’s lifestyle website, much to the dismay of the publisher.

Mike Hannon, vp of yield and revenue optimization at Purch, said that to prevent these kinds of theoretical blunders, publishers should only work with vendors who accept and respect their agreed upon terms. He added that publishers should make it clear that they specifically prohibit inventory reselling if that is something that concerns them.

“The biggest thing is to have that conversation and make some phone calls to see what is happening,” Hannon said. “Any one of the big SSPs can find out where impressions are coming from. … So be careful of where you are putting out supply.”

Just as arbitrage can hook publishers up with brand unsafe adverts, it can also lead buyers to purchase garbage. Because there isn’t a publicly available list like the one TAG is looking into, when setting up private marketplace deals The Richards Group doesn’t “even talk to the SSPs anymore; we go straight to the publisher,” Lee said. The agency also blacklists sections of SSPs that use masked or suspicious URLs because “there is a lot of fraud that is baked into this,” he said. Another buyer said that they primarily work through private marketplaces so that they can avoid this kind of programmatic shenanigans.

Pathmatics CEO Gabe Gottlieb said that the publisher whose video impressions were oversold isn’t alone in having this experience. Gottlieb has also noticed SSPs pushing inventory that doesn’t exist. He said some SSPs will offer a larger number of impressions for a particular publisher than the publisher is actually offering altogether.

“This is standard subversive practice,” Donahue said. “If publishers knew about it, they would likely protect themselves. However, the programmatic kids don’t care as they just want an indirect check.”


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