Top UK publishers say they’ll move to reduce ads bought through open ad exchanges

For some big newspaper publishers, reducing how much of their inventory is bought via the open exchange is a trend they anticipate rising in 2019.

The Guardian, which currently relies on open-exchange buying for around 80 percent of its display inventory, wants to reduce that reliance in favor of programmatic direct deals this year. News UK stopped open-exchange buying for its subscriptions brand The Times (which also carries advertising,) last year and wants to lure more advertisers away from the open exchange, and into an alternative offer — the joint venture Ozone. News UK has also claimed that private-auction and programmatic guaranteed deals have also increased for both its newspaper brands The Times and The Sun. The New York Times has also halted open-exchange buying in Europe, albeit for different reasons.

The fact publishers have historically favored direct programmatic deals or private marketplace deals is no surprise. After all, they can command higher rates for premium inventory offered in environments they can guarantee are brand-safe. Agreeing a fixed fee upfront makes for easier forecasting and managing inventory.

And while private marketplaces have been criticized in the past for being expensive and ineffective for scale buys, programmatic guaranteed deals are tipped for growth. Increased direct-to-publisher transactions are a priority for media agencies, including the world’s biggest media buyer, GroupM.

Group M remains bullish on reducing open-exchange ad buying with premium publishers, a pledge it first made in 2014. The agency holding group doesn’t want to buy inventory from premium news publishers via the open exchange, where possible. In fact, it prefers not to buy in any kind of digital ad auction in which it can’t leverage its scale to negotiate a better deal.

The agency group wants to build more direct-to-publisher transactions in order to simplify digital ad supply chains by reducing the number of players in those transactions. But the agency also wants to guarantee control over any transaction — something that’s harder on the open exchange.

“We are structuring deals with the newspapers so that we can have the inventory we want from them, but which we would ordinarily have taken from the open exchange,” said Robin O’Neill, group trading director at GroupM. “We have the tech capabilities to do that, so it doesn’t make sense to do that [buy inventory] via a third party.”

There will always be a place for buying ads on the open-exchange for performance-based campaigns, in which case an ad exchange partner will always be required in order to manage those long-tail requirements, added O’Neill.

“Anything that has us bidding on a like-for-like basis with everyone else in the market goes against our whole thing of scale being used to our advantage, which we don’t want,” said O’Neill. “It doesn’t make sense for us to be competing [in online ad auctions]; therefore, we will look to remove ourselves from auctions and agree to pricing with publishers upfront.”

Other agency groups are also hunting more direct-to-publisher relationships on behalf of clients that have started scrutinizing how much of their budget actually goes on the media rather than siphoned off by numerous data merchants in the supply chain.

“Advertisers want to maximize spend on media, meaning that we are seeing an increase in demand for publisher-direct integrations,” said Tim Pearce, head of investment at Dentsu Aegis media investment arm Amplifi. “All of the research we have undertaken suggest a positive impact on brand metrics when advertising alongside professionally produced content, which is again leading to an increase in demand for PMPs,” he added.

Of course, what makes sense for an agency group of Group M’s scale doesn’t necessarily for other agencies, many of which still champion the open auction. For many agencies, it’s publisher private marketplace deals that are under pressure, not open exchange-buying. The arrival of header bidding as a technique to drive up yields for publishers on the open exchange was warmly received by publishers. That, along with the introduction of ads.txt, and more sophisticated anti-fraud tools, has done much to secure open-auction buying as a technique.

Meanwhile, PMPs, which were born from the need to protect buyers from unsafe inventory and ensure agencies weren’t just buying remnant scraps, are no longer useful for some agencies. Often, they’re set up and then left dormant for months, as agencies find better deals via the open exchange. Agencies are then pestered by their publisher partners, as to why they’re not buying inventory via their private auctions. “PMPs are under huge pressure,” said Duane Thompson, head of display and programmatic at independent agency Total Media.

Prior to the General Data Protection Regulation arriving last May, publishers were more willing to decouple their audience data from their inventory and sell it separately so that an agency could then use it to target that audience across the web, added Thompson. Since then, fewer publishers use that technique due to the risk of their data being misused under GDPR law, but there are one or two that have found a way to offer it since GDPR, according to Thompson.

Buying audience data from a publisher which can then be used to target which media to buy on the open exchange is a highly useful tactic, according to Thompson. “I would like to see more decoupling from publishers,” he added. “It is a way they also get a decent yield if someone isn’t willing to pay the PMP price for media plus data but will pay for the data if they can utilize it outside of that environment.”

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