Is trading technology poised for a header bidding-style disruption?

by Alex Chatfield, VP Sales & Account Management, AppNexus

Over the past two years, AppNexus has written in these digital pages about the ways in which header bidding has transformed the publisher business model. We’ve discussed how this emerging technology enables publishers to work around Google’s closed and opaque auction system to earn the fairest prices for their inventory. We’ve pushed for header bidding’s technology to be free and open source. We’ve proposed it as a way for newsrooms to better compete with Google and Facebook. And we’ve pointed out that this is just the beginning of a truly open internet.

But while publishers’ businesses were revolutionized by this new, open technology solution, very little comparable innovation disrupted the technology that media traders have long used to execute programmatic buying. Indeed, while conducting this year’s Forrester DSP wave, analyst Richard Joyce found it difficult to discern meaningful differences between technology solutions. “All the vendors represent the same kind of clients, and the differentiation is subtle,” he said. “Everyone is building their own version of the same thing that clients want.”

In other words, trader technology has grown stale and undifferentiated.

That is about to change. Just as header bidding destabilized Google’s monopoly on publisher monetization, commoditized SSPs, and rendered the traditional waterfall setup moot, the buy-side is ripe for a technological disruption.

Indeed, trade desks face pressures that require evolved technology. Brands are requiring greater fee transparency, better outcomes, and guarantees that their advertisements are viewed by real people. After all, these are demands that Facebook can already meet better than the open internet.

Brands are also pushing their trade desk partners to evolve from tacticians who set up media buys to strategic partners who show how the right creative messages combined with real-time data and custom algorithms will deliver the marketing results they need. In order for this to be possible, traders need better technology that enables them to automate setup and calibration tasks so that they can spend more time providing strategic differentiation through highly customized and data-driven campaign management.

But today’s DSPs offer the same technology. It’s basic, and it’s not programmable. Traders still have to spend an inordinate amount of time on campaign setup and calibration. Manual optimization—the process of finding the best performing inventory and audience aligned to a client’s performance goals—is not an easy process when the entire internet is the test pool.

Even if these tasks were automated, a trader’s job is made even more complicated when the entire digital marketplace is designed to buy and sell impressions, a metric that does not guarantee the advertisement will be viewed by a human and often does not align with a marketer’s performance KPIs.

What trading desks need are programmable platforms that not only streamline and simplify the manual tasks of campaign setup and maintenance, but – more importantly –give traders the power to harness the full value of their data and customize campaign programs for their clients.

Further, traders and publishers alike need a marketplace that moves open internet advertising from impressions to views and from cookies to people.

When viewability emerges as the default currency and buyers only pay for viewable impressions, traders won’t have to waste budgets on worthless impressions and publishers will earn more for their quality, viewable inventory.

A device-level identifier that is open and common throughout the ecosystem combined with a ubiquitous, deterministic identifier will enable people-based and cross-device targeting that is as easy as cookie-driven display is today.

Shifting these paradigms will unlock new value for marketers and make traders full strategic partners to their end customers.

Header bidding disrupted the ad tech ecosystem and commoditized the standard, waterfall SSP. Now it’s time for new technology – fully programmable and powered by machine learning – to disrupt the buy side. It’s the next revolutionary step. Stay tuned.

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