Key Takeaways from AdExchanger’s Programmatic I/O Conference

Vincent Pelaske, Senior Programmatic Trader

AdExchanger’s Programmatic I/O was this October in NYC. The conference spanned two days and covered topics across the programmatic landscape with talks from thought leaders in the industry, including from brands, agencies, and ad tech vendors. There seems to be a growing consensus, no matter which side of a bid you sit on, that there are several concerns in the marketplace that need to be addressed.

Transparency & Trust (But Verify!)

Transparency was a hot topic for both buy- and sell-side speakers. Buyers—both agencies and brands—are concerned that ad inventory is not legitimate or that the impressions they are buying are not viewable by a human. To answer these questions of legitimacy and viewability, the industry needs to come together and push for greater openness on all sides. In order to keep everyone honest, open industry standards and reports must be adopted. One such standard, ads.txt, has had significant widespread adoption on the supply-side.

Ads.txt provides proof that a site’s inventory is authorized to be sold directly from the site or by an authorized re-seller. Currently, ads.txt only functions on desktop and mobile web with a mobile in-app solution on the horizon. This gives buyers the peace of mind that who they are buying from is legitimate. To address that inventory being purchased is what it says it is, the IAB is pushing for ads.cert, which is a way to certify that information passed in a bid request is not modified in any way by anyone in the supply chain.

Verification partners, such as IAS, publish reports on the quality of media purchased over the last quarter or year. In their latest report for H1 2018, IAS found that programmatic buys in the US have had increased viewability half-over-half while fraud benchmarks remain flat. Buyers can leverage this information to inform media plans and set fair expectations to brands.

Viewability – Pay for What’s Seen

An interesting topic that perhaps does not get talked about enough: viewability, and by extension, viewable cost and performance metrics.

One of the selling points of programmatic media is the ability to purchase an audience, so if you reach the right people’s browsers, but not their eyeballs, what’s the point? To that point, several buyer and brand-side speakers highlighted an interesting quirk in performance attribution reporting across the board: even an ad that is not viewable can be attributed a conversion. This, of course, does not make sense because how can a person be truly influenced by an ad that he or she never saw. In order to account for this, a viewable cost-per-action (vCPA) metric is needed.

Currently, calculating a vCPA is a manual process if a buyer wants to use third-party verification viewability numbers. Most major DSPs and ad servers have some form of partnership with a verification partner or proprietary technology to measure viewability, but to reiterate a previous point: trust, but verify. This means importing site and placement level viewability from your verification partner of choice and multiply those percentages against your CPAs at-large. This leaves the vCPA, which may be comparatively inflated, but that’s because CPA on its own is not the whole picture.

Incremental – Mo’ Money, Mo’ Conversions… to a point

Another topic mentioned by several speakers is the effect of incremental dollars on a campaign. Multiple speakers had a consistent take on incremental dollars: they’re great, but there are diminishing returns, and it isn’t a 1:1 valuation.

With incremental spend, many brands and buyers had found that incremental spend does not have a 1:1 ratio for incremental conversions. That is to say, every incremental dollar does not necessarily result in a dollar’s worth of conversions. What the studies found was that there was on average an efficiency loss of 30-50% incremental spend, so every dollar spent resulted in only $0.30-0.50 worth of conversions. That is not to say that incremental funds are bad—quite the opposite. The speakers found that a large lump sum of incremental dollars in a short timeframe led to larger inefficiencies, but if the sum is smaller or over a longer timeframe, the diminishing return is reduced.

All in all, there are three key takeaways from Programmatic I/O this year:

  • know what you’re buying;
  • buy what is seen by a human;
  • and buy responsibly.

It is the duty of brands and their agencies to push for further transparency in the marketplace, and for better integrations between platforms to consolidate tech stacks. Money talks and the exchanges are listening.