Last week we examined the biggest buyers and top spending industries within the Index Exchange marketplace during August. Today is all about the sell side – the ad space those buyers secured and in what types of auctions they did so.
Header Grows and Continues to Gnaw Away at Tag-Based Share
Index Exchange’s programmatic market is primarily run through the header. What that means is that majority of the advertiser spend seen and impressions sold are to publishers who have adopted header-based selling to present inventory to the media buying market. Increasingly, these publishers conflate direct-sold inventory with header-sold inventory: direct sold buyers would historically get the first right of refusal on a bulk of these impressions, but they now compete directly with programmatic markets.
Header became the dominant spend stream in February 2016 and its share of exchange-wide spend has increased month over month since. See below for header tag and tag-based share of exchange wide spend through August 2016.
Header’s impression share was a bit slower to achieve a majority – we reached an important milestone in June 2016 when we sold more impressions through the header than through tags (i.e. the waterfall). The reason impressions were slower to catch up? Average clear prices. In August we sold 57% of all impressions through the header (see graph below).
This graph depicts an important header phenomenon – the magnitude of the share of bid requests. While spend and impressions share grew to the majority during 2016, bid requests for header have always far trumped tag-based bid requests.
This has to do with the way header auctions run – once a user accesses a page that is coded for a header auction, all inventory on the page is sent to the programmatic market. This results in multiple bid requests per page view, which explains why header’s share of bid requests is a whopping 93%. In a waterfall setting, programmatic demand likely only sees one or two bid requests per page load.
The Q4 Climb is Underway – August Got Us Closer
We’re super close to the most important advertising period of the year – Q4. The fourth quarter is when we see the most advertising spend year-round, specifically in November and December, during the crazed holiday season when consumers tend to spend the most on goods. After a bit of a summer lull, August is a strong month in the exchange, with a bit of seasonality, around back to school, at play. Here’s what happened in the market in August 2016:
- Header impressions sold increased slightly, header spend up 12%. We cleared 5% more header impressions in August 2016 than in July. Spend increases were higher, which suggests a lot of the increased spend was a function of higher average clear prices and increased competition over header inventory.
- Both auction types experienced increased competition for inventory. Header average clear prices rose 7%, while tag-based clear prices were up 5%. This shows buyers were willing to shell out a bit more for the inventory they sought and that a bigger pool of buyers competed for the same impressions. This could be related to an influx of back-to-school buyers eager to win eyes, or merely a function of the ramp to Q4. Clear prices have historically risen from August to December.
- Header’s average clear prices stayed strong. Header’s average clear prices were 2.46x higher than tag-based clear prices. This isn’t new news, per se, but a continuation of a trend we’ve seen since we started selling in the header. Header inventory is more expensive and publishers enjoy increased yield from selling this way. Why? A few reasons – header sends all inventory to auction, so buyers often see a high-value spot come their way through programmatic and name their price to secure it. That price is typically much higher than a price influenced by the waterfall. Also, there is more competition for header inventory, especially through the wrapper, when multiple pools of programmatic demand compete for impressions. Multiple pools of programmatic demand provide increased liquidity for publishers.
- Tag-based spend continues to deflate. While we’ll likely see tag-based activity for some time within Index Exchange due to legacy relationships and smaller pubs that have eschewed the header switch, tag-based auctions have become wildly less popular within the exchange. Tag-based spend was down 3% in August over July.
Top Performing Ad Units
The graph above shows the five most popular ad units, by spend, in August 2016. As you can see, header accounts for the majority of spend for all five units. Here’s what’s interesting with these units:
- Mobile has most growth. Of these five units, Header spend increased most for the 320×250 mobile web unit – 30% over July. We think this is related to back to school spending – consumer electronics advertisers were the back to school period’s biggest spender and they spent the most on this unit during August. Other advertisers that flocked to it include CPG’s food and drink and auto manufacturers.
- Four of the five units had decreased waterfall spend. The only unit that showed increased waterfall spend was the 320×50 unit, showing that interest in mobile knows no auction bounds. However, the increase was very slight – up 2% over July.
- All units, regardless of auction type, had higher clear prices in August. As we mentioned earlier August clear prices were strong across the board. For these top selling ad units, that discovery was no exception. For header, the biggest jump came from the 300×250 and 728×90, whose average clear prices both notched up 7%. Tag-based clear prices increases were higher – the 300×600 cleared 13% higher on average in August than in July and the 160×600 was up 10%.
Header Video Clips Ahead and Advertisers Clamor for High Impact Mobile
Now for the really fun part – video and mobile, the “it” formats in the advertising market today. Index Exchange has steadily entered the programmatic video space over the course of 2016 and August was a big month for this coveted unit. See why below:
- Header video spend increased 6x. Yup, we saw a whopping six times more spend on header video inventory in August than in July. Bid requests for video were up 233%, which speaks to increased availability of header video inventory. The average CPM for header-sold video was the highest, exchange-wide, with a 48% increase over July. Header video clear prices were 63% higher than video sold through the waterfall.
- Video and mobile units had highest clear prices, exchange wide. Header sold video was the most expensive unit, followed by tag-based video. Header video was $12.22 higher, on average, than tag-based video. The second highest unit by clear price went to the 320×100, sold through the header. Other pricey header spots included the 970×250 and the 300×1050.
- Full-screen mobile experienced swelled demand. The 800×1100 unit, a full-screen mobile spot, had 251% more spend in August 2016 than in July. Who was responsible for such a big push? Three categories of advertisers: food and drink (e.g. Pepsico, Mondelez), telecom’s mobile plans (e.g. Sprint, Verizon), and travel’s destinations (e.g. Sandals, Club Med).