Two weeks ago, we had the pleasure of hosting IX Open in Miami, our first-ever executive summit. Over two days of presentations and breakout sessions, Indexers, publishers and buyers discussed the state of ad tech and where the industry is headed.
The Ad Tech Tax and Commoditization of the Ad Exchange
Index CEO Andrew Casale kicked-off the event with a presentation addressing how ad exchanges can improve. Though often compared to the stock exchange, many ad exchanges lack the clarity with partners to deserve the comparison. Price structures can be arbitrary and supply chains untrustworthy, with undisclosed trading fees and unclear inventory.
Andrew also outlined his predictions for the future of programmatic. Soon, ad exchange commoditization will bring down costs, transactional fees will take center stage and costs will not be tethered to the value of the outcome, when effort is the same. Additionally, he predicts ad blockers will fade away as a mainstream concern, and in its place bad ads will be under the microscope.
“We learned that the industry is moving rapidly toward greater efficiency, and publishers and buyers are ready to seize the opportunities that lie ahead.” — Tom Levesque, Director, Product Management, Index Exchange
Fees were also the subject of a breakout session between publishers and buyers. The questions raised were central to the ad tech tax debate: What is the acceptable cost of doing business? Is an ad exchange a utility (like a power company) or a value add (like an auction house bringing net new demand)? Publishers laid out their priorities: Build consensus on “cost” and prevent “double dipping” on the buy and sell side.
Programmatic Necessities for Buyers in 2017
Later in the day, buyers discussed their own programmatic goals and outlined what publishers should expect in the coming months. The panel, moderated by Ronan Shields of The Drum and composed of Oleg Korenfeld from MediaVest Spark, Rob Kramer from Rocket Fuel, Jon Mansell from MAGNA, and Tim Sims from The Trade Desk, affirmed the need for expanded access in 2017, to every impression, at every priority level, and to the ability to compete on price. They emphasized that the role of the ad exchange is to allow buyers to make informed buying decisions while getting as close to the publisher as possible.
Unifying Different Channels of Monetization
Competing on price proved an enduring theme throughout the event, as Index Principal Analyst Jocelyn Gillespie crystallized in her presentation on the common threads among successful programmatic publishers. According to her findings, publishers that run an agnostic, price-driven auction see 18% higher CPMs and 41% higher win rate on average for their inventory. The data indicate that buyers are attempting to submit bids above rate card prices, but are getting stifled by inefficient prioritization in the ad server. Savvy publishers, meanwhile, are moving direct lines to price priority so that everything competes on direct, and the results have been incredible.
“It was great to be able to openly discuss strategies publishers are deploying. Events like these ensure that publishers and buyers are taking full advantage of the benefits the programmatic landscape has to offer.” — Jocelyn Gillespie, Principal Analyst, Index Exchange
Automation x Creativity
Publishers also flexed their imaginations as Ryan Pauley from Vox Media, Sarah Badler from The New York Times and Greg MacDonald from Yahoo discussed the success they’ve found outside of traditional programmatic. Even at scale, trading 300x250s has become boring, and publishers must unlock more to get marketers truly excited. Native was highlighted as a promising development as it converges with programmatic in the form of guaranteed deals, but there are caveats. They’re not automated, they’re not turnkey and they aren’t set-up like traditional deal IDs. The panel also questioned whether the terms native and programmatic had singular meaning any longer, and perhaps they are just a kicking off point for a conversation about what buyers really want.
A Full Court Keynote
Grant Hill, former player for the Detroit Pistons, Orlando Magic, Phoenix Suns and L.A. Clippers and current tech investor, imparted some wisdom from those who shaped his career and taught him openness, honesty and integrity. People may not like to be told the truth, he remarked, but they need and respect it. To be successful, one must have a presence and contribute in their community. At an event that emphasized transparency and hard truths, Grant’s words were a very welcome keynote.