The fallout to ad tech’s latest scandal is coming. Some advertisers and publishers have shifted their dollars and inventory away from the ad exchange following revelations that Index Exchange had been caching bids — relocating automated auction-based ad buys from the intended inventory to another slot, so the advertiser might not know what they’re getting.

Varick Media Management moved clients away from buying ads through Index Exchange to other exchanges, said Varick CEO Paul Dolan. A publisher who asked to remain anonymous has had a handful of advertisers redirect their deals with the publisher away from Index Exchange to go through other supply-side platforms. The Index Exchange fallout seems to be rippling across other exchanges, or supply-side platforms.

“We heard of instances of DSPs who are establishing deals directly with publishers and circumventing SSPs entirely. Given the sharp uptick expected in programmatic guaranteed and [private marketplace] deals in the next few years, SSPs need to reestablish their role in the supply chain,” said Digitas vp and director of programmatic media Liane Nadeau.

Ad tech companies pledge cleanup
The Index Exchange controversy also has ad tech companies making pledges to clean up the programmatic supply chain.

Demand-side platform MediaMath on Oct. 3 published an open letter saying it would stop buying ads from SSPs that manipulate programmatic ad auctions. “We are putting our money where our mouth is by removing those who intentionally manipulate the auction from our platform, including in the worst of cases, indefinitely,” said Lewis Rothkopf, gm of supply at MediaMath. To date, the DSP has not removed any companies from its platform, he said.

Then on Oct. 17, six major ad exchanges — OpenX, Sovrn, Telaria, Rubicon Project, SpotX and PubMatic — published their own open letter outlining transparency principles they agreed to, including scanning all ads for malware, reviewing all domains for brand safety, not hiding any fees appended to ad buys, not participating in the kinds of rebates or kickbacks that have recently drawn the FBI’s attention and, of course, not caching bids.

The exchanges’ open letter was widely applauded. “The spirit of the letter is on point, and something the buy side has been seeking from the supply side,” said Kolin Kleveno, svp and head of programmatic at 360i. Others expressed skepticism, though.

“I found it ironic that many of the companies that signed the letter were flagged for previous digressions, and some aren’t fully compliant yet with the principles presented in the letter,” said a digital agency source.

“I’d be surprised if this materially moves the needle for these guys unless it is the beginning of a sustained campaign that highlights and somehow proves they are following these practices and, by omission, others aren’t,” said one brand exec.

That latter criticism is buoyed by the fact that the letter is missing signatures of Index Exchange; Google, which operates the largest ad exchange; and AppNexus, another major ad exchange that was acquired earlier this year by AT&T’s Xandr ad division. All three had the chance to review the document and provide input, said Sovrn CEO Walter Knapp.

“They were all exposed to not only what we were trying to accomplish — the early draft of the letter and invited to comment — and so I think there was broad consensus on the spirit. I think some people for a variety of reasons wanted to debate some of the points, and our attitude was, we’re going to draw a line in the sand, and we’re going to take it into [the Trustworthy Accountability Group], and then there’s plenty of time for the process to iron out the specifics,” said Knapp.

Exchanges moving toward compliance
Spokespeople for Google and Xandr did not respond to requests for comment. In a statement, Index Exchange said that it agrees with many of the letter’s principles but believes the letter requires more guidance, specificity and the inclusion of more members of the industry. “As late as [Oct. 16], we shared these concerns and desire to continue the dialogue, and based on that conversation, we are frankly quite surprised this letter was published. We believe rushing to codify standards without process or a group discussion on other necessary inclusions is irresponsible and not in the best interest of any of the participants involved,” read the statement.

There’s another reason to be skeptical of the letters. Of the six exchanges that signed the letter, only OpenX and Sovrn are fully compliant with all of the principles outlined in the letter. Telaria, Rubicon and SpotX said they are in the process of getting fully compliant and PubMatic CMO and head of U.S. publisher development Jeff Hirsch declined to say if it’s fully compliant.

Now that the principles have been published, TAG will take the reins in turning them into actual standards. The industry group’s Business Transparency Committee will review the principles and develop compliance standards and a certification process to ensure companies are compliant. TAG CEO Mike Zaneis said he is hopeful that “by end of the year we’ll have a new area of transparency.” But between now and then, a lot still needs to be worked out.

“There are a lot of questions as to what does this mean. Should I be doing anything right now? I think the answer is no,” said Zaneis. “Nobody should be taking action just because of this letter. If you’re working on some of these principles already, that’s great. But as an industry, companies should really come to the table to further discuss these goals within our committee. Then we’ll have a broader roll-out if and when the guidelines get incorporated into our certification programs.”

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