‘We have too much volume’: The open programmatic market may be down, but it’s definitely not out

There is nothing more inevitable than death and taxes — except maybe musings on the end of the open programmatic marketplace for publishers. 

That’s how often it’s been discussed over the years — and it normally doesn’t take much to get those conversations going. Supply-path optimization, the growth of direct deals in CTV and the death of third-party tracking are just some of the issues that have stirred debate over the perennial topic in the past.

This time, it’s publishers seeing more ad dollars trickle out of those auctions, which has reignited speculation that this is it — the beginning of the end of the open marketplace where prices are decided in real-time through an auction.

But here’s the thing: spending on the open programmatic market may be down, but it’s not out — and it probably won’t ever be. There are too many reasons for publishers like The Lad Bible Group, Future and Gumtree to keep it. 

Among them, is the fact that there’s still a lot of money to be made in open marketplaces. Marketers, drawn to the ease and low cost, seemingly can’t get enough of this sort of advertising.

Publishers are happy to oblige. It is a lower cost of sale relative to private deals, which is especially appealing because most publishers don’t have the capacity to handle a multitude of private deals — an issue that has been compounded by mass layoffs across the market. And even if those publishers could make those deals stick, they probably wouldn’t have the demand to match it. 

“We have too much volume. I need to [fill it],” said one publisher who spoke anonymously under the Chatham House Rule during a publisher working group at the Digiday Publishing Summit last month. “I mean, there are certain units I can [be picky with where they are bought] — the ones our direct sales teams are selling, like 7% or something like that.”

Another publisher, whose ad business is almost completely sold directly, said during the DPS working group that even they are weighing at which points they’ll allow ad partners who don’t have direct demand-side platform connections to use resellers to buy ads programmatically. 

“We don’t allow reseller entries for monetization of standard display or standard pre-roll, but if [a client asks for one of] our higher impact units… we make that concession,” the second publisher said. “That can become a very slippery slope [though] the more we say yes and yes and yes.”

“I’m not able to be that picky,” the first publisher retorted. 

“There is a point for open exchange 100%,” said a publisher from a news media outlet who spoke on the condition of anonymity for this story. This attitude comes in spite of the fact that third-party brand safety and suitability firms like IAS and DoubleVerify have significantly impacted the publisher’s ability to scale campaigns. They pointed to last year when the Ukraine-Russia conflict began, the open marketplace brought in more, new advertisers that might not have ever come through direct selling. 

“It supported the business, but we weren’t seeing quality advertising [at that time]. It was like the bottom of the barrel,” the news publisher contended. 

Needless to say, open auctions are still valuable to most publishers, especially those that don’t have enough marketers buying from them directly. Not only can they use the open market as a source of market intelligence to see who is buying their impressions and how, it’s also a less riskier move given how flexible this revenue for publishers can be.  

That assessment, while overly simplistic, is at least directionally correct, and Gumtree’s ads business only augments the observation. 

Six out of every 10 dollars the online classifieds site makes through advertising (or 60%) come from the open market. Gumtree, like so many other publishers, is reliant on those dollars. 

“It [the open market] is still pretty large, but that also includes our app inventory where the open market is a bit more dominant,” said Victoria Trevillion, head of ad tech and operations at Gumtree.

That’s not for want of trying to move money out of those auctions. When marketers express an interest in doing so, Trevillion’s team will encourage marketers into direct deals. But those deals are, as ever, hard to strike. And they’re even more difficult to scale.

As Trevillion explained, “Deals like this are operationally heavy.”

Until this changes, all Gumtree can do is keep trying to show advertisers the benefits of brokering those deals — sharper targeting, better inventory and so on. Don’t expect this to change anytime soon. 

If it wasn’t so tricky for publishers to wean themselves off those ad dollars, more would’ve done it by now. Here are some data points that lay this out bare: the open programmatic market took up more than six in every 10 dollars spent by the programmatic advertisers (64%) last year at media management firm Ebiquity. That’s slightly down from the 69% that was spent the year before. 

“Open auctions will always be important to publishers because there will always be cash there for them — albeit the amount on offer will differ depending on a few factors,” said Nick Flood, global commercial operations director at Future. “That said, the general trend of advertisers and agencies wanting to get closer to premium publishers still rings true.”

And Flood is doing all he can to capitalize on that interest. Indeed, Future’s own in-house ad tech continues to pull ad dollars out of the open market. However, don’t expect Future to follow Bloomberg out of those auctions anytime soon. Like Gumtree, Future is nothing but pragmatic about why marketers continue to opt for those auctions over direct deals. 

“The open auction will continue to be big and the industry will find ways to prove it as a solution because sometimes markets just want to advertise in that space,” said Flood. 

Some of those so-called “ways” are seller-defined audiences and Google’s publisher provided signals — ways of providing cohort or contextual data into the open auction. Whether they do fulfill that promise depends on whether marketers adopt them over time.

So far, the response has been muted to say the least. With that said, it’s still early days and there’s still time for those alternatives to come good. 

“I’m bullish that those opportunities will provide good value for publishers if the buyers accept them,” said Flood.

His outlook speaks to a deeper point: while it may be safer than before, it’s premature to call the open marketplace a safe place for ad dollars. It wasn’t before third-party tracking got clipped and it won’t be once it goes away completely. 

That’s why there’s so much riding on seller-defined audiences and Google’s publisher provided signals. They represent something more fundamental: the depreciation of granular tracking via the industrial complex third-parties have built on the back of cookies, mobile identifiers, IP addresses and so on means the depreciation of addressability in the open market.

“With the changes that are taking place, I don’t really see a large role for the open programmatic market, especially in Europe,” said Christer Ljones, head of data at Schibsted Marketing Services, the Scandinavian media group’s advertising arm. “However, alternative models are not easy to find, they will either require larger scale, which again points to consolidation or partnerships, or other revenue streams such as sponsorships, premium branded content, change in content strategy or even subscription.”

Building these models takes time, and whether enough is invested to succeed remains to be seen.

What is clear, though, is that the open programmatic market’s share of ad dollars won’t grow — at least not in its current form. 

Neither the CTV or retail media being made available to programmatic advertisers will help on that front. Both are areas where inventory is concentrated into a handful of platforms, most of which are also the largest spenders on content that want to recoup that investment.

The last thing those companies are going to do is sell any notable amount of ads in an open auction.


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