Picking The Programmatic 3.0 Marketplace That Will Make You A Winner

On today’s cutting edge of media trading "programmatic 3.0" are a number of solutions that allow buyers and sellers to make a deal now for inventory that will be delivered in the future. This new technology segment has emerged, in the already crowded field of programmatic solutions. The challenge for publishers and media buyers has been to distinguish the difference among the approaches vendors are bringing to the table to support programmatic deals for inventory delivered in the future. Because these different approaches all seek to address buyers’ and sellers’ pain points, they all present very similar value propositions. In reality, these approaches are very different.

The three approaches that have emerged in the market so far are the marketplace for traditional avails, real-time statistical arbitrage, and biddable impression futures. If we simply looked at the value propositions of each they seem nearly indistinguishable. If we dig deeper to understand what and how they work, the differences become clearer.

A marketplace for traditional avails

This approach is currently the most common and has been adopted by some of the big players that pioneered the real-time space. This approach allows a seller to expose products from their ad server to a marketplace with a “buy it now” price. It focuses on automating the trafficking of media buys and making the media that was sold direct, since the dawn of digital media, discoverable in a marketplace.  This is the approach used by the likes of Rubicon (iSocket/ShinyAds), AppNexus (Twixt/Yieldex Marketplace), and AdSlot

Real-time statistical arbitrage

In this approach the media is not bought from the publisher, but rather from an intermediary that takes on the risk of promising to sell the inventory at a fixed price after buying the impression at a variable price through an auction.  The approach focuses on technology that can forecast what will probably be available in the real-time environment and its estimated auction clearing price. This approach is used by the likes of Media Gamma and was attempted by MetaMarkets and Media Crossing prior to their pivots.

Biddable impression futures

This approach focuses on allowing buyers and sellers to agree to transact media where all the impressions meet a specified set criteria that can include a publisher’s product, 1st or 3rd party segments, context, viewability, or any other criteria the counterparties agree to. This environment is an order management layer that abstracts supply and demand into a separate technology layer to optimize the way in which supply and demand are presented, priced, and matched. This approach does not handle actual impressions or bid requests the way the real-time environment does. This is our approach at MASS Exchange.

In the wild

Let’s look at a concrete example across all the approaches. A publisher is asked to sell a 300x250 unit on the landing page of their automotive section, targeted at males, 18-35, in-market.

In the marketplace for traditional avails, a publisher must manually create the product in the ad server so that it appears in the marketplace via its API integration into the ad server. While doable, selling targeted impressions, not an audience over-indexed inventory, is possible but the efficiency of the marketplace is quickly outweighed by the massive manual process required to set it up. Further, none of the current marketplaces for traditional avails are auction based. So, it’s like Amazon for traditional avails.

Using the real-time statistical arbitrage approach the vendor targets an audience in an open market or may be able to acquire it through a private market, but the negotiation and pricing of the deal between the vendor and the end buyer is handled manually like any other traditional direct media buy. Further, scaling this approach to buy inventory from specified publishers means that yet another technology is inserted into the cost structure of the media and requires the vendor to have PMP deals with each seller so that a specified publisher’s inventory can be resold.

In the biddable impression futures environment, all of the combinations of audience, placement, and viewability attributes that a seller wishes to expose to the market are discoverable and priced with an asking price. In this environment, avails are biddable and transacted through and auction that only clears if the buyer is willing to pay the seller’s asking price.  This approach scales wonderfully as inventory definitions, pricing, availability, negotiation, and trafficking can all be automated. This approach provides tools that can scale across all the part of the transaction process, from start to finish.