viewability

Be Prepared for the Great Advertising Technology Tsunami

What is the next big thing out there that is really going to change the media game? I’m talking about tectonic changes. The way the introduction of display advertising really changed the game or what we are witnessing today with mobile. Where is the next big wave of disruption? It is going to be the expansion of markets and trading technologies. That might seem a bit obvious, but I think what is driving the change is very different than what drove it in the past. It is this reason that will make the next wave of media trading so disruptive. The most recent disruption in this space was the ability to buy impressions in real time. The difference is that real time was a bolt on to the existing system. Real time bidding made something possible that didn’t exist in the past, the allocation of an impression based on real time market dynamics. The next expansion will be different. The next expansion of advertising and media technology will not be a bolt-on, it will drive changes at the heart of media buying and selling.

So, how can disruption be measured in our business? For media, disruption is measured in the ability to shift spending on a media plan. Better ways to achieve campaign or media buying goals is the measure by which media products are judged and priced.  The better the product, the more demand it will capture. Looking back, it is clear that the advent of display media really moved a significant amount of budget around in media plans and that mobile is doing the same today.

We saw the first move in the expansion of trading technologies when programmatic direct became possible in display. That small foothold has been expanding into things like print and outdoor media. The new changes are starting to build. The new systems are not the media planning platforms of old. Those were just messaging and ticketing systems that automated the paper process. These new changes bring new processes. Much more efficient processes.

There are literally billions of dollars of opportunity to create value by eliminating fraud and unviewed impressions. To do that, processes have to be better. We all know that the old way of media buying is just not measurable enough anymore. Measuring better means more efficient capital allocation and better outcomes. It means that sellers need to be able to slice, dice, and price their available inventory much better, and buyers need to be able to find it and bid.

This is the next disruption in media. Media transactions will be smaller and more frequent. Buyers will be buying shorter flights and more targeted audience segments. This means buyers and sellers need the tools to help them do what they already do, but at scale. Give people more time to make more decisions by speeding up or automating more of the basic administrative stuff. It’s like the difference between a hacksaw and a Sawzall. They do the same thing, except the Sawzall allows the carpenter to focus on cutting without worrying about powering the saw. The next disruption in media is power tools for buyers and sellers that meaningfully impact how budgets are allocated across and within media plans.

How Should We Measure Media Value?

Originally published on AdExchanger

Measuring the comparative value of media inventory has been a longstanding challenge. For both sides, the relative value of media inventory is the most important measure to determine price.

At the heart of the problem is the fact that each buyer measures value differently. While that is true, the questions each buyer asks to find value are the same. Being able to answer these questions about available media inventory means that the optimal mix of targeted inventory, given current market conditions, can always be found.

If a media-buying team can answer all of these questions about all if its inventory sources, it can confidently say that it is always buying the best-performing inventory at the lowest price, given the condition of the market.

Since guaranteed deals set the price before the deal is done, the exact value of each possible deal can be compared to determine which will provide the greatest amount of value in budget.

How did the media I bought from this source perform on each metric?

In media, value is measured by the amount of performance achieved. Since performance happens along multiple measures, viewability, click-through rate and conversions, we can think of each of these as a measure in the value space.

Simply put, the best answer that a targeted inventory source can provide is that every impression is viewable, every impression results in a click and every impression converts.

The worst answer is when viewability, clicks and conversions all total zero. When everything converts, every last bit of value was captured. When nothing converts, no value was created.

How efficiently was this source’s inventory moving prospects through the funnel?

The next challenge in measuring value has to do with how steep the sides of the funnel are. In other words, how efficiently does the audience of this inventory source move from the top of the funnel to the bottom? Low viewability and a high conversion rate are just as inefficient as a high viewability and a low conversion rate. The efficiency of the funnel measures both. The wider the funnel is at the bottom, the better.

How much performance and efficiency am I getting from this inventory source at this price?

In the end, it is about effectiveness. Inventory that delivers high value may be important, but if the price is too high, it might actually be less effective than something cheaper. So when comparing different media inventory, it is the combination of value and price that drive the decision.

How much audience scale does this inventory source have?

Having fairly priced and efficient inventory is great, but there is still another piece missing: the amount that is available for sale. Being able to achieve campaign goals with the least number of sellers is important in keeping down the cost of the media buy and ensuing administrative costs.

If the media-buying team can answer all of these questions about all of its inventory sources, it can confidently say that it is always buying the best-performing inventory at the cheapest price, given the condition of the market.

Without viewability price does not measure value

While much discussion of viewability has taken place, there is still room to discuss viewability in the context of media markets. The true price at which something will sell in the market contains a very important bit of information. Pricing and market data within media are like the DNA building blocks for our understanding of the market. You need to have all the pieces to understand what is going on. True price is the most important piece of information. For buyers, not having the ability to understand the unit price of inventory, which will be viewed by real audience members matching their targeting, means there is a missing piece in the DNA that makes up that buyers’ understanding of the market. Without the knowledge of price, a significant amount of decisions cannot be made with certainty. An impression that is not known to be viewed has a price that has little information buyers and sellers can glean from. Viewability measurement is so important because without it, price cannot be used to compare the value of different media inventory. In turn, that means that a real negotiation is more difficult.

Buyers and sellers want to know that they are doing business ‘on the level’. Viewability is not about higher or lower prices, viewability is about finding the right price. For those hiding in the shadows, lack of viewability hides true quality, artificially raising effective price, and can be used as a negotiation bludgeon to artificially lower price. In the end though, all the good folk of the media market just want fairness.

In media markets, buyers know ‘a price’, the problem is that the price they know is not exactly for what they are buying. Some media buyers will read the previous statement and disagree. I argue that the only price the buyer cares about is the CPM of all the real impressions. If a buyer knows how many impressions were shown to their specified audience of real people, in a viewable manner, and the real unit price of what they’re buying, before the purchase, they can proactively select the inventory that will perform best.

Media is not a commodity, the viewability of each publisher is unique and the mix of real and bot impressions is unique. Moreover, two buyers who buy the same inventory at the same price will not achieve the same ROI. So, every publisher is different and so is every buyer.

Let’s work through an analogy. Imagine you’re a contractor building houses. You have an opportunity to build houses that you know will sell for $1000 per square foot. What should you build to maximize your profit? Well, if you consider all the materials and labor, you can mathematically figure out the most profitable size house to build. But what if you had no idea what the price of the real materials would be when you need to build the house? What if the amount of defective materials varied by store and manufacturer and you had no way to measure it? Viewability is exactly like that. Without viewability you don’t know the actual price of the product that you need to buy.

Today, the data landscape is rich with solutions that help separate the wheat from the chaff when it comes to impressions. This data powers buyers’ ability to look past the amount they paid and into the price of target audience and media.

Using that data to power media buying decisions, the ability to measure substitutability begins to emerge. Figuring out “what to buy instead” is a very important function of the buy side. Houses are not commodities, but we all know that when you have to choose a place to live you figure out how to balance the good, bad, and price. The second choice at a lower price can quickly become your first choice. Without viewability, you cannot accurately measure price, and without price you can’t make good decisions to balance the good, bad, and price.

Viewability: The Long And Winding Valuation Road

Over the past few months, the discussions in the marketplace about viewability have been important in establishing the importance of actual delivery. The most pithy view of the discussion was a quote from  a senior agency ad tech executive -  “Expectations are that if you buy an impression, it’s being viewed. Period. For that reason, I’d be surprised to see anyone agree to pay a premium for certified viewable impressions over today’s rates but would expect CPMs to start to fall.” If you believe the validation angle, the point about premium is spot on. In reality, the world is filled with people trying to 'work the system' and removing unviewed impressions will create supply constraint. So, he's right and wrong at the same time. No one will pay a premium for certified viewability, but prices will go up regardless, as supply is constrained.

In nearly all significant transactions, a third party is called upon to provide a quality validation service. In the diamond market there is GIA certification, when buying a house an engineer inspects, CPG organic products have certifying bodies, when completing a merger the target is audited. Why should advertising be different?

Ads that are bought should be viewed, it's that simple. If the ad was not viewed, then nothing was really delivered by the publisher. In print, proving that an ad was delivered is accomplished by a tear sheet. Since a print publisher can not prove an ad was seen, they have to prove the ad was included in the publication. To do the same, digital advertisers inserted their own ad servers in to the stack, they essentially create their own tear sheets when the ad call was received.

So where does this leave us? Simple, buyers want confirmation that they got what they paid for. Confirmation of delivery, confirmation of view, and confirmation of audience. In short, every element key to value validation will be confirmed by a third party in the near future. It started with advertiser ad servers, then click fraud identification, followed by view confirmation, and the new frontier - audience segment guarantees via PII data.

With all this validation scaling through the ecosystem, a real exchange is unleashed to become a super-powered price discovery engine. Knowing exactly what is being bought and sold let's the buyer bid without worry, as they know exactly what they are getting. We welcome all of these services with open arms. Why? Because an exchange works to provide a facility for establishing a common price for a shared understanding of value. Better understanding of value means markets work better.