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Weekly Roundup: Google’s Auction Update, Adtech Consolidation, and More!

“Nobody in the chain is well compensated to take on credit risk.”

Get ready for the unified first price auction

We’ve been discussing Google’s unified first-price auction for over a month. Well, last week Google sent out emails to the publishers and network partners to notify about the beta launch. As per the company, the transition to unified first-price auction starts in a week and if everything goes as expected, it will be completed late July.

Unified first-price auction Google

When Google’s unified auction goes live, we know what measure a publisher should take and how the industry will try to adapt. As a publisher, you’re required to create price floors for the unified auction in Google Ad Manager. Existing open auction pricing rules will be only applied to traditional second-pricing auctions, not the upcoming unified auction.

The new pricing rules will be applied to all sorts of auctions including – private auction, exchange bidding, and header bidding. However, AdSense backfill, house line items, and Programmatic Direct are excluded from the floors.

“In the unified auction, bids submitted by Google Authorized Buyers, Exchange Bidding buyers and by other demand partners buying through non-guaranteed line items will all compete in a single-stage auction, with consistent rules and pricing across all channels. Unified pricing rules will make it convenient for you to manage pricing of your inventory across all indirect sources of demand from a single place in Google Ad Manager.”

– Google.

Okay, we’re not here to disclose the news. You’re right, publishers aren’t happy with the new update. Noticeably, a few changes are likely to impact publishers more than the others.

– Buyer-level pricing floors aren’t available anymore.

As noted by AdExchanger, publishers like to set different floor prices for different platforms. For instance, Google AdWords demand will have a higher price floor than the other platform and with the unified auction, publishers can’t do it as Google puts platforms under buyer-level. It might also affect first look feature available in Google Ad Manager (First look allows specific buyers to get preferred access to premium inventory)

– The number of pricing rules are capped at 100.

Many publishers will have hundreds of price rules to ensure both direct and programmatic buyers can have enough impressions so that they continue buying from the publishers (known as “competitive exclusion”).

Takeaway:

With its prodigious market share, Google can surely expedite the adoption of the first-price auction. But publishers aren’t coping with its changes in the name of ‘simplifying programmatic’. Especially, many remain still wary of its promise to act on the suggestions. We’ll keep you informed.

Taking control of programmatic tech

Adtech consolidation isn’t something new. According to LUMA Partners, the number of independent adtech companies decreased 21 percent to hit 185.

What caused consolidation?

– Duopoly. Both Google and Facebook take more than half of digital advertising spend.

– VCs and investors. The number of deals went from 260 (in 2014) to just 53 in the first half of 2018 as venture capital firms are becoming skeptical about the success of ad tech business (Thanks to duopoly again).

Both of them curbed the rise of new adtech companies and forces the existing companies to ink a deal or merge so that they can sustain and thrive.

Now there’s a new driver on the block – Buy-side optimization. Though supply path optimization has been here for a while, advertisers didn’t seem to get what they expect. Now, they’re cutting down the vendors they use to buy ads.

For instance, Hershey’s used to buy programmatic ads via a single DSP and then use specialized vendors to buy specific impressions (custom or preset audience). Recently, it switched all of its buying to The Trade Desk, making it the only vendor it uses to buy impressions.

“Each DSP implements its own technology in its own proprietary way that makes it harder to compare and contrast what impressions are bought across several different vendors.”

Digiday.

With the multiple DSPs, the advertiser found it hard to know whether the current path is efficient or not. Besides, tracking impressions and reconciling reports from different vendors isn’t an easy job.

Buying via a single DSP means, Hershey’s can also get rid of the long-tail publishers and focus on quality impressions.

“That number has heavily gone down because there are stricter criteria”

– Vincent Rinaldi, head of addressable media at Hershey’s.

In fact, it’s just not Hershey’s, the number of DSPs used by advertisers dropped 40% between 2016 and 2018, according to Pathmatics.

Takeaway:

Accruing spend will drive consolidation and it means publishers have to assess and improve their inventory quality and onboard suitable demand partners. Partnering with a few ad exchanges aren’t going to help you if you don’t have the one right partnership – After all, you need a proactive bidder to experience competition and revenue lift.

The aftermath of a bankruptcy filing

In our last roundup, we argued the domino fall isn’t likely to happen just because of Sizmek’s bankruptcy filing.

We’ve seen a couple of events since last week and it’s a sign that things are recovering.

– First, the expected result. As per Sizmek’s court filings, the number of impressions available on the Sizmek DSP dropped from 284M to 60M. SSPs disconnecting from the Sizmek’s DSP as the company could default is clear.

– SSPs and publishers are reconsidering how they manage their credits with DSPs. For instance, PulsePoint previously took the credit risk to woo partners and hold them on its platform, but it won’t anymore. Some companies are demanding prepayment if the campaigns are exceeding the specific value to avoid any risk or delay in payment.

– Zeta Global agreed to buy Sizmek DSP and Rocket Fuel DMP assets for $36 million. Sizmek is still looking for buyers to save its core ad server business and other assets.

Takeaway:

As you could see, SSPs don’t want to bet on DSPs blindly. With the dwindling investments and consolidation, clawing back payments from publishers or waiting for the failing DSP to show up isn’t a healthy choice to run a business.

“Nobody in the chain is well compensated to take on credit risk.”

– Rajeev Goel, CEO of PubMatic.

Why do we see the series of events as a good sign? Simple, Zeta Global will help Sizmek to stay operational (or at least pay the debts) and SSPs becoming more cautious may prevent the domino fall. Let’s what happens next.

Moments that matter

War with ad blockers: Axel Springer and AdBlock Plus fight continues – Digiday

What if Chrome blocks third-party cookies – AdWeek.

Apple News plus had a rough start – Digiday.

Automatad Team

At Automatad, we help publishers to monetize better without hampering the user experience. Our products are live across hundreds of publishers, earning them incremental ad revenue with every passing second. You can request a free audit to get an estimated revenue uplift today.

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