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Can the Key to Ad Transparency be Found in Other Online Marketplaces?

Tim Cross 08 December, 2021 

The complexity in how most digital advertising is currently bought and sold is largely due to how trading tools have evolved over time. The current digital advertising ecosystem was never intentionally designed to operate how it currently does. Rather, individual tools were created to solve specific problems, and those that worked well were tweaked to fit into existing infrastructure.

This complexity not only makes the overall space difficult to understand, but also creates a lack of transparency – highlighted by last year’s report from ISBA and PwC which found that a significant portion of ad spend ends up in unknown hands.

Supply path optimisation and demand path optimisation both seek to address this transparency while working with the current set of tools. But some believe a more comprehensive rethink of how markets operate is the best way to improve transparency and efficiency – and that the industry can take inspiration from how markets operate in other sectors.

Taking inspiration from ecommerce

One such company is Media Futures Market (MFM), a Dutch company which takes inspiration from online ecommerce stores. The idea is fairly straightforward: media owners set out their stall by creating specific packages of inventory and targeting options, and buyers then purchase directly from those media owners.

On MFM, sellers can list all types of inventory – video, display, print, outdoor – with set pricing for each product, as well as the available quantities. Buyers can search for specific types of media or audiences, set their campaign parameters, and then book through the platform – submitting creative assets as necessary.

Founder Stijn Gimbrère says that MFM is designed to help productise advertising, so buyers know exactly what they’re getting. For example, a seller might offer a sports video package which offers 10,000 views. If a buyer wanted 200,000 views, they would simply order this product 20 times.

The actual execution is handled off-platform – it can be done manually, or run through the buyer’s DSP if necessary.

But Gimbrère says that facilitating direct buying makes it much easier for buyers to understand and control exactly what they’re paying for.

Direct trading is of course how all advertising was originally bought, and much still is. And programmatic direct trading similarly introduces direct buying to the programmatic world.

But Gimbrère says that MFM has a number of specific features that introduce more simplicity and transparency.

For example, sellers bill buyers directly, rather than MFM taking money and handing it on to the seller (MFM itself monetises through offering premium features to paid subscribers, rather than taking a slice of ad sales). So sellers don’t have to wait on payments from ad tech partners, which can at times be inconsistent.

And MFM allows sellers to build in bulk buy discounts, as an alternative to manual price negotiations which would usually happen in direct trades. All buyers are offered the same discounts when they place large orders, which are fully transparent.

“MFM takes what would usually be done bilaterally via a phone call, and makes it scalable and much more efficient,” says Gimbrère. “Media owners would normally need a lot of account managers to keep up with all their clients. This makes it much easier for a salesperson to sell their inventory to a lot of buyers, who might normally have gone to Google and Facebook instead if they believed it was too difficult and complicated to buy directly from other media owners.”

Marrying Wall Street with Madison Avenue

New York-based NYIAX meanwhile takes inspiration – and indeed specific technologies – from stock exchanges. NYIAX itself is powered by the NASDAQ financial framework, transferring these tools over to the advertising world.

NYIAX co-founder Carolina Abenante describes the company primarily as a contract management platform – which streamlines all the various contracts buyers and sellers enter into, and clearly presents the whole market.

“We have DSPs on the buy-side, SSPs on the sell-side, and all the various intermediaries taking different fees,” says Abenante. “But what you don’t have is contract management for all this so you have transparency on fees which are being taken, or that ability to easily decide who you want to work with in terms of SSPs and publishers.”

NYIAX works with advertisers, agencies and DSPs, to combine all the various buys and formulations into an order book, which lays out all of what the buyer is looking to buy. And on the sell-side, NYIAX can list inventory available to buy directly, programmatically, and  via programmatic direct.

NYIAX then sits in the middle of the buy and sell-sides and works out an overall contract, facilitating transactions and sorting our reconciliation and billing. At the end of all this, Abenante says both sides get a much clearer idea of what the overall market looks like, creating liquidity, as well as laying out where fees are going.

“As a buyer coming in, you set up who is allowed to buy and sell, and what your limitations are on buying and selling,” says Abenante. “Then you can go and look at the market, which is very large, including both SSPs and publishers. And you can make your decisions based on the true market price of what you want to do.” 

Buyers can filter for targeting parameters, which can include demographics and context, but also standards around privacy and viewability. They then see the market price for that buy, and negotiate with the publisher on pricing directly to secure a deal.

Deal negotiated off-platform can also be printed onto the exchange, keeping everything in one place.

Abenante says bringing Wall Street-style tools to advertising brings big increases for efficiency and transparency. And it also allows interesting new types of trading.

For example NYIAX offers media futures, where advertisers buy inventory for a future date, with an obligation to buy built in (which NYIAX says differentiates it from Upfronts, and other forms of advance buying). This creates more predictable income streams for sellers, and gives buyers more certainty around their media plans.

And NYIAX is working on audience futures too, where advertisers buy target audiences (rather than specific inventory) in advance – a tool which will be enabled by integrations with data clean rooms.

2022-01-05T12:12:15+01:00

About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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