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The hazards of not cutting out the middlemen in programmatic
The current state of programmatic, particularly CTV, has taken on a wild west theme that comes with controversy and repercussions for marketers and media owners alike.
A big driver of this issue is middlemen, or entities that are inserted into the supply chain without adding value to a transaction. It has been estimated that, at best, 40% of every dollar spent is actually making its way to media owners.
Many buyers are holding on to a mentality that they can’t be challenged in regards to how purchasing decisions are made. Maximizing margins and undercutting media owner rates are prioritized over quality. If brand messaging even has the opportunity to be seen by a human, it can take a back seat.
However, it’s naive to say this is solely a buyer-driven issue. Media owners also have the responsibility to vet demand partners and put precautions in place to protect the value of their brand. To gain more transparency and minimize waste, both marketers and media owners should assess the hazards of the middlemen they partner with.
It can be difficult for marketers to navigate all the middlemen involved in a transaction, but going through the exercise of learning exactly who you are purchasing inventory from can lead to long-term benefits.
By cutting these third parties out, more money of every dollar is being spent on effective media and there is less risk of brand messaging showing up alongside content that’s not suitable.
Choosing to keep middlemen in place opens up the possibility for your media to not be seen by humans, less of your money being spent on actual media, and lowers performance overall.
Media owners are often approached by “demand” partners that come with a promise of incremental and unique demand. However, these demand partners are often just plugging into the major SSPs and taking a cut of the revenue the media owner could access via an already existing integration point.
On top of revenue loss, the media owner jeopardizes their brand image to fraud and transparency issues. Once they start working with these low-tier “demand” partners, they have no control on how their inventory is being represented in the market.
How Consolidation Leads To More
If done correctly, cutting out middlemen is a win/win for both marketers and media owners. There is less wasted spend, allowing marketers’ money to go further. Performance is also better, as eliminating middlemen can lead to less latency, higher viewability and increased engagement. Marketers are then able to have an increased focus on innovating and driving results.
The same story goes for media owners. With less middlemen, they should not only have less operational expenses in managing all of the unnecessary partners, but they should also see an increase in their bottom line by cutting out actors taking an unnecessary chunk of the pie. Finally, fewer resources required to ensure traffic quality allows for more innovation and creativity overall.
The Aftermath of Leaving Middlemen Intact
Keeping the unnecessary middlemen around increases yield to fake traffic providers and ultimately funds criminal activity, creating a sense of decreased trust among the industry. By cutting out these entities, there is inherently less risk associated in programmatic transactions. This should only lead to less verification costs, operational costs in managing so many partners,
less infrastructure cost and an overall better experience for the end user consuming the content. On top of efficiencies, cutting out middlemen should allow the industry as a whole to have a larger focus on innovating and developing new tools and technologies
However, not all middlemen are created equal. So how do you distinguish the good from the bad? The IAB Tech Lab has released industry specifications, including ads.txt, app-ads.txt, sellers.json, and supply chain to find and cut out the aforementioned harmful middlemen. By leveraging these tools and doing your homework, vendor consolidation and choosing value-add partners becomes more manageable and streamlined.
Nick Frizzell is vice-president of inventory quality and planning at SpotX
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