If there’s one thing living in New York City has taught me, it’s the value of a streamlined commute. The less stops, the better. Why transfer three times to trains and shuttles, when a single train line will get us there in one straight shot?
Regardless of what city you live in, or your destination, everyone wants to get where they’re going as quickly and efficiently as possible. The shortest distance between two points is a straight line, and the world of programmatic ad buying is no different.
As the digital ecosystem has continued to evolve, publishers and marketers are realizing that the more “hops” between point A to point B, the higher the likelihood that something might go wrong. You might get pick-pocketed during that transfer, so to speak.
Impact Of Fraud On Advertisers
This year, eMarketer estimates that US advertisers will spend nearly $60 billion dollars on programmatic advertising, accounting for approximately 85 percent of total digital spend. By the year 2021, this is expected to increase to 88 percent, or about $81 billion.
That’s a big pie, and everybody wants a piece – even those who weren’t invited to sit at the table. Bad actors have continuously tried to game the system, and new fraud schemes are popping up every day. The truth is that the most common way these fraud schemes enter the marketplace is through resellers.
These fraud schemes can take many shapes, with the most common being some form of domain spoofing. There have been some important strides made in the effort to clean up the programmatic supply chain and protect against these bad actors, including the implementation of verification tools like ads.txt, app-ads.txt and Sellers.JSON.
However, even with these advancements in place, there are still fraudsters out there looking for a new way to beat the system and stay one-step-ahead of these security tools. According to The Drum, fraud schemes like these could cost advertisers between $70 – $80 million on average.
For these reasons, premium digital publishers – as well as programmatic buyers – are emphasizing the importance of the direct relationship.
The Value and Risks with Resellers
Breaking up is hard to do. Publishers and buyers have been dating advertising resellers for years, but the time has come to settle down and it has become increasingly clear that you can’t bring most resellers home to Mom and Dad (a.k.a. The Advertisers).
Don’t get me wrong, not all resellers are created equal and not all are bad. Some resellers can bring an immense amount of value to a balanced programmatic strategy; whether that be due to their access to otherwise limited inventory at scale (i.e. certain video channels), a unique ad unit, or even a particularly strong cookie match with a specific set of publishers. Supply scarcity is still a concern when scaling up an advertising strategy and this can provide solutions.
The value that a good channel partner can bring to an advertiser cannot be understated, and in an industry that relies heavily on efficient performance at scale, they will always be an important piece of the puzzle. However, too much of a good thing can be bad and the more resellers that an advertiser or publisher chooses to work with, the more potential there is for fraudulent activity.
In the early days of header-bidding, the mantra for publishers was “the more sellers, the better!” However, as fraud schemes through resellers have become more prevalent, so has the desire for quality and control.
Publishers are becoming more selective about who they choose to partner with to help them sell their inventory. According to an AdExchanger article from April 2019, publishers of all sizes are cutting ties with programmatic resellers further down the value chain. Larger publishers like the New York Times were among the first to make these changes – reducing their programmatic partners by 75 over the last three years and ending all reseller relationships.
Who Can Buyers Trust?
In conversations with marketers, fraud and inventory quality continues to be a major concern. It has become evident that buyers are putting a higher level of emphasis on premium relationships and are starting to take control of their supply path by working with exchanges that can get them the inventory they need in the fewest number of hops possible.
In order for buyers and advertisers to feel increasingly comfortable spending dollars programmatically, publishers and exchanges need to have a zero-tolerance policy for fraud and need to be selective about which resellers to trust. As advertisers continue to take steps to optimize their paths to supply, the exchanges and SSPs who prioritize quality and superior relationships will ultimately reap the benefits.