Promoting Inventory Quality in Programmatic Advertising, #1

Ian Davidson from OpenX goes deep on inventory quality and the need for more collaboration

It’s been almost six months since we launched SQX—the Supply Quality Index that factors inventory quality into our bidding logic. While the SQX algorithm is collecting data and our engineers are refining its logic, we also keep close contact with our supply-side partners to share our knowledge and experiences. One of them is OpenX, a global expert in digital and mobile advertising technology and supporter of SQX. We spoke with Ian Davidson, Vice President Platform Demand at OpenX, to learn more about what inventory quality means from a supply perspective and how the industry can work together to tackle challenges like fraud, transparency, brand safety and viewability.

Ian, how do you perceive the ongoing debate about quality in programmatic advertising in the industry? How has this affected your business?

I think perception lags reality. The industry began addressing the fraud problem aggressively in 2012, and redoubled its efforts in the years since. As a result, there are pools of inventory in which there is very little bot traffic.

Desktop display inventory was the first battleground and as a whole, the industry is doing quite well in keeping fraud to a minimum. Now it’s time to focus on other pools of inventory, specifically mobile apps and video. Video is particularly problematic because fraudsters find its high CPMs utterly enticing.

So while the industry can never rest on its laurels, we can breathe a little easier given the strides we’ve made, as evidenced by Integral Ad Science’s most recent Media Quality Report, which found that in public ad exchanges, 11 percent of the traffic was fraudulent; within the OpenX Exchange only 2 percent is. That’s a far cry from the fraud levels of 2010, when by some estimates, up to 70 per cent of traffic was suspect.

OpenX works with both publishers and programmatic buyers. How do quality requirements differ between these two stakeholders?

On the buy side, the primary concerns are media waste and brand safety. When ads are presented to consumers in environments that aren’t brand safe, the advertiser’s brand value is damaged, and when advertisers buy traffic that is generated by bots and not seen by human eyes, they are burning media dollars. So when advertisers consider fraud, their goals are to eliminate waste and avoid negative advertising environments.

For publishers, the consumer experience is the primary concern. Fraud for publishers typically takes the form of malware, which can arrive on their sites if their ad exchange doesn’t properly screen their traffic. If their readers click on a fraudulent ad, which, in turn, infects their browsers, the result is a very negative experience. Another aspect to the experience is ad quality—publishers don’t want to frustrate their readers with ads that refresh, flash, or are otherwise annoying. That’s why for publishers, user experience trumps waste.

Amongst other topics, ad fraud, viewability, brand safety, transparency and inventory quality are recurring concerns in the programmatic industry. How can buyers and exchanges work together to ensure higher quality?

To make the industry efforts to eradicate fraud more effective, we need to share information strategically across DSPs and exchanges. Let’s say OpenX discovers a bot network that injects fraud into our exchange and we devise a way to shut it down: if we don’t share that knowledge with all of the legitimate players out there, the industry as a whole will continue to have a problem, as that fraudulent traffic will certainly find a new home. As partners, we need to alert one another whenever we discover inventory that isn’t up to standards, and help other players identify it so they don’t inadvertently buy it from other sources. As an industry, we’ve yet to figure out how to share this type of information among trusted partners.

Additionally, DSPs need to help their advertisers understand that buying inventory from 25 different sources may be opening the door to fraud. If buyers concentrated on the exchanges that have strong, multi-pronged anti-fraud systems in place, they’d go a long way in starving fraudsters of their profits.

As for viewability, we can work as partners to ensure that the viewability standards set by advertisers are reasonable and based on real human behavior. We don’t want to encourage advertisers to optimize to 100 percent viewability, because real consumers have diverse viewing habits that don’t allow any standard ad banner to reach 100 percent viewability. If we don’t acknowledge this reality, we’ll open the door for bots to replicate 100 per cent viewability, and for optimizing ad dollars towards that behavior.

For brand safety, we need to be very transparent about how URLs are passed so that the DSPs have the information they need to meet their client’s brand-safety thresholds. To do that, the exchange needs to make the URL transparent to the buyer, and the buyer and the exchange need to agree on how to categorize each page.

Inventory quality is a combination of all these factors.

Sociomantic recently launched SQX, as the first programmatic buyer to factor quality into the bidding. Where do you think the broader industry is at when it comes to promoting quality?

First, what Sociomantic did is incredibly significant because the company has chosen to be fully transparent with the industry in how it measures quality, and how it biases ad dollars towards the cleanest players. Similarly, Pixalate has released rankings of inventory supply sources with its media-quality ranking available to anyone to access.

There are companies on both the buy side and exchange side that have taken steps in the right direction, but until we’re willing to follow Sociomantic’s and Pixalate’s lead to make inventory quality measurable, we’re not going far enough.

If you go back to the Integral Ad Science report of decreasing fraud within the industry, it’s clear we’ve come a long way and have accomplished a lot. But there’s still a lot more to do, and the only way to reach that new level is to embrace transparency,

Check out this video to learn what supply quality means at Sociomantic and how SQX is supporting it: